...McKinsey Consumer & Shopper Insights Meet the 2020 Chinese Consumer McKinsey Insights China McKinsey Consumer & Shopper Insights March 2012 Meet the 2020 Chinese Consumer Yuval Atsmon Max Magni Lihua Li Wenkan Liao The authors gratefully acknowledge the assistance of their colleagues: Molly Liu, Cherie Zhang, Barry Liu, Rachel Zheng, Justin Peng, William Cheng, Glenn Leibowitz, Joanne Mason. 5 Contents Introduction 1. China at a turning point 2. Getting the basics right: changing demographics Mainstream consumers driving income growth Aging population Postponed life stages Increasingly independent women 3. Understanding the mainstream consumer: new spending patterns Growing discretionary spending Aspirations-driven trading up Emerging senior market Evolving geographic differences 4. Understanding the mainstream consumer: behavioral patterns The still-pragmatic consumer The individual consumer The increasingly loyal consumer The modern shopper 5. Preparing for the 2020 consumer: implications for companies Strategic imperatives Growth enablers Conclusion 6 8 12 13 17 18 18 20 21 22 23 24 26 27 27 28 29 34 35 37 37 Introduction Meet the 2020 Chinese consumer 7 Most large, consumer-facing companies have long realized that they will need China’s growth to power their own in the next decade. But to keep pace, they will also need to understand the economic, societal, and demographic changes that are shaping consumers’...
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...VIETNAM TOURISM MARKETING STRATEGY TO 2020 & ACTION PLAN: 2013-2015 (PROPOSED) Executive Summary Developed by: European Union funded Environmentally & Socially Responsible Tourism (ESRT) Capacity Development Programme Vietnam Tourism Marketing Strategy To 2020 & Action Plan: 2013-2015 (Proposed) Executive Summary Page 1 © 2013 Environmentally and Socially Responsible Tourism Capacity Development Programme This publication has been produced with the assistance of the European Union funded Environmentally and Socially Responsible Tourism Capacity Development Programme (ESRT). The content of this publication is the sole responsibility of the ESRT programme and can in no way be taken to reflect the views of the European Union. The European Union and ESRT do not guarantee the accuracy of the data included in this publication and accept no responsibility for any consequence of their use. By making any designation of our reference to a particular territory or geographic area, or by using the term “country” in this document, ESRT and the EU do not intend to make any judgements as to the legal or other status of any territory or area. ESRT and the EU encourage printing or copying exclusively for personal and non-commercial use with proper acknowledgement of ESRT and the EU. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ESRT and the EU. Environmentally...
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...Advanced Industries The road to 2020 and beyond: What’s driving the global automotive industry? The road to 2020 and beyond What’s driving the global automotive industry? 3 Preface For the last century, the car culture has spread over the entire globe. As much as any other product, the car has shaped not only the global economy but how billions of people live. In Europe alone, the automotive industry accounts for roughly 12 million jobs (including related jobs); in the US, more than 8 million; and in Japan, more than 5 million.1 For all of its staying power, though, the industry has also seen constant change. Today’s cars – with their drive-by-wire electric systems or drive assistants – would have astonished Henry Ford, Ferdinand Porsche, and Kiichiro Toyoda. They would also have been taken aback by the increasingly demanding environmental requirements and the rise of new players, particularly in China. So what’s next? This in-depth research offers a perspective on where the automotive industry is headed. It is based on many discussions and interviews with the top management of leading automotive original equipment manufacturers (OEMs) and an analysis of data from the top 17 (by sales) global OEMs, which comprise 80 percent of global sales. This work was designed to answer the most crucial questions: How are the industry and the market evolving? What are the future challenges and opportunities? How can OEMs benefit from these new challenges and opportunities...
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...following we will execute a PESTLE Analysis on the E-Commerce sector of the Chinese market. And as proposed by Neil Botten (2008, p.39) that there are no pure factors because these factors are interlinked. Political and legal analysis Political factors include government regulations and legal issues and define both formal and informal rules under which firm must operate. And it is claimed that the political force is probably the most turbulent force in the environment (Fahey & Narayanan 1986). In the past one decade, the Chinese government attaches great importance and focus to the development of e-commerce in the most populous country, for example, on issuing the Summaries of the Middle/Long Term Science and Technology Development Plans of China and the Development of Information Industry Plans in the Eleventh Five-year and Long Plan in 2020 Years in The Ministry of Information Industry, the “application of e-commerce platform technology” has been listed as a key point (Li 2010, p.260). In term of the legal system, the Chinese legal framework for e-commerce is still in its nascent stage and has already experienced several problems. China has limited experience with drafting e- commerce legislation for issues such as transactional security, intellectual property rights protection and tax. And regulations supporting areas critical to the development of e-commerce such as the privacy, consumer rights, and validation of electronic contracts and recognition of digital signatures...
