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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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GUEST OPINION What do Chinese consumers look for in British brands?

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GUEST OPINION What do Chinese consumers look for in British brands?
GUEST OPINION What do Chinese consumers look for in British brands?
This year’s Black Friday-Cyber Monday-Christmas boom was kicked off in style by Single’s Day in China on 11 November – and shows just how important the Chinese market could be to UK etailers. Here Dan Matthews explores what Chinese consumers want from UK brands

China is the 21st Century’s economic superpower. Years of investment by foreign businesses has made the country rich and in recent years its reputation as the “factory of the world” has seen countless brands source manufactured goods there.

Economists say the country’s super-boom years are over; these were the days in 2006-07 when its economy was growing by up to 15 per cent annually. But it is still moving forward at a spritely 6-7 per cent a year – many times faster than the comparatively sluggish economies of Europe and the US.

The legacy of this fast growth is quick societal change. Farmers have downed tools and moved into the cities where work is plentiful and a giant new middle class has erupted almost overnight. Demand for consumer goods, electronics and disposable items has spiked.

The buying power of this group is eye-watering. According to Jian Goh, co-founder of Quarter8, a business connecting British brands direct with Chinese consumers, ecommerce sales already eclipse those of the UK, the world’s fifth largest economy.

The UK’s digital retail sector is worth £52.25 billion a year. That compares with £443 billion in China. At £65 billion last year, cross-border sales alone outweighed the whole of Britain’s e-retail sector.

Meanwhile, in recent times the country has taken to mcommerce in a big way. About half of all online purchases are made via a mobile device, compared to only a quarter in the US, according to eMarketer. What’s more, smartphone users are expected to number 640 million – roughly 10-times the entire UK population – by 2018.

Tapping into the Chinese zeitgeist

This is great news for British brands hoping to reach out across the world. More good news is that demand for British goods is high in China, thanks in part to a global reputation for quality and the famous British heritage.

But the country is a distant target for UK sellers – so it’s important to know that what drives consumers to buy here is not always the same as over there.

Perhaps the biggest differentiator is the Chinese focus on standards. In the UK, consumers have come to expect a basic level of quality in everything they buy. Food must be fresh, labelled and quality stamped; Cosmetics and pharmaceuticals go through rigorous tests before hitting the market.

The same is broadly true in China but for one key difference: the country’s black market is rampant. Poor quality copies of products have flooded the market and the issue has reached epidemic proportions, such that people can’t be totally sure what they are buying.

The problem is played out every day in markets, on websites and even in high-end superstores. Legitimate shops have in the past unwittingly passed on fakes, duped by shady suppliers. This is detrimental not just to people’s bank balances but also their health, as fake pills, powders and even food have caused havoc.

Chinese consumers with deeper pockets take international shopping trips to pick up goods they know they can trust; not just luxury items but everyday products like baby formula and medicines too.

For British retailers this means proving you are a legitimate business selling genuine products. According to Goh, the most important aspect of establishing Quarter8 in Chinese is proving the brands that feature really are all made in Britain.

“Here, brands are very important. In China they are too, but things like the ingredients and the expiry date come first. The safety element is of much greater concern – reassuring buyers that your product won’t harm them is an important step,” he explains.

“The UK has rigorous standards and the black market problem isn’t the same, so proving an item is made in Britain is a bit like proving it has quality and integrity. We have been careful about the brands that sell through Quarter8. A lot of British companies still buy from China, which would obviously defeat the object of the business.”

Nothing like the present

Another difference is the culture of gifting in China, which is more embedded than it is in the UK. When someone travels abroad they are expected to return with presents for extended family members, work colleagues and close friends, not just for their spouse and children.

Gifting is a big deal in China and it’s important that holidaymakers and business trippers pick up products that evoke the experience their travels. The Chinese are generally eager to experiment with foreign brands, especially famous ones from Europe.

With insider knowledge of customer preferences, the Quarter8 team look for products that naturally tie in to the Chinese gifting culture.

Goh says: “When we look to list products on the platform, first, we look for items are genuine; that is most important. Second, we consider the likely demand from buyers as some will be more appealing than others to this audience.

“We obviously prioritise items in higher demand, usually products that are unique with beautiful quality. These make good gifts. Uniqueness, quality and authenticity are our three watchwords.”

Though the Chinese economy may never revisit the lightning growth of a decade ago, its status as a global economic powerhouse has been cemented. Millions of newly affluent consumers have spare cash to spend – and where better than in British shops?

By understanding what motivates people in this part of the world – the desire for genuineness, quality, luxury and an appreciation of ‘Britishness’ – retailers in the UK will be in a strong position to benefit from the boom happening on the other side of the world.

Quarter8 is currently raising crowdfunding investment on the Seedrs platform.
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