The subprime debacle has rattled retail sales in the U.S., forcing many companies to downgrade sales estimates as consumers shy away from checkout counters. Luxury retailers and credit-card companies in the U.S. have recently reported bearish projections for the coming quarters.
China, however, is a retail market on the rise. In 2007 China posted 17% growth in retail spending. Electronics retailers Guomei and Suning posted record numbers, and both paint positive pictures for the future as Chinese consumers continue to buy LCD TVs from LG Electronics and mobile phones from Nokia (NOK).
Much of this continued growth is fueled by Chinese under the age of 32. My firm, the China Market Research Group (CMR), conducted in-depth interviews with 500 Chinese between the ages of 22 and 32 in 10 cities to gauge whether fears of a global slowdown would influence their shopping habits. The answer was a resounding no. A full 90% of interviewees said they expected to "spend considerably more" in 2008 than they did in 2007, and the vast majority was "very optimistic" about salary potential in the next two years, with the majority expecting salary increases of 10% to 25% in next year.
No More Lazy Localization
As selling to Chinese consumers becomes more important to multinationals' bottom lines, the key to winning in China is to understand the needs and motivations of Chinese youth. Many multinationals find their core target market in China is much younger than in other countries. Companies, therefore, need to rethink the products they introduce to China, the sales channels they use, and the marketing-communication strategies they employ. It is no longer acceptable to take what worked elsewhere and transfer it here. China is too important a market for s ...