With all eyes on China for the 2008 Beijing Olympics, we are seeing a dramatic increase in the amount of media coverage and blog commentary on every aspect of China and Chinese life. Much (if not most) of what is said about China when not directly related to the Olympic Games is ignorant or exaggerated. Having studied Chinese culture and language for a few years and also lived in Greater China for several more, I have made it my personal mission to improve China's image to the outside world as well as spread a greater understanding about one of the world's largest cultural (note I did not use the word "ethnic") groups to those with little experience of Chinese people beyond their local eat-as-much-as-you-can buffet.
To that end, this will be the first in a series of articles aimed at analysing China in an objective manner using concepts I learnt, adapted or developed over the years. The concepts defined and used in these articles can actually be applied to most countries and should be used to gain a better understanding or a region prior to developing market entry or marketing strategies.
Physical and Cultural Space: An Overview
There are two different types of Space – Physical and Cultural. Physical Space describes the physical characteristics of the market such as size, terrain and borders etc. Cultural Space describes the people within the market, including population size, languages and other basic demographic information. See the table below for a full list:
Physical Space |
Cultural Space |
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Research into a market’s Physical Space is important as it affects the distribution of physical goods, as well as demand for certain types of products/services (e.g. sales of sweaters in a market with a tropical climate). The locations of cities and towns may also account for strategic location decisions made by a firm.
Cultural Space outlines the general population in a market, while the New Media Toolbox’s Consumer section examines specific market segments. This outline is significant because of the intrinsic links that network all people within a market, particularly in collectivist societies such as China. Understanding how consumer groups fit into the population as a whole can help firms effectively research the market’s consumers.
So let's go into details:
Physical Space
Size of the market: China is only slightly smaller than the USA and is the fourth largest country behind Russia, Canada & the USA. Its size (more than 2.2 times the size of the EU) and diversity suggest it should be treated as a continent, rather than a country. In the same way may people complain about Americans being too US-centric, the Chinese are very much focused on China. With such a large nation and so much natural and cultural diversity within, who can blame them for not looking outside enough?
Terrain: The terrain in western China is generally mountainous with some high plateaus and deserts, while eastern China contains hills, plains and deltas. Although the transport infrastructure is constantly improving, it is far behind the US, which has approximately 2.6 times more paved roads. On a slightly separate note, when I visited India in December 2007, I was absolutely appalled by the lack of infrastructure in comparison to China. Of course India will rise as one of the great economic powerhouses, but the quality of roads and telecommunications was on average 5-10 years even less developed regions of China.
Climate and weather: China has an extremely diverse climate, with sub-arctic weather in the North and tropical weather in the South. Coming from the UK, I'm pretty used to mild temperatures and drizzle all year round, so I can tell you there honestly is nothing quite as diverse as China temperatures. Beijing winters are really harsh and you feel an icy blast on any exposed extremities that make them go numb within minutes; Shanghai summers are dry like an oven at 40°C (104°F), while in Autumn it can rain non-stop for a week; In Guangzhou I experienced it's coldest winter on record which had me sleeping in a full tracksuit and 3 jumpers, while right now in the stifling humid summer heat you can be sweating within a minute outside. The takeaway point from all this is that some companies should focus the marketing of their products/services on specific regions if demand for their goods is affected by climate.
Natural disasters: There are many natural disasters including frequent typhoons along the southern and eastern coasts, earthquakes, floods and droughts. Living in Hong Kong or Taipei you experience Typhoons on a fairly frequent basis and you watch for the black and red storm warnings on TV. When they do finally appear, all rejoice as kids don't need to go to school that day, while parents can also stay home from work. Of course in recent times much attention was drawn to the tragic earthquake and aftershocks in China's western Sichuan province. Much of the damage that happened to buildings and to the people injured by them occurred because this is not a very regular occurrence and the affected towns were therefore not built to withstand them. By comparison, Taiwan has long been hit by frequent minor earthquakes and therefore all buildings are solidly built and not typically higher than 10 floors (apart from the Taipei 101 - currently the world's tallest building [with 101 floors], which has a giant counter-weight in the top to offset any earthquakes).
