Three IMC faculty members have examined the characteristics and habits of young Chinese consumers in their recently published book, “Understanding China’s Digital Generation."
Professor Martin Block, Professor Emeritus-in-Service Don Schultz and Adjunct Lecturer Heidi Schultz collaborated to co-write the book. They used their personal knowledge of China and research from Prosper, which conducts surveys of the spending habits of American consumers, and ProsperChina, which conducts surveys on Chinese consumers.
“It’s written primarily for Western marketers, to help them understand how to best market their products in China,” Heidi Schultz said.
The primary focus of the book is digital and media usage. The three writers looked at spending in categories like retail and housing and analyzed key differences between Chinese and American consumers in the digital generation.
“Digital generation” refers to those born after the 1978 economic revolution. That population is the first generation to grow up after the one-child policy was implemented in China and during the advent of new communication technology and the Internet.
“The comparison of the Chinese and U.S. consumers provided invaluable insights into both,” Block said. “Perhaps as [important] as the cultural differences are the common characteristics of both digital generations.”
With the common characteristics also come differences in culture. China’s economy is shifting away from a focus on exports and toward an increase in internal consumption and this presents a problem for those in China who need to balance spending while saving for the future. China lacks standard American safety nets like insurance and social security to provide for its citizens as they grow older, so many must save to bridge the gap.
The need to save in China is increased by the one-child policy, which reduced the number of children who are available to care for parents and grandparents. As a result, according to the IMC faculty, young Chinese consumers are careful about what they buy. They think through purchases, researching products online and utilizing word of mouth. For businesses, this means they need to figure out how to get Chinese consumers to spend money and purchase their product.
Marketers need to recognize the differences between Chinese and American consumers to effectively advertise in China. According to Don and Heidi Schultz, the economy is shifting to rural cities. These rural areas have less infrastructure and wealth and the distribution system is more complicated and traditional, so residents of rural areas have less options.
“We hope that [marketers] will read the book and think about how these consumers seem to be like their counterparts in America, but are also really quite different and so they’re going to have to adjust their marketing plans to be relevant in the daily lives of Chinese consumers,” Heidi Schultz said.
Another difference in the purchasing habits in China is that they often spend the most on things that people see. Home exteriors are more important than the interior, which is typically sparsely decorated. Also, items purchased are often for the use of groups or were recommended by others.
“One of the other differences between the U.S. and the Chinese is that most U.S. consumers buy things because they want it for themselves. It’s an individualistic purchase,” Don Schultz said. “The Chinese, because they are a communal society, buy products that are approved by and recognized by their friends and associates. So, it’s all about external as opposed to internal support.”
Heidi Schultz explained that she wanted to help dispel some of the misconceptions about the Chinese, such as that they want to become Western. That idea is an oversimplification, because while many Chinese adapt aspects of Western culture, they also are shaped by their heritage.
The book is based off research conducted by Prosper and ProsperChina, an organization that conducts quarterly surveys of the spending habits of Chinese and American consumers. Prosper began collecting data in the United States in 2002 and in China in 2006.
“Understanding China’s Digital Generation” uses data beginning in 2006. The data for both countries was collected on the same aspects and using similar methodologies, which created a parallelism that allowed for Block, Schultz and Schultz to draw comparisons between the U.S. and Chinese consumers. According to Don Schultz, the United States data represents information from 60 million U.S. consumers.
The three began writing the book in the spring of 2011 as an extension of the papers they were writing on the topic and an analysis of the data that Don Schultz and Martin Block were looking at in their work with Prosper.