January 18, 2015 by ...
According to a post on Sina, a Facebook clone, Chinese looking to buy cell phones can be divided into three distinct groups. There are those who buy based on the most popular brand available. People who listen to friends and lastly those who rely on expert opinions. Not surprisingly, of all three types, two specifically rely on China’s tendency towards collectivism. It should also come as no surprise that these two segments predominate the Chinese cell phone purchaser space. Through hunger marketing, Xiaomi positions its phone for success.
China is collectivist
Communism fits well with China’s psyche, as they are a collectivist people. This is rooted not only in Confucianism, but that definitely helped. Anyone who has worked, studied and or taught here has seen ample proof of this. For example, most Chinese disdain to give opinions which are outside what is socially acceptable. They will typically take cues from their family, neighbors and society to help identify the ‘right choice’ or belief. Once this is established, the Chinese repackage this opinion as their own. Ask them what about Taiwan or the Dali Lama, for example, and one will be amazed at the lack of diversity at their response. Of course there are exceptions to this but overall it is a fact.
Collectivist behavior patterns in buying
It should come as no surprise then, at how much collectivism impacts purchasing decisons. Rather than seek internal cues about what they want or should buy, Chinese look outside themselves. Collectivist culture inculcates a self-definition derived from the opinion of others, and so this is their ‘go to’ when deciding on how to spend some cash. They use the collective or ‘whole’ as a sounding board. After consulting that group, they move to purchase.
After deciding how much they can spend, the Chinese primarily do one of the following in order of prevalence:
1-Choose the most popular phone
2-Ask friends for their opninion
3-Follow the recommendation of experts
Observations and insight
What should be most interesting to businessmen is how great a role popularity plays in China. Collectivist countries put a premium on ‘face’ which is externally derived, as I mentioned. This means that one wants to fit in rather than stand out. The way to do this is to go with the flow and buy the same thing as everyone else. The vast majority of Chinese buy phones based on this consideration, which makes sense.
Secondly, it should come as no surprise that the Chinese consult friends. This may not differ from what we do in the west, with one exception- westerners consult family as well as friends. The interesting thing to consider about buying choice number two is that friends are consulted and not siblings nor family. This stems from the fact that children born after 1980 are part of the one-child generation and most have neither brothers nor sisters. Whereas we may consult this cohort, the Chinese cannot. In turn, they confer with the next best thing, their friends.
Considering that their parents were either born in the disastrous cultural revolution or early reform period, it is no wonder they are of little help. This demographic went from living in collective homes with shared toilets and script instead of cash. They were not taught the same life and research skills as others and thus are not the best choice here.
The last of them consider technical specs and opinion leaders before purchasing. This group takes a more rational approach and is more likely to buy the phone which best meets their specific needs. ‘Face’ would not be a primary driver to this group.
What the data tells us
We can see that collectivism is alive and well in China. The pressures of conformity and face are primary motivators in the purchase patterns of most Chinese. They are more likely to follow the masses when deciding what to buy and their friends as well. This external orientation shows how businesses must address the needs of the Chinese. We need to make goods which can be ‘unique commodities’- a thing at which Xiaomi excels.
By limiting sales Xiaomi creates a product which not everyone can buy but many desire. Chinese consumers fear being left behind and looking like rubes who are not up with the times. With so many people flocking to Xiaomi flash sales, the Chinese reason that the kit must be good and seek to lap it up. Of course the gear does not give the same face that one gets from plopping down $1000 for an Iphone, but it is better than buying a lower-end product.
Of course Xiaomi’s strategy works best in the mid to lower end market and in second tier cities. Referring back to face, most Chinese kit does not have the panache of foreign goods. For example, most of my MBA students say they would never buy a Xiaomi phone, calling it a knockoff. Those who do buy tend to be consumers with less financial reaources.
Success in china is measured by how much one looks and behaves relative to their peers. Chinese consumers want to be seen as aware and discriminating as well. The way to do this is by purchasing the most expensive item they can afford which has already been accepted by the collective.