Three Golden Rules of Brand-Building in China | Agency News: Viewpoint

The Starbucks at Dongguan Mission Hills Golf Club in China. Credit: Starbucks

Two conflicting factors motivate Chinese consumers: They want to project their status, but they also want to protect their economic and social interests.

This conflict is clear in the rhythms of daily life in China. Passion for luxury brands, over-the-top names of apartment buildings (“The Gathering of All Heroes under Heaven,” for example) and omnipresent VIP cards are expressions of the former; sky-high savings, an acute fear of germs and a fixation with feng shui — the harmonization of design with the environment to minimize risk — are expressions of the latter.

The duality can be perplexing for companies trying to earn Chinese consumers’ loyalty. So how do brands win? By resolving the projection-protection tension through three golden rules.

1. Maximize public consumption. In China, consumers will pay a premium for goods consumed — and admired — in public. Several multinational brands have embraced this insight.

  • Starbucks, which operates over 2,600 outlets in China, has performed a marketing miracle by selling coffee in a land of tea drinkers. The company’s Chinese real estate strategy focuses on Grade A office buildings, while its stores are smartly positioned as gathering sites for professionals. A cup of coffee emblazoned with a Starbucks logo is 30% more expensive than in the U.S. But unbranded sandwiches are half the price.
  • Häagen-Dazs does not operate ice cream parlors in Japan, but there are more than 600 in China, where a cone costs $6. Chinese millennials want to be out in public, seen eating the treats with friends.

2. Externalize the pay-off. This is a country where “early MBA” courses for 5-year-olds are popular. Brands must deliver externalized benefits that show they are a means to an end. Luxury brands, non-essential in the West, are tools of advancement in China. Johnny Walker’s Blue Label holds exclusive “whiskey appreciation summits”…

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