In almost every city, including Tier-Two or Tier-Three cities, you can find at least one Western-style shopping mall. Where Western-style shopping malls crowd out the neighborhood stores, will local neighborhood stores continue to maintain their competitiveness by catering to the consumption habits of Chinese consumers? Megastores are getting popular in China. Will Chinese consumers preference for fresh meats, seafood, and poultry be replaced by frozen imported food? Or will the Chinese preferences for fresh seafood motivate foreign retailers like Walmart and AEON to change its retailing practices? For example, it is not uncommon to find a wet market selling fresh produce inside a Walmart in China. Public media in China have criticized the rising levels of materialism in China. Are Chinese consumers materialistic? If so, what are the consumption habits of the materialistic consumers? Are materialistic consumers in China similar to or different from materialistic consumers in the West? These are open questions that have in fact many speculations, and these speculations may reflect how businesses sell for Chinese consumers. If these speculations turn out to be wrong, companies who do business in China based on these speculations may suffer severe financial consequences. Thus, it is important to verify our assumptions about Chinese consumer behaviors. In this lesson, I will illustrate how we learn about Chinese consumer behaviors based on the results of scientific study conducted by the Innovation Creativity and Entrepreneurship Laboratory, or ICE Lab, at the Chinese University of Hong Kong. Through this study, we have identified some distinctive characteristics of Chinese consumers. We have also learned how the cultural context and social ecology in China support these consumption habits. Companies doing business in China should be aware of these habits, and the social ecology that sustain these habits. China is undergoing very rapid economic and social changes. By attending to these changes, and the corresponding consumer behaviors, companies doing business in China can predict new consumer trends, and find new business opportunities in China. Take materialism as an example; in lesson one, you learned that conspicuous consumption has increased in a fast rate in China. Many commentators are concerned that the increase in conspicuous consumption is a sign of rising materialism in China. What is the evidence for this assumption? If conspicuous consumption is a sign of rising materialism, how do we explain the rising materialism in China? Some commentators believe that rising materialism in China is a result of the middle class and the fast speed of urbanization. These explanations seem to make sense on the surface. However, when companies try to sell luxury products to the urban middle class by setting up their stores in the middle class neighborhood in big cities, they may be surprised that many of their customers are the new rich from the neighboring rural towns. These new rich customers have become rich overnight by selling their farmland to the industries of property developers. For reasons I will discuss later, these customers has a lot of disposable cash, and they didn't mind spending a lot on luxury products to show off their wealth. In contrast, the urban middle class try to distinguish themselves from the vulgar pattern of conspicuous consumption of the new rich by consuming products that can signal a bohemian lifestyle. For example, they may be dining out in private kitchens instead of spending a fortune on expensive restaurants in six-star hotels. You will learn from this lesson that, through rigorous consumer research, we can identify an important reason for the rising popularity of conspicuous consumption in China. Specifically, the rise of conspicuous consumption and materialism among many Chinese consumers is a result of the lack of relational mobility they experience in the society. At the end of the lesson, you will have learned that many Chinese consumers embrace materialism, and that materialism is strongly associated with conspicuous consumption. More importantly, you will learn that the popularity of materialism is not a symptom of the spread of individualism from capitalist countries from the West to China. Instead, it is linked to the lack of relational mobility, which is a characteristic of the social ecology in Chinese societies. This characteristic fosters materialistic consumption when the Chinese consumers have become richer. That is, materialistic consumption in China is the result of the rapid economic growth and a stable socio-cultural characteristic of the Chinese societies. We will also interview an expert in the area of consumer behaviors. This interview will focus on how values and attitudes affect Chinese consumption behaviors.
