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Consumer behaviour in emerging markets.

Consumer behaviour in emerging markets

The world’s biggest and most successful brands are knocking on the wrong door if they believe China to be their long-term golden goose, according to the head of a European brand and business-development consultancy.

‘China will have absolutely no qualms about quickly buying in everything it needs to build an infrastructure, society, design and manufacturing knowledge and capability base focused on a handful of its key business sectors and cities,’ said Allan Biggar, of All About Brands plc. ‘Its plan is to enable it to sell even more to the West – and as soon as it has everything it needs, the door will slam and the current river of money will dry up.

‘There is no tradition or culture of foreign trade in China, or looking outside its own borders,’ he continued. ‘It is buying at the moment, and it will buy to put itself in a strong position to sell. But my contacts in the big banks are beginning to say that beyond Beijing there is nothing, and there is little ambition in the Chinese Government to develop infrastructure outside Beijing and a handful of other major cities.’

Without major infrastructure investment, of course, few people outside China’s big urban centres will benefit from quick and efficient broadband connections, so levels of e-commerce will remain low. But Pang et al. (Human Systems Management, Vol 26 No 3, 2007) reveal that lack of trust is another reason why online shopping has yet to take off in China. More than 40% of Chinese with the internet report that they have not used it for shopping because they lack confidence in e-commerce. The phenomenon is concentrated among those on low income, which suggests that middle-class Chinese should be a target group for campaigns to increase online shopping.

Resistance can be expected even among the middle classes, though, if the economic conditions are not right. Kucuk (Journal of Euromarketing, Vol 16 No 4 2007) reveals that consumers in emerging economies are often more sensitive than those in the West to their countries’ general economic conditions, and tend not to make risky shopping decisions during difficult economic times. Their concern shows through even in their basic shopping behaviours. Kucuk advises that investing in store loyalty is one way to overcome this reticence.

Biggar believes that, unlike China, India has massive potential for the big brands and businesses of the West. ‘China thinks growth, India thinks trade,’ he commented. ‘Indians learn languages, they adopt Western ways, they appreciate Western standards and requirements – and while they don’t always get it right they are actually still a child in the grand scheme of trading Western-style. They also have well-established connections with Europe and, more recently, with the Middle East and north America.’

Karnad and Shrivastava (Admap; Nov 2007) find that the average urban worker in India now spends much more time out of the home than five years ago and, as a result, is buying from large shops, chains and department stores. While TV and print continue to be important to most advertisers in India, there is growing emphasis on outdoor advertising, radio, the internet and mobile telephones to cater to this important social change.