The view from China: Growing consumer sophistication

As part of the Asia's Top 1000 Brands report, we asked experts from around the region to share in-country expertise on the factors driving branding in their markets. Bryce Whitwam, managing director of Wunderman Shanghai, shares the view from China. 

We see the convergence of two major trends that affect brands in China in the next coming 12 months:  the relative economic slowdown of the market combined with a growing consumer sophistication that will make consumers more discerning and selective. These trends provide unique opportunities for smaller, incoming brands, especially in premium categories, because they can begin to carve their niche’ within a specific target group that seeks more discernment from the mass.

There also continues to be a growing trend in China to grow from lower tier cities because the relative opportunities there are enormous for those brands that can get it right.  Big lower tier winners in WPP’s 2013 BrandZ China report included Hainan Airlines, Septwolves and Semir, all of whom have largely avoided competing in Tier 1 markets of Beijing or Shanghai.  For them, winning in lower tier cities was not a question of a price alone but driving messages around practicality that is generally more appealing to lower tier consumers than just status.

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In the big cities, we’re seeing a general trend from consumers to slow down. Y&R, recently released their “Chinese Whispers” report pointing out that many Chinese today are now looking to jump off the high speed economic roller coaster in exchange for a simpler, less complicated lifestyle that seeks inner peace in a place that is closer to the home and the values that goes with it.   It’s therefore not a surprise to see that it’s even now cool to be a housewife in China..  Brands that offer the emotional connection to more traditional values will prevail.

Bryce Whitwam

Recent food safety scares in the country have also made consumers lose trust in traditional advertising claims and as a result consumers have become more reliant on family, friends and social media connections for their recommendations.  Social media and direct communications are therefore vital investments in a distrustful brand world.   Some local milk brands such as Yili and Mengniu are going as far as forming partnerships with foreign brands to win back their own brand credibility.

It’s therefore not a surprise to see brand values of “trustworthiness” “reliability” and “intelligent” scoring in the top 10 in recent 2013 Y&R Brand Asset Valuator, while “innovative”, “up to date”, and “trendy” dropped out the top running. 

To me, this points to a need for brands to build stronger emotional bonds with their consumers. Chinese are more than ever looking to develop deeper, more meaningful relationships with their brands that they can rely and trust over the long term.