Understanding the Chinese consumer

As emerging markets go, U.S. companies are probably most familiar with China. Large corporations -- and plenty of middle-market ones too -- have been present in the country for some time. The Chinese market, however, is anything but static, and succeeding there hinges on understanding, among other things, changing consumer tastes.

A new report, "Understanding China," from market researcher GfK Group tracks the changing tastes of Chinese consumers from 2002 to the present and highlights some interesting trends. For one, there's a major values shift away from tradition to a focus on power and a striver mentality, coupled with a strong desire for luxury brands. There's also a willingness among Chinese consumers to experiment with foreign brands.

To find out what this means for companies doing business in China, we checked in with GfK's vice general manager in China Michael Mueller. Marketing plans that might work fine in multiple countries, says Mueller, need to be adapted to Chinese culture. For instance, Mueller points to a fast-food chain that's had great success positioning itself in China as a sophisticated place to dine. Determining the right positioning for a product is a lot easier with the right local partner, so choose wisely, he says.

In addition, where you do business has a lot to do with how to market your product. "You won't find as many branded goods in second-tier cities [Harbin, Dalian, Qingdao, Tianjin, Xian, Wuhan, Hangzhou, Ningbo, Nanjing, Chongqing, Kunming, Zhuhai, Shenzhen and Xiamen]," says Mueller. "But when you look at population and improvement in living conditions and salaries, the huge potential is in tier-two cities."

While I had Mueller, who's based in Beijing, on the phone, I had to ask about marketing opportunities and the Olympics. Does Mueller think the protests following the Olympic torch will scare off potential sponsors? "In the end, it's a big event with huge publicity. I don't think [the protests] will change that." - Suzanne Stevens