GUEST COMMENT Shopping culture in Thailand, China and Malaysia: how to sell in the Far East

by Paul Bolton

Internationalisation is a big growth area for retailers. Recent research IVIS Group carried out found that almost a third (32%) of the top 50 UK retailers across five sectors are trading overseas in one or more countries, and a further 34% ship to international locations. Although offering delivery outside of the UK is a way to directly compete with local companies without having a local presence, individual shopping culture should be at the heart of a move into any new territory.


Many UK high street retailers – Marks and Spencer, Debenhams, Mothercare, Topshop, Tesco and Dorothy Perkins to name a few – have been focusing heavily on China, Malaysia and Thailand. But just how do people shop in the Far East, and what do retailers need to know to set up successful multichannel operations?

How people shop

First off, Thailand. The social element of shopping is significant here; doing things in a group with family or friends is preferred. Other people’s opinions as part of the shopping experience are very important. Trips to malls become a day out, an experience. As there’s a big cash culture in Thailand, trust is important so that people have the confidence to shop online, especially if they are using credit cards. But they also need to have trust in a brand, the way retailers sell, the service they deliver and the quality of goods.

In Malaysia, people are more price-sensitive. There is also a culture of differentiation – consumers want the latest overseas brands and like to customise and personalise. They will often save up and go to an overseas retailer with a physical presence in the country or order online so they can have something a little bit different to everyone else. This runs across all sectors of retail from fashion to cars, household goods to electronics.

Social interaction is important, but it isn’t physical, or as dominant in the shopping experience as it is in Thailand. Malaysian consumers spend a lot of time socialising online. They are big users of social networks on mobile phones while they’re out. The cross-channel experience is pervasive – consumers regularly browse and check prices while shopping instore. Time spent per person on Facebook is one of the highest in the world, across a broad section of people. And while there is still some concern about credit card fraud online, if a reputable retailer is offering a compelling deal – something many consumers really want – they will readily hand over payment details.

The in-store experience is also a big part of shopping culture in Malaysia. People spend a lot of time in shopping centres at weekends – big air conditioned malls which house entertainment and retail units.

Looking at China, shopping is even more heavily driven by price, yet at the same time there is huge demand for anything European and luxury. The online shopping market is growing rapidly here. There doesn’t seem to be the same level of concern over confidence or being risk-averse, but the majority of the online spend is focused on more metropolitan areas like Beijing or Shanghai. There are huge numbers of consumers in metropolitan areas – 18 million people in Beijing alone – which means online sales will continue to grow for some time. When you move outside of these areas, online shopping becomes something people are less likely to do, as many people don’t have a credit card and a large proportion of society in China still operates a cash model.

Multichannel approach

So what does this mean for retailers? The approach to online and multichannel in each country needs to be both creative and bespoke to achieve success.

Although physical stores are successful in Malaysia, there is a clear case for multichannel as the speed and convenience of online shopping negates the need to travel often long distances to get to malls, which themselves do not necessarily provide a fulfilling shopping experience. The breadth of range a retailer can offer online combined with more targeted promotions will allow them to increase the loyalty of their existing customer base.

To a greater level than most countries, the immediacy of being able to have the goods they’ve bought is important to Malaysians, so retailers need to offer same day, localised delivery models.

There is an element of fun in the shopping experience in both Thailand and Malaysia. In physical stores, there is usually something happening to engage consumers, such as a product demo or daily competition. It’s a very interactive experience and the same thing can be replicated online. Retailers can create a persona on their websites, for example allowing games to be played with the opportunity to win products or vouchers that day. This retains engagement with the customer and gives them a seamless multichannel shopping experience.

The social aspect of shopping lends itself to online very well in two main ways. Word of mouth in the multichannel world becomes ratings and reviews and opinions from other people. A lot of retailers are integrating Facebook into their websites: many in the Far East have a first page option to log-in via Facebook before sending consumers to their home page. A lot of the comments, feedback and sharing is done through social networks; it’s a huge thing.

Because of the risk-averse approach in some countries when it comes to ecommerce, there are a number of concerns that retailers need to address. Financial fraud is one, and the fact that shoppers are going to get what they see is another. In China, the demand for anything European and luxury encourages a counterfeiting market, and there is a concern among consumers that merchandise may not be real. However, there are things retailers can do to reinforce their credentials. Using third party accreditation and certification for goods and payment processing, such as those offered by Verisign, will be critical.

The market in China has an expectation of good service and this can be seen in the advanced approach to customer service centres taken by many domestic retailers. This is also evident in the approach to delivery where the ‘local’ courier service on a scooter will deliver most items within hours; something only offered more recently in the UK. To get around the fear of financial fraud, some Chinese companies take cash on delivery, or bring a Chip and PIN machine to consumers’ doors. This trend is growing quite quickly and China has been quick to innovate and work around multichannel issues.

Historically, consumers in the Far East are also used to having the option to negotiate when buying something. Haggling is a difficult thing to translate online, but some retailers in the UK have implemented solutions to support this that work based on a set of rules driven by customer data, stock information and margin calculations.

Who’s doing what

Quite a few UK high street retailers are making a push in the Far East, but with physical stores – there is not much multichannel activity at present, although many are looking to go online.

So are international retailers currently respecting individual shopping culture or trying to impose a western way of doing things?

Each country is a little bit different. Malaysians love anything British, so there’s an element of ‘being more British is good’. In Thailand, that approach wouldn’t work. Thai shoppers like things to be aligned with the way that they work; there are signs in British shops in Thai. However they do like to buy overseas goods, so there’s a need to strike a balance.

In China, it’s very interesting. One of the most famous failures in China was B&Q – because no one understood what DIY was! What people actually needed was to be shown how to do things. Support and guidance, not just products. Now B&Q has remodelled its business catering for the local market, it’s more successful.

In a market such as China retailers need to align themselves with the way consumers behave. And being such a huge country, each region in China is different – retailers must be sensitive to who they’re selling to. For example, Shanghai has a very young population.

Some retailers have been smart and partnered with established local retailers in each country. Finding a company that has experience in the market is not necessarily the right route for every retailer, but it’s often a clever one to increase chances of success.

Setting up a retail operation in the Far East is about customer centricity. It really is about understanding and listening to the customer, and being prepared to adapt to the local market. It’s great to have a common policy and systems and try to save money by using those around the world. But adapting to the behaviour of customers in each market cannot be underestimated in terms of the way a UK retailer approaches its overseas business.

Paul Bolton is director of product and strategy, IVIS Group