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...next decade. How can China ensure stable and sustainable growth in the face of significant internal and external challenges, including slowing medium- and long-term growth, rising labor costs, and growing inflationary pressure? After the global economic crisis weakened external demand, which sustained China’s unprecedented economic growth for three decades, the authorities agreed that internal demand, especially domestic consumption, must become the country’s new growth engine. At the Chinese Communist Party’s congress in November, China’s leaders declared their intention to double per capita income by 2020, unleashing 64 trillion renminbi ($10.2 trillion) of purchasing power. Indeed, with roughly 130 million middle-class consumers, China’s domestic market holds significant potential. The Boston Consulting Group estimates that, with an average annual GDP growth rate of 7% in China and 2% in the United States, Chinese domestic consumption will rise to half of America’s by 2015, and 80% in 2020 (assuming that the renminbi appreciates at an average rate of 3% against the US dollar over the next few years). Moreover, the current-account surplus plummeted from more than 10% of GDP in 2007 to 2.8% in 2011, reflecting China’s decreasing reliance on exports to drive economic growth. In 2010, China’s imports ranked second in the world, and are expected to grow at an average annual rate of 27% in 2011-2015, outpacing export growth by five percentage points. As a result, the total value...
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...Mercedes-Benz growth strategy Mercedes-Benz made achievements for more than one hundred years, and it will continue its successes for another hundred by their strategies. They launched their short-term strategy, which called ‘Mercedes-Benz 2020 growth strategy’. All of their activities are based on this strategy, like they built a new plant in Beijing. Their goal is taking the leading role of premium automobiles by the end of this decade. They desired taking their leading role on brand image, product range, unit sales, and profitability. For instance, they want to increase their unit sales to 1.6 million on 2015. And based on their ‘Vans goes global’ strategy, they want their vans can get a profitable growth. They also launched their ‘Target System’, which can leading them to a sustainable profitable growth. They need working with passion, respect, integrity, discipline, and then they can be high performing. Mercedes-Benz want their business growth can be sustainable, not increasing rapidly like other high-tech firms. After these they can making growth on their products, consumer experience, brand image, technology, and global presence. At the end, they can increasing their profit a lot. M&A and strategic partnerships Mercedes-Benz has its subsidiary in China, Mercedes-Benz (China) Ltd. (MBCL). This corporation sales imported vehicles form Germany, and these vehicles are really expensive like the S-Class cars. To reduce the cost, Mercedes-Benz directly invest a lot...
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...people from the same background These "rich Chinese" are regular customers, and most of the time, are exclusively responsible in banks or executives of the party contractors. They are a big part of the 320 000 Chinese millionaires, often as young as rich. They inform themselves about new products by visiting the catwalks. Louis Vuitton has also a specific politic for this kind of customer; they call them VIC (Very Important Customer). Indeed LV sends them personally letters, they invite them to special private sales where they show them all the new and limited collections in advance. When they shop they make special appointments with the store and most of the time and it is the director who receives them and look after them during their shopping session. The new super rich class: Main characteristics: * Young customers smart and educated * Customers with high revenues * Need for recognition * Looking for a social « status » (climb the social ladder) * Proud of their success * Importance of appearance The ’new super rich class’: Coal mine, company, factory owners, and real estate developers, accumulate their capital from the Chinese economic development. This sector of people belongs to an affluent elite class and their age group constitutes those above 30 years. We also talk about the "little emperor", referring to the one-child policy. This policy brought about by the Chinese to become an...
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...Cultural Considerations in Business Phase 4 Individual Project Collins, Bruce A. Colorado Technical University Abstract Mike, Tiffany and I have just met. Mike is confident about the analysis we did of our strategy and says all we have to do is “put the pieces together before the final presentation.” ("Mgmt690-1404b-05 strategic management,") Tiffany says “We do have solid information, but we have to look at all the parts to see if we can remain competitive.” ("Mgmt690-1404b-05 strategic management,") First, “What are the considerations that you need to be aware of to remain competitive?” ("Mgmt690-1404b-05 strategic management,") Second, “based on the research that we have done, can we compete in the market that we have chosen? Why or why not?” ("Mgmt690-1404b-05 strategic management,") Thirdly, “what primary factors let us to this decision?” ("Mgmt690-1404b-05 strategic management,") Fourthly, “what would we say to someone who would dispute our position?” ("Mgmt690-1404b-05 strategic management,") And lastly, “how do we plan on evaluation the global marketplace in the future?” ("Mgmt690-1404b-05 strategic management,") ("Mgmt690-1404b-05: Strategic, the Problem ") Cultural Considerations in Business Phase 4 Individual Project Considerations To be able to remain competitive in any market a company needs to use analysis tools like SWOT. Brian Hill explains in his article that “SWOT analysis is a process where the management team identifies the internal...
