China is currently the world’s second largest economy after the USA and is increasingly playing a very important and influential role in the global economy. It is not surprising then to also see that its research market has grown, according to ESOMAR’s 2015 industry report, to become the 5th largest globally with a turnover of US $ 1.7 billion. While China is as compelling market to explore, it is also as complex of a market to decipher, especially for most people outside of the region. Here are three things that most people need to know about China’s unique culture and diverse market when planning research in China:
- “Nat rep” has a very different meaning in China
Marketing Research (as opposed to opinion polling) tends to concern itself with the economically involved – target audiences for research might be defined as “buyers of yoghurt” or “users of mobile phones,” for example.
However, since the vast majority of the population in most developed countries is economically involved, the idea of using “nationally representative” samples for many research projects is extremely common, so much so that it is often demanded without any prior consideration as to whether it is actually the target market.
While China has a population just shy of 1.4 billion people, almost half of these live in remote rural areas in relative poverty and can hardly be considered members of the “consumer economy.”
Real potential consumers, those with higher incomes and purchasing power, live in urban areas. This then is the more appropriate segment to target for most producers of commercial products and services.
- There is no official definition of “tier system” in China
Historically, the exceptional economic roles of a number of cities in China triggered the classification system based on tiers. The objective was to rank China’s cities to be used as a reference by foreign investors. This was necessary since China has at least 140 cities that have a population of more than one million people and 14 cities with more than 10 million people!
The tier classification is generally accepted to be highly correlated with the income value of the cities. For instance, people living in tier one cities have income levels well in excess of the national average.
Beijing, Shanghai, Guangzhou are usually classified as tier one cities, representing China’s most developed markets in terms of consumer behavior. While tier two cities are less developed markets, they show rapid growth. Fixing samples per tier city over time is therefore difficult – it changes as the economic grows.
- “Other” or “None of these” simply does not work in a Chinese setting
Western researchers, when wanting to capture brand usage, will often use a truncated brand list, containing only the brands of interest plus an “other,” or “none of these” category to capture the remainder.
Based on our internal research, Chinese respondents, for cultural reasons, avoid using non-substantive answers (even including “other”) in favour of the actual brands listed.
Therefore we recommend using a full brand list rather than a truncated brand list. Asking questions about category or brand desirability also helps to understand potential levels of over- claim within the category.