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Chinese Marketers May Win the World but Lose at Home

Chinese Marketers May Win the World but Lose at Home

by William J. McEwen

Marketers around the globe continue to take an enormous interest in China, but the nature of that interest has changed lately. China is no longer viewed as simply a huge potential market for foreign-produced goods, but also as an emerging and formidable competitor abroad. China is not just an attractive consumer, it's a powerful producer. Consequently, global marketers are paying close attention to the overseas marketing activities of Chinese manufacturers such as Haier, Changhong, SVA, and Lenovo.

But as these Chinese companies plan for opportunities abroad, just how well are they performing at home? In a highly competitive global marketplace, domestic markets can never be taken for granted -- as any number of Detroit automakers would certainly agree. The new Gallup Poll of China provides insight into the question of how these expansion-oriented Chinese companies are faring on the home front. The results reveal some intriguing anomalies.

Chinese People Prefer Chinese Products

Chinese consumers overwhelmingly say, when shopping for consumer durable or major appliances, they would prefer to buy products made in China, rather than foreign-made goods. Almost half of Chinese adults (47%) agree very strongly that they would prefer to buy products made in their own country. Only a small proportion (11%) are strongly oriented toward buying foreign-made goods.

That would seem to bode well for Chinese manufacturers, especially because many Chinese consumers indicate their intentions to acquire products in categories where leading Chinese manufacturers are already active participants. Nearly a quarter of Chinese intend to purchase a color television, clothes washer, refrigerator, or mobile phone in the next year or two -- and almost one in seven plans to buy a computer.

So it seems that companies such as Haier and Lenovo appear very well positioned, with a seemingly solid foundation at home. They serve large and growing domestic markets, which have expressed their clear preference for homegrown brands. What could be better?

Perceptions of Quality

There's a fly in this marketing ointment, however. Despite the stated preference of Chinese consumers to "buy Chinese," they are simply not convinced that the quality of Chinese-manufactured products is typically very good.

Fewer Chinese consumers rate the quality of manufactured goods produced in China as generally "excellent" or "very good" than rate it as "only fair" or "poor." The numbers are even more dramatically skewed in the large-market "big three" cities (Beijing, Shanghai, and Guangzhou), where so much of the market potential appears to lie. A majority of those in the big cities rate the quality of Chinese goods as only fair or poor.

As a result, Chinese companies face an apparent dilemma: Chinese consumers say they would prefer to buy domestic goods, but many feel that these goods may well be low in quality. The battle for consumer-perceived quality, especially in the big three cities where foreign brands are most familiar (and where so much of the market growth is expected to come), is being waged and won by Japan, Germany, and the United States. While many Chinese are as yet unfamiliar with the goods made in these three countries, consumers in the larger cities believe their quality generally surpasses that provided by domestic Chinese manufacturers.

Bottom Line   

The lesson? As Chinese marketers expand overseas, they must also confront consumers' vitally important perceptions of quality at home. It's entirely possible that Chinese companies could grow in market share overseas while shrinking in share back home. These companies can't afford to ignore the opinions of a huge domestic base of consumers, who stand poised to support Chinese goods but are apparently convinced they sacrifice quality when they buy locally. The longest journey, therefore, may well require that steps first be taken at home.     

Author(s)

William J. McEwen, Ph.D., is the author of Married to the Brand.


Gallup https://news.gallup.com/poll/14641/Chinese-Marketers-May-Win-World-Lose-Home.aspx
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