From Red Tea to Rieslings

By SMG Research Team, September 30, 2011 11:50 am

Despite this tumultuous global economy, Chinese consumers are still spending… a lot.

Just a few short weeks ago, Christie’s auction in Hong Kong sold a single lot (300 bottles) of top-tier wine Chateau Lafite-Rothschild for $539,280 USD – the most expensive single lot this year.  The lucky buyer was an anonymous phone bidder from China.

Said Christie’s Head of wine for Asia, Charles Curtis, “We had several bidders, and they were all from China, and they are just getting into wine.”

Over the last two years, Hong Kong has surpassed New York and London to become the world’s largest single wine auction market – and this is largely due to mainland Chinese buyers who have flocked to auctions in Hong Kong, favouring such brands as Chateau Lafite or Domaine de la Romanée Conti.  At the Sotheby’s “Ultimate Cellar” auctions in Hong Kong this year, a predominantly Chinese buyer base spent US$12.4 million on wine – the second highest total ever for a Sotheby’s wine auction series.

Indeed, for a culture that traditionally prefers red tea over Rieslings, rich Chinese consumers are opening their eyes, ears, and taste-buds to a whole new kind of luxury.  Never mind, though, that many new wine drinkers in China only enjoy high-end wine when mixed with Sprite; just having the most expensive wines in the world bring status and prestige.

However, the truth is that there still is a long way to go in changing consumer tastes, as mainland Chinese consume only around 1 liter of wine annually per capita.  This is very little compared to 4.5 liters in Hong Kong and an impressive 58 liters per year in France.   In China, it may not be the taste of wine that is the draw, but simply owning it, offering it to visitors, and especially giving it as gifts.

Chinese buyers are willing to spend thousands of RMB on imported wine brands with the intent of giving them as gifts to business acquaintances.   In recent years, wine has even played a big part in Chinese festivals, with the gift-giving of traditional mooncakes with expensive bottles of Bordeaux.

It’s not only wine.  The Chinese tradition of gift-giving touches upon every industry, with everything from confectionary to skin-care products to coffee brands offering special packages for gifting during China’s festive seasons.  With China’s emerging middle-class, and their desire to embrace their newfound wealth, and with the scores of rich and nouveau riche, luxury items emulating a more western lifestyle and lavish gift-giving show no signs of slowing down.

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One Stop Shop: Questions about China youth – Continued

By SMG Research Team, September 6, 2011 6:08 pm

Last week, I posted questions I was asked about China’s youth and my answers.  Please click here to get caught up if you missed that post.

Today, I will post a couple follow up questions I was asked.  If you have any questions, please feel free to contact me at angie.chan@hk.starcommedia.com.

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Q: How important is it to understand the concept of “tribes” when marketing to Chinese youth? Do tribes make it easier or more difficult to market to Chinese youth?  How do Chinese “tribes” differ from “tribes” in other countries, and what implications does that have for marketers?
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One way China youth tribes differ from tribes in other countries, is in their history.  Today, we see China youth with their skateboards, or their dance crews, or their indie music …  but tribes in other countries, let’s use the US, started small, and over time, grew as a movement, as youth picked it up along the way and added, shaped and molded it to what it has become today.  There’s a history and a legacy attached to tribes.  However, when we look at Chinese youth and the ‘tribes’ that they have built up, they are predominantly taking a see-and-emulate approach.  They see the skateboarding culture and tribes from the States and they emulate it, without necessarily understanding its history and how it came about.  Similarly, fashion lovers – especially those of luxury brands – purchase these brands because they see others carrying that brand of handbag, but they don’t know where the product originates from, how it was made or the surely extensive history of the fashion label.
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In China, the idea of ‘tribes’ differ in that Chinese youth are still exploring what they like, who they are, and what they stand for.  They are in their own personal quest toward identifying their interests. That’s why it is not uncommon for Chinese youth to dip in and out of various tribes and areas of interest, or to belong to several simultaneously.  In contrast to US youth who steadfastly proclaim their allegiance to one tribe (e.g. skater, boarder, street, emo, etc.), Chinese youth may belong in several at once.
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For Chinese youth, what they get the most out of tribes are experiences.  In China, experiences are their social currency; it’s what they talk to their peers about and having the most experiences, or knowledge gives them a leg up in their social circle.
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For a thorough article about Chinese youth tribes from Campaign Asia (I’m quoted in it also), please click here.
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I believe the implication of this upon marketers is simply not to be short-sighted in their thinking; to look beyond ‘tribes’, and focus on ‘experiences’ that lead to China youth gaining social currency. Marketers must understand the dynamic Chinese youth have with the internet and how they communicate on it… how they treat the internet as an extension of themselves.  Anything they write in forums/BBS/social networks will be seen by a multitude of others.  Marketers should be asking themselves how they can tap into this chatty, fast-talking, experience-desiring group of influencers and designing experiences their brand can get behind.
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Q: What are the biggest mistakes marketers make when trying to reach China’s youth?
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I believe the biggest mistake marketers make when trying to reach China’s youth is two-fold.
The first is that they tend to treat China’ youth as a homogenous group, when in reality, this couldn’t be further from the truth.  The youth we seen in Beijing and Shanghai aren’t reflective of Chinese youth as a whole, especially when considering geography and tiers.  Top tier youth are vastly different from lower tier youth – in product consumption, lifestyle, desires, and media usage.  Assuming that all Chinese youth are aspirational and wish to live the life of youth in the big cities is incorrect, as is assuming that all Chinese youth wish to emulate a Western lifestyle.
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When marketing to Chinese youth, marketers need to understand tier differences (especially now that many companies are looking past the top tier cities in which they already have a foothold, recognizing the spending potential in lower tier cities).
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Another mistake marketers make is looking at China youth superficially, without understanding the greater truths that shape the way they are and their actions.  We know that only in recent years have Chinese youth really stepped up and are allowing their creative sides to show.  However, do we know why this is and how the past has shaped this change (think: cultural revolution, focus on economic gain, rote memorization taught in school, no encouragement of the arts, etc) and how the Chinese government has vowed to pay more attention to the arts and put more money into this area? Knowing the full picture will lead to better and more impactful strategies and messaging.
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Research Methodology

Much of the research I speak about was done in-house through Starcom China with our research method, Surveillance.  Surveillance melds both qualitative (in-homes, shop-alongs, hang-out sessions, etc.) and quantitative techniques in order to get a very well-rounded and thorough picture of who China’s youth are.  We are also launching the findings of our Yangtze Study soon – this is our deep-dive into the lives of lower tier Chinese consumers – how they live, what they purchase, their media habits, lifestyle choices, mentality, aspirations, etc.

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