It's About the Work

The Chinese Home: Disrupted, Smarter and a New Global Model for Living?

By Bill Adams

chinese-homes-blog

www.atimes.com

 

Global marketers are obsessed with getting their brands into Chinese households, as no other country offers so much potential for growth. However, before western marketers attempt to gain market share, they should first step back and ensure they truly understand the evolution taking place inside Chinese homes and its implications for world markets.

Disrupted Homes

No other country has experienced such profound change in both the lived experience and concept of ‘home’ as modern China. For much of the 20th Century, the seismic forces of war, collectivization, mass political movements and internal migration during an economic boom, displaced vast numbers of people and disrupted families. More than 20 years ago, no citizen of The PRC owned their own home. However, today, China has one of highest home ownership rates in the world.

After generations of disruption the Chinese are settling into their homes and learning to organize and decorate them. They are hungry for information that will support these middle class ambitions. However, this new generation of homeowners can’t seek decorating tips from their parents, as they have little experience with these matters. In their objective to become homemakers and hosts, they respond to brands and resources that provide this kind of advice.

Smart Homes

As the Chinese build, buy and nest in their new homes, they also want them to be smarter. Smart home technologies, like e-commerce, mobile payments and wearable tech, are playing an important role in advancing markets in China. Chinese consumers embrace smart home technology to a greater extent than their global counterparts. In fact, an international survey conducted by GfK found that more than 75 percent of people interviewed in China said that smart home technology would impact their lives in the next few years, compared to the global average of just over 50 percent.

Chinese consumers’ knowledge and appetite for smart home technology gives its domestic retailers and suppliers a strong start in the global competition for these products. The country has a tremendous ecosystem of innovation to respond to consumers’ needs and aspirations. Internet giants Baidu, Alibaba and Tencent are partnering with the country’s impressive array of consumer electronics firms – Huawei, Hisense, Hai’er, Xiaomi, Midea and others, to create smart home solutions.

The government could also push the smart home boom. Over the last 20 years, the internet, mobile phone, and digital television networks that enable smart homes were part of government plans to establish universal connectivity. Connecting all homes and enabling technologies to control energy consumption and emergency response systems, could well become part of the Communist Party’s vision for building a stable, well-off society.

A New Global Model for Living?

The China market could develop a new model for 21st century living based on an urban experience and a critical need for sustainability. It’s predicted that by 2050 approximately 64 percent of the developing world and 86 percent of the developed world will be urbanized. That is equivalent to three billion urbanites, living mostly in Africa and Asia, markets where Chinese brands are building leadership positions.

Consumer demand, smart home innovation and sustainable development initiatives, are further bolstered by China’s economic and trade policies destined to push a new model for the home globally. Under the ‘One Belt, One Road’ strategy, Chinese firms are building apartment blocks and infrastructure across Asia, Africa and Latin America. President Xi Jinping’s much-touted ‘China Dream’ is beginning to take form, and it looks a lot like an affordable, smart, sustainable urban home for everyone, built by Chinese companies.

Advice for American Marketers

  • First, change your mindset. Many marketers assume that global consumers will follow American consumer behavior when they attain a certain level of buying power. This was a simplistic, but relatively useful, view ten years ago. Today, we must acknowledge that what’s happening within the Chinese home is complex and evolving. While consumer research about buying and the user experience of refrigerators is necessary, if you lack an understanding of what consumers are doing or want to be doing in the rest of the house, your engagement with them will be short-lived.
  • Second, when communicating to Chinese consumers, remember that ‘home-making’ is still a new experience. Brands that appeal to newlyweds or single professionals to help them decorate, organize and clean their homes, will find audiences hungry for support and eager to show off their accomplishments via social media. More established homeowners are looking for solutions related to entertaining and living more comfortably.
  • Third, American style furnishings and décor are noticeably under represented in the conversation about the home in China. Brands like IKEA and MUJI are leading the way for other more premium northern European and Japanese brands. If American brands want to win in China, they must first define American style for Chinese consumers and then build a demand for it.
  • Finally, get ready for intense competition. Now that Chinese white goods have saturated the global market, solutions for smart homes will follow. To go head-to-head with competitors, marketers must understand how Chinese brands built domestic and global demand and how they are now targeting the world’s new middle class in developing countries.

Bill Adams is an executive vice president in Allison+Partners’ Global China Practice and market leader in Shanghai.

Posted by: Bill Adams on December 20, 2016 @ 1:17 pm
Filed under: Uncategorized

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