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...was marketed poorly. Disney built, promoted, and communicated EuroDisney as a piece of America in Europe. Cultural differences were neglected. In the case, we see that Fresh culture also has its own cartoon characters such as Asterix, who has a theme park not far from EuroDisney. Furthermore, Disney banned alcohol in a culture that has a deep appreciation for wine. Disney failed to understand French national character, their insecurities over cultural invasion, and their deep commitment to maintaining their identity. Hong Kong Disney faces cultural problems as well, but in a different way. Many Chinese people were not familiar with Disney characters prior to the entrance of Hong Kong Disney. It was hard for Disney to create this familiarity and recognition without that long term relationship. Advertisements were run to create recognition but they were unfit and offensive to the Chinese market. Ads showed families of four...
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...WGSN GLOBAL CONSUMER INSIGHTS REPORT GLOBAL CONSUMER INSIGHTS WGSN takes a look at how consumer behaviour is evolving in four world markets: Brazil, China, India and Japan. Understanding different consumers around the world was a key focus at the 2010 World Retail Congress in Berlin, where numerous international speakers were on hand to provide insights into their markets. “First and foremost you have to understand in detail who your customer is. Only then can you leverage a change of marketplace,” said Ian Scholey, managing director of consultancy company 5One in the UK, when discussing strategy for embarking on global expansion. Here we report on some of the consumer thoughts shared from Brazil, China, India and Japan. WGSN FACT FILE Brazil's neoconsumer has a global outlook, is multichannel and digitally connected. China's middle class is focused on the future, driven by ambition and pressured to succeed. In India a new sense of "price plus" value exists, based not just on price but factors such as quality, fashion and service. In Japan three key trends exist: multichannel, convenience and sustainability. BRAZIL A new consumer has been built by Brazil’s changing market, said Marcos Gouvea de Souza, director general at Brazilian consulting firm GS&MD. Despite turbulent times on a global scale during 2008/09, Brazil saw a growth of 10.7% in retail performance in 2010, the third highest increasing rate worldwide. This is the result of unemployment being...
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...OMRON: SENSING SOCIETY “At work for a better life, a better world for all” SUBMITTED TO Prof. Ray Titus SUBMITTED BY GROUP-1 Aditi A Kulkarni Amritesh Saxena Neha Buruju Sanghamitra Barua Sangram Mishra 1. About Omron: History: Omron is a leading global supplier of sensors, control system components, advanced electronics and related services. It thrives on its ability to identify social needs and innovate. Omron was founded by Kazuma Tateisi an electrical engineer who started his career was at a hydroelectric plant for the Japanese government. Later in 1922, he was transferred to Inoue Electric Manufacturing Company only to quit the company in 1929 after the New York market crash. Being an inventor and innovator by nature he rented a factory in 1930 to produce his inventions and later in 1933 founded the Tateisi Electric Manufacturing Company. Tateisi Electric began with the production of X-ray timers and later moved into producing many other sensing products. Later in 1948, Tateisi began selling household products under the brand name “Omlon” and later adopted the name “Omron” in 1959 for easier pronunciation in foreign languages. Omron was known for multiple engineering firsts. Omron spent huge amount worth 4 times its capital on building an R&D laboratory in 1960. Omron was the western Japan competitor to eastern Japan’s Sony. Omron introduced various new and innovative products in the market. Some of them were vending machines capable...
