Generation Gaps towards Consumer Behaviours

Whenever one is trying to talk about the consuming ability of Chinese people, the capability of Chinese expenditure should be familiarized by most of the world. If you try to go to Paris, Milan and step into any luxurious shops, it is of high chance that you can see Chinese people around you.

Due to the immature market environment, the Chinese consumer behaviors are sometimes being criticized as it shows a certain special characteristics. However, the side that we always see about this group of consumers does not represent the whole population of Chinese. Indeed, the traditional Chinese culture has formed its unique consumer characteristics, and the distinctions between different generations show big differences between these gaps.

When it comes to consumer behavior, Maslow’s hierarchy of needs theory is always being mentioned. These hierarchies of five different levels of demand are the minimum to meet their basic physiological needs, followed by the security needs, social needs, esteem needs, and lastly self-realization.

Reflected in this hierarchy of needs theory is a universal condition, but in the actual market behavior, especially in the Chinese market, the environment is quite complex, and different phenomena under this model varies between generations. The consuming behaviors, life styles and habits between different generations show an obvious distinction.

Chinese towards expenditure are usually divided into four generations and distinct by the general level of economic development during their growth stage, which shape their primary characteristic.

  • 1st : Born on or before 1945, which have come along with the war
  • 2nd : Born between 1946 to 1965, which is the generation of baby bomb
  • 3rd : Born between 1966 to 1980, the Generation X
  • 4th : Born after 1981, includes the Post-80s and Post-90s

The 4th generation always represents the most developed consumer groups, while the 1st generation is often on behalf of the least developed consumers. These different groups of consumers are grown in different environment in specific period of times. The economic status and the development of consumer market surrounding shapes different specific behaviors of them.

The 1st generation grows in more or less a poor environment as they have experienced war in their lifetime. Basic physiological need is the core value of their consuming behavior. They tends to have a strong family values and the value of money expenditure tends to be more pence-pinching. They will usually compare prices before making a purchase and the preference goes to the cheaper product. Only necessities and essential products would be on their list of purchase. Luxurious products would not attract this group of consumers.

The 2nd generation is the generation of the baby bombers. The consumer market in China expands a lot in the growth stage of this group of people, in order to suit the dramatically expanding market of consumption. Upon the stable growth of post-war economy, there are more choices and varieties of products available in the market. Thus, this group of people tends to pay more attention to product safety and reliability from the varieties. They will conduct careful planning and research before buying any products.

The 3rd generation is what we called “Generation X”. This generation follows the powerful baby bomber generation. “X” described the lack of identity that members of Generation X felt — they didn’t know where they belonged, but knew for sure that they weren’t a part of the overbearing generation of Baby Boomers. With the shocking growth of the economic status during Baby bombers stage, the parents of Generation X would be able to provide better environment for their child. The identification problem together with the better economy has created the starts of needs for self-esteem and self-actualization. The concept of luxury products starts to grow in this stage, as different products seems to be able to provide this group of people different identity. Fashion trends and brand-name goods start to be an important concern of this group of peoples’ buying behavior.

The 4th generation is called Post-80s and Post-90s in China. Post-80s and 90s are colloquial terms which refer to the generation whose members were born after 1980 in Mainland China, after the introduction of the One-child policy. This generation currently aged below 32, making up a major portion of China’s young adult and teenager demography. In this generation, the One-Child-Policy started to launch and the effects of this policy is significant. With the fastest-ever growing of Chinese economy and the restriction of child in family, they are sometimes being referred as “Little Emperors” at home. In many Chinese families the 4-2-1 format, 4 grandparents, 2 parents, one child, takes place, resulting with a child which receives love and attention and has no siblings to compete with. The spending habits and buying behavior of this generation is very significant as their parents tends to encourage them on spending if this makes them feel happier. The concept of luxurious products is very important to this generation and they are willing to spend a lot on buying expensive products to treat themselves.

I have conducted a skype interview towards different family members of mine who live in China, including my grandma, uncle, auntie and their daughter, my cousin, to understand their consuming behavior. To make the interview easier, I have picked up an example of product: Mobile Phone, as they all have one and it’s easier to analyses their behavior.

