By Sonny Wong and Jenny Tan
Originally published in Adweek
The Chinese are coming, they’re spending, and they will reshape America’s economy.
For a moment, let’s set aside the heated political debates and focus on the consumer landscape. This influx of consumers with enormous spending power is a huge opportunity for brands.
Let’s separate politics from marketing because the opportunity Chinese consumers present is too huge to ignore.
Forget politics—Chinese consumers are regular people
We often fall into a hole when talking about China. We lump the Chinese government and Chinese consumers into the same pile, preventing us from making the rational marketing decisions we make for other consumer segments.
The Chinese government is not playing ball with the White House, but Chinese consumers are regular people. They don’t think about macro-political tax negotiations when buying handbags. Patriotism is certainly a factor in purchasing decisions, but Chinese consumers are like any other consumer segment: largely occupied with thoughts about life and kids and what’s for dinner tonight.
Chinese consumers are changing the world
To be clear, the Chinese consumer segment is a powerhouse and will only continue to grow. Consumers of ethnic Chinese origin make up 24% of Asian Americans. In cities such as Millbrae and Cupertino, Chinese consumers make up over a quarter of the population. In the New York, Newark and Jersey City regions, there are almost 800,000 Chinese-Americans. In the city of Richmond, Canada, a suburb of Vancouver, B.C., the minority is now the majority, with over 50% of the population self-reporting as ethnic Chinese.
In addition, these figures don’t account for the international students who are fueling America’s post-secondary education sector. Let’s also not forget tourists from China. In 2016, they spent $33 billion in the U.S. and now bring over $1 billion to Los Angeles each year. And given that less than 10% of mainland Chinese citizens currently hold passports, the smart bet is on Chinese tourism dollars increasing sharply.
Of course, mainland China itself is the growth market for a bulging group of American companies. China accounts for 20% of Apple’s revenue, a third of the world’s luxury spending and is almost a fifth of the global population. We may love our Swarovski, but two years ago, China leaped past the U.S. to become the jewelry brand’s largest market.
Chinese consumers have and are still changing the world.
What brands can do to be coveted in China
The opportunities are endless in China. Even despite China’s recent economic slowdown, retail sales still grew almost twice as fast as in the U.S. last year, and the size of China’s middle class is larger than that of the entire American population.
But marketing in China is filled with landmines. It’s easy to fall flat on your face when marketing to a massive market with cultural sensitivities so different from those of the West. Just ask Burberry, Dolce & Gabbana and Marks & Spencer. Campaigns in China are also expensive. Media buys alone require budgets that will make most marketing teams sick.
The solution is to start marketing to the Chinese communities in the U.S. Ties between the Chinese diaspora and their friends and family in China are strong. We call this the “bamboo network,” a network of Chinese who are tied together between North America and Asia because of friends, family and business connections. WeChat, the Chinese social media juggernaut, erases the cross-continental distance. Because of the bamboo network, local influences affect trans-border sensibilities.
Increases in brand awareness among Chinese residents in the U.S. will flow fluidly across oceans and over to China. The numbers show just how tight those ties are. For example, the daigou industry, made up of overseas Chinese residents, tourists and students who buy luxury goods in Western markets for resale in China, may be worth as much as $6.3 billion annually. Starting ethnic campaigns in the U.S. is your easiest entry point to creating a global Chinese marketing strategy.
The Chinese are coming. Is your brand prepared for them?