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...X I N G TA I FOCUSED ON THE C A P I T A L CHINESE CONSUMER THIRD QUARTER 2012 REPORT Contents 内容 4 Managing Partner’s Letter 执行合伙人致函 6 XTC Statistics 星泰统计数据 7 About Xingtai Capital 关于星泰投资 8 Xingtai Hallmarks 星泰资质 10 Xingtai Differentiation 星泰差异化 12 Investment Universe 投资环境 14 Investment Opportunity 投资机会 16 Chinese Consumer Growth 中国消费者增长 19 XTC Research: Beijing’s Bicycle Rolls Onwards 星泰研究:北京的自行车继续飞驰 27 XTC Research: The Tribe of Empty Wallets 星泰研究:私募股权投资的前景 31 XTC Research: Hidden Affluence 星泰研究:中国人隐形财富 2 | XINGTAI CAPITAL Xingtai Capital is the only investment manager focused solely on listed Chinese consumer businesses. Xīng Taì (星泰) Xīng (星) – star. Taì (泰) – peaceful; very good state of being. Derived from Xingtai’s history of investment activity in China. 星月齐明, When stars and moon are bright and aligned, 国泰民安 then the country is peaceful and people are satisfied. 星月齐明, When stars and moon are bright and aligned, 保盈持泰 then a peaceful and prosperous state is maintained. XINGTAI CAPITAL | 3 Letter from the Managing Partner 致管理层及投资者： 中国消费群体日渐成长壮大，预示着良好的投资消费行业上市公司的机会， 星泰投资正是基于这样的信念而成立的。 然而，消费品行业只占中国股市的一小部分，对于期望投资中国消费增长 行业的投资者来说，挑战是巨大的。星泰投资能够战胜挑战，为您带来可 观的投资回报。 有意向的投资者和企业可以通过本文了解到我们的工作方法和流程：我们 是怎样研究行业，分析财务信息，以及如何审查商业模式。 我们计划频繁的会面被投资公司和目标投资对象。我们团队的部分成员曾 经是这些上市企业的管理者，可帮助我们提供更好的服务，为您消除疑虑、 抓住机遇。 我们珍惜投资伙伴赋予我们的工作机会，全力打造一个引人注目的专注于 中国消费品行业的投资组合。非常感激您给予的信任，我们时刻奋斗着， 努力成为可靠的透明的受托人。...
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...the battle for China’s new middle class A huge wave of increasingly affluent consumers will constitute China’s urban majority by 2020. To serve them, multinationals must adapt—or be left behind. June 2013 | byMax Magni and Felix Poh The rapid emergence of a prosperous, more individualistic, and more sophisticated class of consumers in China is creating unprecedented opportunities and challenges for companies serving them. The opportunity is clear: in less than a decade, more than three-fourths of China’s urban households will approach middle-class status on a purchasing-power-parity basis (for details, see “Mapping China’s middle class”). But the market is rapidly bifurcating between a still large (but less affluent) mass market and a new, even bigger group of upper-middle-class consumers—one that’s so large and significant we’ve referred to it in the past as the “new mainstream.”1The people in this more affluent segment tend to live in China’s higher-tier cities and coastal areas, enjoy household incomes between 106,000 and 229,000 renminbi ($16,000 to $34,000) a year, and have opinions strikingly different from those of their mass-market middle-class counterparts.2 As China’s new upper middle class swells to include more than half of the country’s urban households by 2020—up from just 14 percent in 2012—it will strain many of today’s business models. Companies that have long catered to consumers trying to meet basic needs at affordable prices will face a shrinking market...
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...Question: In the Eyes of the Consumer, Brand is Far More Important than Price. Discuss this Statement in the Context of a Country of your Choice. Tutor Name: Katie Mulcahy Recently, the topic of brand and price which are important has become an intense debate. In some people's point of view, brand is far more important than price. Following this further, brand is a name or symbol of one company's product and it is connected with advertising, price and quality. Also, it will be the necessary one of the factors to consider when some people buy clothes. The famous advertising copywriter and ad agency founder Ogilvy, (2007) definition of a brand "The intangible sum of a product's attributes: its name, packaging, and price, its history, reputation and the way it's advertised". Which means the price is a part of the brand, exist a very close relationship between price and brand. The purpose of the essay is to discuss whether or not brand is more important than price when people buy clothes in China. To achieve this purpose, I will choose China to analyze customer shopping behavior, psychology through provide examples to support brand is more important in the first part, in the second part I will give views to analyses price also a necessary role and conclude in the end. However, this essay focuses on business and marketing so I cannot write more about psychology. With brands development, design style and visibility are more important than price especially...
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...or if it provides threats like intense competition domestically. A reason why China still represents a significant opportunity for business outside of China is because of demand for western products. With the rapid rise of middle class potentially reaching 630 million by 2020. This gives companies outside of China especially luxury good companies a massive consumer base, it gives them more demand for superior goods, especially western brands can gain higher profit margins through charging premium prices dealing to high amounts of a market share and growth which makes them a star status. Therefore, providing them with good opportunities this is seen through luxury brands like Starbucks. With their western brand they have managed to become market leaders with 60% market share in the Chinese coffee market. They have further received a more profitable return in the Chinese market than in the US, as sales have increased 34.4% in comparison to the US’s 26.1%. This shows that with Chinese consumers seeing Starbuck as a status symbol, it gives them more brand awareness which should aid them when they opening new outlets. Starbucks emphasis on quality allows them to charge higher prices to price sensitive consumers than anywhere else. This is seen in their Grande Latte which costs one dollar more in China than in the US. To some extent, income elastic products seem to...
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