Grandma /71 years old / Retired person/ Nokia 8310

Uncle /48 years old/ Logistic Manager/ Blackberry 8520

Auntie /39 years old/ Housewife/ iPhone 3GS

Cousin/16 years old/ Student/ iPhone 4S

Question 1: Why do you think you will need a mobile phone?

Grandma: Indeed I do not need a mobile phone, but my son is not living with me currently. They buy me a phone so that they can find me anytime even I am not at home.

Uncle: I need a mobile phone to contact my family as well as use this in working purposes.

Auntie: Obviously everyone needs a mobile phone in this generation. I need to contact my friends and family. There’s no reason for not having a mobile phone for everyone live in town in China now.

Cousin: I need the phone to contact my friends and play games. I also need it for listening music and watch movies.

Question 2: Why did you choose your current phone?

Grandma: My son wants me to have a phone but I really don’t need one. So I just take his old phone to use.

Uncle: Blackberry is good for organizing my stuffs at work. It facilitates my working process. It is very useful.

Auntie: iPhone is very trendy and popular now. The shape and the functions of it are perfect. I feel good for using iPhone that it gives me a luxurious feeling. But my phone is out of fashion now, I am going to ask your uncle to change a new iPhone4S for me soon.

Cousin: This is nonsense of asking why people use iPhone! Everyone knows that iPhone is the best. You are going to use iPhone to do everything. The best thing is that people jealous when you are holding it!

Question 3: How do you find the price of your phone?

Grandma: I don’t know the price of it, but I am sure that it must be high. My son needs to get a new phone for work so give this old one to me. However, it can still function well and I think it’s kind of waste to give it to me. I try to give it to my granddaughter but she refused to use this.

Uncle: I think it is reasonable. The price matches the functions and it eases my workload in certain extents.

Auntie: I think the price is high but It is still reasonable. The price is a bit high as compare to other phones. But as long as it is trendy people are willing to give money to them.

Cousin: The price is not expensive at all. This gives every functions that you can use and it worth more that it cost.

Question 4: Will you get a new mobile phone in the coming period?

Grandma: No. I am happy with this one.

Uncle: Not in this period until it’s not functioning. This one matches all my need of a mobile phone.

Auntie: Yes. I want to get an iPhone 4S. But maybe my daughter is going to get a new phone soon. So I may get hers if she is getting a new one.

Cousin: Probably. I heard that the new iPhone 5 is launching soon and I want to get that one. It would be the trendiest and people would envy about it. I think mobile phone should always be changing due to current trends.

I hope the results would give you more clues on the difference between generations in consumer behaviors. These gaps in a single family actually represent majority of these groups in China. And I believe this is worth to understand.

One Child Policy in China- Past, Present and Future

“Even if China’s population multiplies many times, she is fully capable of finding a solution; the solution is production. Of all things in the world, people are the most precious.”

Mao Zedong, Chairman of the Communist Party of China, made this statement in 1949 soon after the People’s Republic of China was formed. During this time, China experienced a massive increase in population, which at the time was considered a positive direction for China to go in. The mentality of people during this time was that population growth meant economic growth. After centuries of generations suffering from political unrest and epidemics, high population rates were not considered damaging to the Chinese people. This generation wanted to create new lives in a positive time in Chinese history.

It wasn’t until 1955 that the government introduced a birth control campaign that supported abortion in an effort to control the population growth. After a series of natural disasters and poor government planning a reported 20-30 million people in China starved to death between 1958 and 1961. The need to regulate the population started to become a serious issue.

