Welcome!

News Feed Item

Rapid Rise in Online Shopping Behavior in China Reshapes Company Strategies

AmCham Shanghai and Booz & Company survey finds Chinese consumers increasingly seek higher quality products and shop online, two key trends driving company strategies

SHANGHAI, Aug. 21, 2013 /PRNewswire/ -- Chinese consumers are increasingly opting for quality goods at higher prices and adopting on-line shopping and social media to gather product information - two key trends driving company strategy in China. This is according to a report jointly released today by The American Chamber of Commerce in Shanghai (AmCham Shanghai) and Booz & Company.

The 2013 China Consumer Market Strategies, the third annual report based on a survey of nearly 90 Chinese and multinational companies (MNCs), measured how companies rank 7 major trends by importance and the approaches they take to respond to them. This year's survey also included a section aimed at evaluating companies' digital capabilities.

For the 2nd year, companies ranked the evolution of consumers - from price-driven purchasers to value-driven consumers - as the top trend driving their China market strategy. Chinese consumers, particularly in Tier-1 and Tier-2 cities are seeking greater reliability, consistency and integrity in consumer products.

With the rise of e-commerce and social media, the 2nd most important trend identified in the report, both multinational and Chinese companies reported that they recognize the importance of developing digital marketing and sales channels. However, the majority of companies declared that they are not yet adequately prepared to convert growing online interactions to a sales advantage.

In contrast, the report noted that leaders in this area demonstrate an ability to make strategic use of data derived from online viewing and purchasing habits, and to align digital activities with their corporate strategies and across organizational functions.

Robert Theleen, Chair of AmCham Shanghai said, "The report highlights that the use of mobile devices, online shopping and social media is a disruptive business trend. Companies must develop targeted strategies and China-specific capabilities that enable them to respond and beat out competition."

"China's rising middle class have high expectations of consumer products and also a need for product verification. With the rise of e-commerce and social media, online marketing channels and Internet forums offer a platform for consumers to gather the intelligence they need to make informed purchasing decisions," Theleen continued.

"In China, consumers leapfrog their counterparts in other markets by adopting technologies to gain bargaining power. They are sophisticated in using social networking platforms to form alliances with like-minded consumers, which would be hardly possible in developed markets. Companies have to stay vigilant to the power of the online activities, with opportunities for online engagement to enhance or harm a brand."

THE TOP TREND: VALUE AS A DIFFERENTIATOR

For the second year, both MNCs (69%) and Chinese companies (55%) chose "value as a differentiator" as the most important consumer trend in Chi­na today. In Tier-1 and Tier-2 cities, an increasing number of consum­ers are seeking greater reliability, consistency and integrity in the products they purchase. This represents a significant evolution from what has been a price-driven market.

Adam Xu, Director for and Consumer & Retail Practice at Booz & Company, said, "As China's consumer market matures, Chinese consumers in developed cities and regions continue to trade up in their purchasing choices. This presents companies with opportunities to build products and brands that could deliver great value. However, to capitalize on this trend, companies will need to strengthen their capabilities in innovation and branding."

A significant majority of MNCs and Chinese companies (70%) expect this trend to increase brand loyalty among consumers focused on value and 85% expect to see an increase in consumers' willingness to pay higher prices for quality products and services.

THE RISE OF E-COMMERCE AND SOCIAL MEDIA

The rise of e-commerce and increasing integration of social media into the day-to-day lives of consumers was ranked as the second key trend by Chinese companies (58%) and MNCs (55%).

Adam Xu said, "Although consumer companies in China have high levels of confidence due to their long experience in the market and success relative to their peers, they still face several challenges adapting to the rising digitization trend. In contrast to findings from our global digital study, the key challenges for companies in the China market are measurement of success, organizational alignment and adapting global capabilities for China."

Companies admit that they have yet to make operational improvements keyed to the Internet and take actions to integrate the digital dimension into their branding and product development.

While a large majority of companies rank themselves as digital novices, leaders in this area demonstrate an ability to make strategic use of data and align digital activities to their corporate strategies. Leaders also reported two capabilities as critically important: innovation and the omni-channel brand experience.

The success of China's homegrown smartphone maker Xiaomi Technology is as a good example of a company capable of integrating intelligence gleaned online into its business process. For product development, it solicits suggestions for new features and improvements from an online community of brand followers. Most of its products are also sold online through preorders, giving it manufacturing and marketing edges.

"We believe AmCham Shanghai has embraced the go-digital trend in launching our SME Virtual Center, the first online platform in China serving SMEs in the U.S. The online resources we provide will empower American SMEs to tap into China's growing consumer market," said Robert Theleen.

