Product safety, social media key in China

06 January 2010

BEIJING: Product safety, e-commerce and social media will be among the key drivers of purchase behaviour for Chinese consumers this year, according to a new study.

The China Market Research Group conducted 5,000 interviews in 15 cities in the world's most populous nation, and found that product safety was the matter of most concern to its panel.

In response, people have started putting pressure on the government to take a highly active role in this area, and are also shopping more regularly at established chains like Wal-Mart.

Brands like DuPont and American Dairy have also grown in popularity, with the latter of these firms emphasising the quality of its manufacturing processes in its marketing communications.

Many shoppers also stated that they would be willing to pay a 20% premium for goods demonstrating impressive credentials in this field.

Another factor that is expected to be of heightened importance in 2010 will be the increased use of the internet and mobile phones as commerce tools.

From January to September last year, the 380 million web users in the rapidly-developing economy spent $25 billion (€17.3bn; £15.6bn) via this medium, double the total in the same period in 2008.

Reasons for this substantial uptick included the fact that credit cards are now much more widely available, with 180 million in use at present, compared with just 13.5 million in 2005.

Safe payment systems, like Alipay, operated by Alibaba, have also contributed, while many retailers are tapping into this channel as an alternative to the more expensive route of building store networks.

Lancôme, owned by L'Oréal, is one brand that has profited from this approach, having sent products ordered in this way to a large number of cities where it is not available in bricks and mortar outlets.

Moreover, an online effort to mark the relaunch of its Hydra Zen moisturiser resulted in 1 million netizens registering their details with the company.

Finally, marketers should turn their attention to social media, where portals like Tencent and QQ are currently among the most widely-used sites.

According to the China Market Research Group, most multinational firms only direct around 3% of their budgets to digital platforms.

Shaun Rein, managing director of the company, said "brand managers need to push their media buyers to embrace digital marketing more strongly."

"They also need to work with marketing agencies that have strong in-house digital capabilities."

Data sourced from Forbes; additional content by Warc staff