It was in 1978 that Chinese leader Deng Xiaoping established the one child policy that limited the number of children people could have to only one. If a family did not comply with this law and produced a second child, there would be substantial fines. At a 2007 press conferences with Chinese officials, Zhang Weiqing was eager to exemplify the success of the one child policy, “Because China has worked hard over the last 30 years, we have 400 million fewer people.” This policy has created an enormous debate on whether it is hindering the basic human rights of Chinese citizens. Zhang Hui, mother of one little girl, believes that one child is enough and she would want one no matter the government regulations and fines. “I’m too busy at work to have any more,” stated Beijing native Zhao Hui. She also went on to say she is not alone in thinking this way. Many of her friends feel the same. A 2008 Pew Research poll three-in-four Chinese people (76%) approve of the policy. Professor Wang Feng, of the University of California, Irvine, confessed that because of the one child policy the Chinese citizen’s attitudes have evolved since the policy was instated in 1978.  “A lot of people simply don’t want that many children. People have accepted the policy,” said Wang. Over the years, the Chinese people have adapted to the childbearing regulations. For past generations, when it was typical to have many children in family, this policy would have seemed unrealistic.

For many in China there has been an acceptance of the one child policy but in some cases people are against it. Mother of two, Liu Shuling, escaped the traumas of a forced abortion when she decided to pay fines, amounting to four times her annual income, in order to have a second child. Liu Shuling and her husband were pleased to have a second son even if it was at the risk of loosing all financial stability. Liu Shuling’s husband admitted in an interview that a son was really what they wanted in order to help them when they reached an older age. Liu Shuling added, “To have a girl doesn’t work.”

Liu Shuling

Because of the one child policy, sex discrimination has become a huge repercussion. Most people prefer sons to daughters and will go to drastic lengths to have their one and only child be a boy. Abortion, neglect, abandonment, and even infanticide have become consequence of the one child policy. Everyday in China, 20,000 babies are born, but for every 100 girls there are 120 boys. The future generation of China will have to deal with the vast number of single men unable to find brides. There is also a fear that with such a high number of single men in China’s future society, there will a drastic increase in crime and violence. Jo Ming, a school principal with a belief that there needs to be a cultural balance between men and women, states in reference to the one child policy, “Once born, we are all equal, and we are all human beings. We need to respect each other. I think, even though some older people don’t agree, it should be eliminated.” The mentality that females are not as preferable as males is not a new attitude in China but only one that has worsened with the one child policy.

The one child policy was created to regulate the population and avoid poverty; however, there are still 600 million people living in China who earn less then $2 a day. Multiple generations will feel the effects of the policy. Because of the one child regulations, generational dynamics within a family have altered. In past generations, the parents were able to rely on their children in old age. For the present and future, a single child must take care of his or her parents and four grandparents. The one child policy has effected generations differently but all people in China are interconnected. A solution made during one generation seems to inevitably make way for an entirely new problem for the next generation. The one child policy was meant be a temporary solution and only last a generation. In 2010, after 30 years of the policy being enacted, the government shows no sign of stopping the regulations.

Because it’s cheap!

I am currently studying jewellery design, but I will not be writing about beaded necklaces that are made for Mardi Gras. Actually, we do not celebrate it in Europe in the same way that it is celebrated in the United States. I am mostly going to express mine and others opinions about daily life and how we deal with jewellery and clothes shops in Dundee, the UK, France, and Europe.

In order to find the opinions of other people, I sent out a questionnaire to teenagers, workmen, students, unemployed, and retired individuals. I tried to ask people from different social classes to find if money made a difference. The questions I asked were simple and were based on questions that I was curious to find the answers to. After the answers I received, I also came up with a few more questions to ask.

The first question I asked was, “When I say ‘Made in China’, what does that mean to you?” The replies I received were very similar, ranging from “huge factories, poor people working, children workers, rapidity, profitability, cheap goods, bad quality”.  Almost everyone thought the same thing, more on a negative side. The question is, “do people continue to buy Chinese items even if they criticize it?” I found that people do still continue to buy items despite what they know.

Even as a jeweller, I admit that I buy cheap jewels that are made in China (Claire’s, Topshop, New Look, Primark). These jewels are the kind that are easily breakable, lost, cheap, and are not important.  I always check the labels of things I buy out of curiosity, including clothes and jewellery. Honestly, I know where and how the stuff I buy are made when it says “Made in China”, but out of habit I still continue to buy it. It seems wrong, especially when I am aware of the bad conditions, pollution, and other factors. Why don’t I change? It is probably because it’s a habit. I’m still a student so I always try to find the cheapest deal when I buy clothes and jewellery. Many people I interviewed do the same. Even though we are aware of what is happening, we live too far from the reality of the other side of the world and are more concerned about the money in our purse.