The 2013 China Consumer Market Strategies report identified three key challenges in digitization faced by consumer-facing companies in China, both Chinese companies and MNCs:

  • Measurement. Compared with the global benchmark, consumer companies in China find themselves equipped with limited ability to measure the results of complex online activities.
  • Execution of digital strategy. Companies appear to encounter difficulty in making digital initiatives a priority across their organizations.
  • For MNCs, leveraging global capabilities of an organization to address China's unique online environment is also a challenge.

About the 2013 China Consumer Market Strategies

The 2013 "Business Response to Trends in China's Consumer Market" survey was conducted by The American Chamber of Commerce in Shanghai in cooperation with Booz & Company, a global management-consulting firm that works with many of the world's top businesses, governments and other institutions. The survey seeks input from executives from consumer-facing companies operating in China on key market trends and their responses. This is the third annual report by AmCham Shanghai and Booz & Company.

About AmCham Shanghai
The American Chamber of Commerce in Shanghai, known as the "Voice of American Business" in China, is the largest and fastest growing American Chamber in the Asia-Pacific region. Founded in 1915, AmCham Shanghai was the third American Chamber established outside the United States.

As a non-profit, non-partisan business organization, AmCham Shanghai is committed to the principles of free trade, open markets, private enterprise and the unrestricted flow of information.

Visit www.amcham-shanghai.org for more information about AmCham Shanghai.

About Booz and Company

Booz & Company is a leading global management consulting firm focused on serving and shaping the senior agenda of the world's leading institutions. Our founder, Edwin Booz, launched the profession when he established the first management consulting firm in Chicago in 1914. Today, as we approach our 100th anniversary, we operate globally with more than 3,000 people in 57 offices around the world.

We believe passionately that essential advantage lies within and that a few differentiating capabilities drive any organization's identity and success. We work with our clients to discover and build those capabilities that give them the right to win in their chosen markets.

We are a firm of practical strategists known for our functional expertise, industry foresight, and "sleeves rolled up" approach to working with our clients.

To learn more about Booz & Company or to access our thought leadership, visit booz.com. Our award-winning management magazine, strategy+business, is available at strategy-business.com.

SOURCE AmCham Shanghai

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
The many IoT deployments around the world are busy integrating smart devices and sensors into their enterprise IT infrastructures. Yet all of this technology – and there are an amazing number of choices – is of no use without the software to gather, communicate, and analyze the new data flows. Without software, there is no IT. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, Dave McCarthy, Director of Products at Bsquare Corporation; Alan Williamson, Principal ...
DevOps and microservices are permeating software engineering teams broadly, whether these teams are in pure software shops but happen to run a business, such Uber and Airbnb, or in companies that rely heavily on software to run more traditional business, such as financial firms or high-end manufacturers. Microservices and DevOps have created software development and therefore business speed and agility benefits, but they have also created problems; specifically, they have created software securi...
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
"There is a huge interest in Kubernetes. People are now starting to use Kubernetes and implement it," stated Sebastian Scheele, co-founder of Loodse, in this SYS-CON.tv interview at DevOps at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, John Jelinek IV, a web developer at Linux Academy, will discuss why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
Providing secure, mobile access to sensitive data sets is a critical element in realizing the full potential of cloud computing. However, large data caches remain inaccessible to edge devices for reasons of security, size, format or limited viewing capabilities. Medical imaging, computer aided design and seismic interpretation are just a few examples of industries facing this challenge. Rather than fighting for incremental gains by pulling these datasets to edge devices, we need to embrace the i...
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
In his session at DevOps Summit, Tapabrata Pal, Director of Enterprise Architecture at Capital One, will tell a story about how Capital One has embraced Agile and DevOps Security practices across the Enterprise – driven by Enterprise Architecture; bringing in Development, Operations and Information Security organizations together. Capital Ones DevOpsSec practice is based upon three "pillars" – Shift-Left, Automate Everything, Dashboard Everything. Within about three years, from 100% waterfall, C...
Fifty billion connected devices and still no winning protocols standards. HTTP, WebSockets, MQTT, and CoAP seem to be leading in the IoT protocol race at the moment but many more protocols are getting introduced on a regular basis. Each protocol has its pros and cons depending on the nature of the communications. Does there really need to be only one protocol to rule them all? Of course not. In his session at @ThingsExpo, Chris Matthieu, co-founder and CTO of Octoblu, walked through how Octob...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.
"We're bringing out a new application monitoring system to the DevOps space. It manages large enterprise applications that are distributed throughout a node in many enterprises and we manage them as one collective," explained Kevin Barnes, President of eCube Systems, in this SYS-CON.tv interview at DevOps at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.