Borders with other markets: China borders 14 countries including India & Russia, both of which are predicted to have strong economic growth in the near future. With a lower cost base than Russia and better infrastructure than India, China could become a viable regional base for companies serving all three markets.
Cultural Space
Population statistics: China is the most populous nation in the world, with most estimates around 1.32bn people and population growth of 0.63% per annum. This low growth rate is primarily attributed to Mainland China's One Child Policy, which in general prohibits couples having more than one child and fines couples that break this rule on top of not providing state healthcare or education for additional children. There are some situations where multiple children are permitted, such as if both parents are only children. While it may sound like a draconian law, China's One Child Policy probably deserves much credit for China's fast economic growth. Without out an exponentially increasing population putting burdening public resources and only children (or "Little Emperors" as they are also known) receiving the attention and financial investment of up to six adults (two parents and four grandparents), it is no wonder that millions are being lifted out of poverty. The only long term downside to the policy is the aging population and who will take care of them. But this is a problem faced by most markets today. With 71.9% of the people aged between 15 and 64 years (working age), China is a large potential consumer market although with considerably less income to spend on goods than most Western markets.
Ethnic groups: The ethnic Han Chinese apparently account for 91.5% of the total population, while 55 other ethnic groups make up the remaining 8.5% of the population, although only 18 of these groups have over 1 million people. Personally I am skeptical over this figure and what defines "Han Chinese". From my personal experience of travelling around Greater China, I have noticed physical differences in the body (e.g. Shanghainese people being considerably taller than the average Cantonese person), differences in skin tone (northerners tend to be more pale than southerners) and facial structure (Beijingers tend to have squarer faces than the oval shaped Shanghainese). While these differences may be attributed to dominant Chinese clans, I personally think there should be at least sub-groups of the Han Chinese ethnicity if not completely separate ethnic groups. The main reason for the promotion of a singular ethnic group is to maximise social harmony and national pride. But I digress... Back to official party lines... Most of the ethnic minorities tend to live in mountain or forest villages in pastoral and mountainous areas, often in border regions. Due to their small, highly fragmented nature and their isolated locations, there is little incentive for companies to provide specialized goods and services for ethnic minorities (apart from perhaps the growing number of Western foreigners) in China.
Gender ratio: China’s gender ratio is 1.06 men for every woman. While this result does not indicate companies should target their products at men, there are more men to target - It would seem China is the place for a single gal to find a guy...
Languages: The official language of China is Mandarin, based on Beijing dialect. There are also many other dialects/languages (e.g. Cantonese and Shanghainese) and many Chinese people are able to speak two dialects or more (with one being Mandarin). As a foreign businessperson in China, it would do you well to not only become an intermediate speaker of Mandarin, but also to learn a few simple phrases in other Chinese languages - You will find them real icebreakers when you meet someone from those places. There are two main types of written Chinese: Simplified characters (the official character-set of Mainland China) and Traditional characters (used in Hong Kong and Taiwan). Again, knowing how to at least write your own name in Chinese, as well as being able to recognise the most basic/common 20-50 characters will go a long way in building friendships with local people. Showing you are sensitive to, understanding of and interested in Chinese culture will win you lots of Brownie points. When it comes to marketing your products to local consumers, you should typically use: Mandarin and Simplified Characters in Mainland China, Cantonese and Traditional Characters in Hong Kong and Mandarin and Traditional Characters in Taiwan. Some companies have even used local dialects (such as Shanghainese) when targeting specific regions. This requires strong local knowledge and may only be cost-effective in larger dialectal areas but will be appreciated by local communities.
Religion: Although China is officially atheist, many Chinese are either Daoist (Taoist) or Buddhist. Christians account for only around 4% of the population on the Mainland and in Taiwan, but closer to 10% in Hong Kong. There is also a relatively small (1-2%) community of Muslims in China, primarily originating from the western province of Xinjiang.
Well, that wraps up class for today. While I expect there was nothing really new for other Old China Hands, I hope those that have yet to experience China managed to gain some useful insight.