I’ve asked my friends and myself the reasons as to why we continue to buy cheap things all the time, especially when we don’t need it. Why do we not keep our money in order to buy something of better quality, made in Europe in good working conditions, but more expensive? The response that came up was quantity. Our society is a consumer society. The fashion society will tell you what to wear and say that what you are currently purchasing will be outdated in a few months! We do not want the expensive brand made by a fashion designer. Instead we prefer similar clothing just for the attitude and look. Most people don’t have the money to buy designer brands, unless they are from the upper class! You can just ignore that and try to buy “ethical” clothes and jewellery that was made in better working conditions or go to second hand shops. I try to do that sometimes, but I find that things made in Europe are too expensive to buy all the time or items in second hand shops are not “fashionable”.  I received similar responses from my panel. Some people are not interested in buying second hand clothes, but more to try less but Asian goods.

I’ve asked some people the reasons why they want to stop buying jewellery and good “made in China” and they reply, “ because Made in China items are destroying western jobs, factories, and the economy.” When I ask them about the working conditions, people are aware of how the products are made and feel guilty, but most of them admit that this is not the first thought that came to mind.

A few friends have argued that products “Made in China” are everywhere, so it’s kind of hard to boycott it. We can’t really do that because China has such a large export industry worldwide and it’s probably not a wise thing to do either. Europe is in a huge crisis and people are very aware of their money and how much things cost. We may tend to blame China, but actually they are just making what we want and ask for: cheap, consumable, but a detriment in quality and working conditions.

We tend to blame China for many reasons, but goods produced from other Asian countries like India and Bangladesh, South America and Turkey are all made in poor working conditions. The quality for products from these countries is similar to Chinese goods and pollution from clothing factories is quite harmful. A large number of jeans are made in Turkey and sadly workers in textile factories have serious health injuries. The public tends to turn a blind eye towards these issues. Why do we only really focus on what happens in China? I asked this question to my panel and gave them information about jean factories in Turkey as a comparison. Some people came up with interesting responses. They said that China is one of the most powerful countries in the world, western people and westerns factories are possibly afraid of that. They try to make China the black sheep because they were able to increase their economy so quickly. Chinese made goods quickly and at an affordable price in large quantity, due to the large numbers of workers they have! Westerns try to use the guilt factor with consumers in order to keep their economy alive.

Home Made Produce or Value for money imports?

When buying products, especially online, a large percentage of the British public are concerned about the ethics and morality of the product if it is manufactured in a foreign country.

Foreign imports are a regular sight, be it in a popular brand store like Topshop, or whether it is online. But does the public actually consider where the product was made? Considering Topshop, the company does not state on website the origin of the product, but says is displays it on ‘most’ items of clothing aside some for which it is not ‘relevant’. Asos is another brand, which does sell items imported from China, but does so under strict guidelines that include;

  • Compliance with local laws
  • Employment is freely chosen
  • Freedom of Association and the right to collective bargaining are respected
  • Working conditions are safe and hygienic
  • Child labour shall not be used
  • Living wages are paid
  • Working hours are not excessive
  • No discrimination is practised
  • Regular employment is provided
  • No harsh or inhumane treatment is allowed
  • Environmental protection
  • Communication and supervision

But does this all matter? In a students case, the answer of course is no. Value for money rises above all other criteria, as agreed with by an anonymous interviewee who said, “I work and work and work, but all money goes to numerous sources, such as bills and rent. That leaves little enough money for fashion without having to fork out over the odds for British home made products.” This is a resounding factor in the relevance of where our products come from. The following question was proposed on my personnel blog;

The results, although only a small scale, show a large swing towards the opinion that the public would like to see where products originate from because they feel anxious about certain destinations.  The rest of the results are fairly spread. Two students further commented on the matter;

  • · Mike Skillings says:

Don’t care where they are made. As long as the product is made well and employees treated fairly it shouldn’t matter which country they are being produced in

I completely agree with Mike – the quality of the product and the employees’ conditions are a lot more important. Maybe websites should focus on emphasising these instead?

