DM Into China at 'Tip of the Iceberg'
Credit cards and online shopping are gaining prominence among urban Chinese consumers, creating new opportunities for U.S. businesses.
The second annual survey by carrier UPS of Chinese urban consumers -- often called "Chuppies" -- also found that 52 percent use credit or debit cards for shopping and 40 percent have shopped online.
"China presents tremendous opportunity for U.S. businesses, and not just as a manufacturing base," UPS international spokesman John Flick said. "For direct marketing, we are just at the tip of the iceberg. Businesses today have to look at China as an opportunity rather than as a threat. And with the growing number of Chinese consumers that can afford American goods, if you don't look at China as opportunity, then you will be left behind."
Of those surveyed who have credit cards, 84 percent expect their usage to rise or remain the same in the coming year. Card usage is more prevalent in large cities, especially Beijing, where 47 percent plan to increase their use.
Consumers in large cities also are the most likely to shop online. Comparatively more consumers in Shanghai, Beijing and Guangzhou shop on the Internet than consumers surveyed in other cities.
Even as more Chinese consumers say they shop on the Internet, 73 percent report that they lack access to U.S. products online. Some say this may be because of technical issues. Another reason could be that everything purchased must be paid for cash on delivery.
Urban Chinese online shoppers buy books, music or DVD/videos the most: 45 percent of them buy goods from this category. Other popular categories are consumer electronics and apparel. The proportion of consumers who report buying apparel online jumped from 16 percent in 2005 to 26 percent in 2006.
In 2006, 72 percent of consumers said they surf the Web on their own computer, compared with 59 percent in 2005.
Research International conducted this quantitative study of 1,200 consumers in six cities: Beijing, Shanghai, Guangzhou, Shenyang, Chengdu and Wuhan. Respondents were ages 20-59 with high household income: RMB 3,000 monthly ($375) or above in Beijing, Shanghai and Guangzhou, and RMB 2,000 or above in the other cities. The computer-aided telephone interviews were done June 2 to June 20.
The survey found that product quality is the No. 1 message to convey, as 56 percent of consumers hope to hear messages about quality ingredients or workmanship in ads for U.S. products. They particularly want to hear messages about quality for healthcare products (61 percent) and for fashion/apparel products (65 percent).
For endorsing a product, younger consumers prefer celebrities, with 46 percent of those ages 20-29 saying they like celebrity endorsements whereas 29 percent ages 50-59 want to see celebrities in ads. Older consumers prefer professional endorsements (doctors, dentists, etc.), as one-third of those 50-59 called expert endorsements important.
In ads for U.S. electronics and beauty products, 40 percent and 41 percent, respectively, said they preferred "a person like me" to endorse the product. For healthcare products, 43 percent said they preferred to hear professional endorsements. Celebrity endorsements were most favored for fashion goods.
The UPS survey also found packaging preferences among urban Chinese consumers. The preferred package color for American products is blue, with 37 percent favoring that color followed by white at 19 percent.
Blue also was the color of choice among almost half of respondents for products given as gifts to men. Exactly half said that gifts for women should be in red packaging. Younger, high-income consumers prefer American or Western-style packaging, especially for beauty products, while nearly half of consumers ages 50-59 and lower-income consumers are more likely to prefer Chinese icons on packaging.