How to Tap China’s Super Spending Women
As fears of a double dip recession hit the world, the one consumer segment that has defied analysts and kept on spending at pre-recession levels are Chinese women. Overall luxury goods sales in China have risen 20 percent annually since Lehman’s collapse to reach $13 billion last year and that growth has been driven in large part by women under the age of 35.
My firm recently surveyed 3,000 women consumers in 12 cities in China, and 85 percent of them said they expected to spend more in the next six months than in the last six. Despite soaring food inflation, they remain optimistic about their own careers and ability of the government to navigate the country through crisis.
Women have become a major driving force behind China's economic and political growth - yet they remain little understood by western brand managers as an influence on household budgets. Not only are they exerting influence on decision-making in their own homes; they're also making purchase decisions for their parents and pushing for greater legal protection for women in the workplace.
Many Americans harbor images of Chinese women shaped by movies like The Last Emperor or the Joy Luck Club, where they've tended to be portrayed as concubines with bound feet and treated like chattel by sex-crazed men. Reality thankfully is different.
One of the Chinese government’s great accomplishments has been promoting gender equality. In the 1950s women accounted for only 20 percent of household income. That rose to 35 percent during the 1990s and has now reached parity. There are now more girls than boys getting a university education. Forbes reported last year half of the world’s 14 self-made billionaire women are Chinese.
Millions of girls have been raised as little princesses in one-child families that have pinned their hopes on them since the late 1970s. They are expected to make as much as men to take care of retired parents.
While much has been made of the statistic that there are 117 Chinese males for every 100 females (because of infanticide), it's also true the situation in the rural areas is quickly evolving, as the spread of urbanization means less need for hands for farming. In rural families, women are starting to out earn men. Women often become breadwinners when families move to cities in search of work.
My firm recently interviewed peasants who had moved to Beijing and Shanghai. Nearly 80 percent of the women reported earning more than husbands. Common jobs for uneducated women – maids, foot masseuse – often pay $300-$400 a month while typically male jobs like construction pay falls in the $150 to $200 realm. Shifting earning power is altering family dynamics.
Just three years ago, most internal migrants left children at home to be raised by grandparents. Now, 10 percent of the respondents told us that the men had already returned home to be near children and many would consider doing so because urban salaries were not much higher than those at home.
With urbanization rates hitting 50 percent this year for the first time, up from 30 percent a decade ago, and as China’s manufacturing shifts away from labor intensive industries to automated, more women will become empowered.
Understanding how rising Chinese women think and what they want will be critical for brand managers selling to them. Women’s biggest concern our research suggests is product safety.
Women care not just about brand but also sales channel. As one woman from Beijing told us, “I buy milk from three brands on rotating basis in case one brand is tainted. I also prefer to shop at Wal-Mart because I trust them more than smaller stores.”
Fear of buying poor quality or fake products is not exclusive to food products. Many women told us they prefer buying Apple products in Apple Stores because they fear buying refurbished iPhones sold as new in local electronics markets. They prefer to buy Estee Lauder cosmetics and Kraft Oreos in trusted shopping outlets even if prices are higher than cheaper stores they don’t trust.
Women are also turning to domestic brands because they are perceived premium. In the yoghurt sector for instance women told us they would pay more for products from local producer Mengniu than Danone because it’s perceived quality level.
Selling to Chinese women is critical for brands trying to offset slowing growth in developed markets. To sell to them, you need to develop their right marketing and sales channel that builds trust with them. As incomes rise, the trend is towards buying more premium, safe products.
Shaun Rein is the founder and managing director of the China Market Research Group (www.cmrconsulting.com.cn) a strategic market intelligence firm, and is based in Shanghai. Follow him on Twitter at @shaunrein.