The question just asks more questions rather than provide a clear view. Questions like, if products are still made in the same way – and look the same, taste the same and smell the same as a result – does it matter? Would a mere change in ownership mean you’d stop buying a product you love? Would you want to undertake the jobs the likes of the Chinese workers are doing – repetitive labour, underpaid, cramped conditions? (There a few who set a higher example than this.)

One certain issue that is becoming very pressing is the economic situation. For every £999 Britain spends in imports from China, China spends £1 in imports from Britain. This is one of the many reasons China is becoming such a world power, as her level of self production becoming increasingly high. As a developing country, they have cheap labour as a major resource. Developing countries typically export a large quantity of relatively low value mass-produced goods. As a developed nation, the UK has a skilled and a rather more expensive labour force as its major resource. We export less in volume, but we export higher value, and generally higher technology goods, such as satellites or even folding bikes!

To help boost Britain’s economy, a campaign has been set up by Stoves to increase the sale of home made goods, and is backed by UK manufacturers and MPs. The ‘Made In Britain’ Logo has been designed, and to qualify, companies must say ‘the majority’ of their production or manufacturing takes place in the UK with companies certifying their own eligibility. So far over 100 manufacturers have applied for the logo, including Samuel Heath (Bathrooms), Roman Showers, The Pure H2O company, Ultima Furniture, Chalon (Kitchens), Big Bale Transtacker, Taylor Bins, Anglia Kitchens and Bathrooms LTD, Perrin and Rowe (Taps), Bartuf (Retail display manufacturers) and Primisil Silicones LTD. The logo can be seen below.

According to the research carried out by Stoves’, over one third of British consumers say they would buy British more often if it were easier to identify British products. It’s a noble sentiment, but would it still hold once consumers saw the price tag of a 100% British manufactured product? Some foods and drinks already carry Protected Designation of Origin (PDO) labels that let consumers know that foods are made according to tradition and in the designated area. Surprisingly, the UK only has 16 registered PDOs, compared with France’s 82 and Italy’s 143.

Only time will tell whether the Made In Britain campaign has any affect. It is battling against a public stuck in a struggling economy, and a mentality to get the best value for money possible. Although issues still surround the foreign factories that produce our imports, many are beginning to improve their working conditions, such as the EUPA factory, and this will ease the publics mind. On the other hand there are many who will stand to the end to help the small time, home made companies battle on and convince the British public that buying their goods is more beneficial than imports. With China’s increasing rise in power, everything we own may soon come from China. And, as a student, that may not be all bad.

Why Chinese companies want to buy British businesses

MG

Evidence that China is much more than just the factory of the world, producing other people’s goods for them:

“The indelible stamp of “Made in China” has made an impressive mark on world trade, but this country’s ambitions are proving to be much higher.

No longer content to be known for their cut-price efficiency in stuffing Disney toys, Chinese companies now want to own high-end global brands and be at the forefront of major technological projects.

[…]

Europe’s markets are mature, full of established brands but ripe with investment opportunities and in the UK in particular, Chinese companies have been fast to realise their potential.

According to consultants Dealogic, Chinese firms have acquired stakes in 33 UK companies since 2008, acquisitions totalling almost £12bn.

They include mining, logistics and financial services companies.

[…]

China’s interest in such projects does not come as a surprise to Dr Karl Gerth from Oxford University, who has been researching how social changes in China are pushing global growth.

”China is becoming less and less competitive in manufacturing, those same jobs are moving to Vietnam and other places,” he says.
“At the same time there are millions of unemployed, college educated Chinese looking for work, who don’t want to work in factories; they want technically sophisticated jobs. In order to employ all those people the Chinese economy needs to move up the value chain and start participating in higher-end industries.”

Buying into established brands and pitching for large infrastructure projects abroad is seen as key to providing that upwards trajectory the Chinese economy needs to take.

 

(Read the full story at BBC News – Why Chinese companies want to buy British businesses.)

BBC News – China export and import demand dips amid global fears

Factory

BBC News – China export and import demand dips amid global fears:

The demand for Chinese exports fell in January as global economic uncertainty continued to hurt consumer confidence.

Latest government data showed China’s new export order index fell to 46.9 from 48.6 in the previous month.

The imports index also dropped to 46.9 from 49.3 in December, showing that domestic demand was slowing.

The data comes amid concerns over the impact of a global slowdown on China’s economy.

Analysts said that Chinese exporters were being hurt by falling demand in key markets such as the US and Europe due to the ongoing economic problems in those economies.

“The economic situation in Europe continues to remain grim. It seems like the eurozone will not be able to avoid a recession in 2012,” Stephen Joske of the Economist Intelligence Unit told the BBC.

“There is no doubt that China’s exports will have a tough year ahead.

Chinese Manufacturing and International Trade

“First time visitors to the world of China manufacturing were often surprised by what they found” – Paul Midler, Poorly Made in China

As a child I remember being baffled after reading the words ‘made in China’ around the base of my pencil stopper. Where was this place? And why would an entire nation want to produce rubber pencil stoppers? Obviously, I was mistaken.

I knew little of China and its booming manufacturing industry. After all, it was not a topic at the forefront of everyone’s mind. However, recent years have shown a surge in the publishing of books concerning this topic followed by a growth in interest by Westerners.

Many companies in the West rely on China to produce their products. This is believed to be because it is a far cheaper alternative, though the rate of production provided is also a major asset. For many, the promise of cheap labour and a fast return was enough information to do business with factories in China.

Paul Midler, author of ‘Poorly Made in China’ comments on China’s abundance of factories and of just how little we still know about them. He states that “With most of these factories…it was often a mystery what went on behind their walls”. This may be true; however after asking a few friends and family what they knew about China’s manufacturing industry it was seen this topic was not common knowledge. We knew little of factory life in the Far East.

Leslie T. Chang, author of ‘Factory Girls’ offers a compelling insight into the lives of modern day factory workers in China. In addition, this creates some interesting questions regarding the country’s business relationships with the West. Through working thirteen hour shifts with two breaks in some factories, along with talking on the job being ‘forbidden’, it is no secret as to why products are manufactured so quickly in this nation. This may be good news for potential business partners; however Chang states that factory workers “talked constantly of leaving”.  In some ways this shows just how similar Chinese workers are with their European and American counterparts. Many leave jobs in order to find better wages and working conditions elsewhere.

In China, this migrant attitude towards job hopping not only concerns these basic attributes of working life. Chang states that the ordinary workers are constantly trying to improve themselves as individuals. Learning a new skill set, or learning English (it was believed to make a person more employable) are just some of the ways this was achieved. A constant desire to better oneself pushes these workers to new heights, and often to better wages.

I believe that this desire to improve as an individual is a crucial driving force behind China’s manufacturing power. As more and more workers gain better skills the quality and efficiency of manufacturing in the country will inevitably continue to flourish. This in turn will ensure that foreign business partners will be in ample supply for years to come.

It can be seen that the Western nations are benefitting greatly from their business relationships with China, but who really is gaining the most out of this partnership? In recent years the answer falls more closely towards the side of China. The Economist newspaper declared that the Chinese economy grew by 9.2% in 2011 and set a prediction of 8.2% for 2012. It seems that this rise in the economy is destined to continue as Economy Watch states, “Forecasts for 2015 predict China’s Gross Domestic Product (GDP) to reach US$ 9,982.08 billion…” These figures are impressive and are testament to a nation on the rise. As the West continues to fuel China’s export industry the nation will begin to wield more of an influence financially over the rest of the world.

As China’s manufacturing industry becomes more dominant the country itself will follow suit. The nation is fast becoming more modern, leading it to catch up with Europe and America. If the financial figures stay true, this may happen sooner than we think.