The China Attraction

“Why is it that, despite its…low per capita imports, China still attracts the foreign trader?” The US report’s author notes the common tendency amongst international businesses, when contemplating the Chi­nese market, to tempt themselves with “hy­pothetical and at times amusing surmis­es”. For example, one American entrant to China business wonders, “if only every Chinese would buy one stick of chewing gum”, or “if only 25% of the Chinese could be persuaded to buy my product I would become successful here.”

Of course, as the author goes on, “the rea­son why the prospect of selling goods to China provokes such queries is because even the slightest modification in the prevailing mode of life is capable of creating an enor­mous market, and with the entire social structure in a state of flux and progress, trade possibilities are limitless”. As he says, “China is on the eve of what promises to be an amazing industrial awakening”.

Consumer Characteristics

But what of the Chinese consumer himself ? The American study here cautions: “Let us look at this market a little more closely for a moment and try to visualise their civilisation, so that we may the better appraise it and the market it af­fords for foreign goods”. The report then identifies five key characteristics of the China market

-“there is no such thing as a defined class system in Chi­na”

-“they are essentially a businesslike people in their practi­cal material outlook”

-“they have a keen sense of humour and are even inclined to jest under difficulties”

-“they have an inordinate curiosity and love of gossip”

-“and, with the poverty of the lives of most of them, be­lieve that they can become rich by their own efforts”

Packaging

The Americans argues that there are hundreds of US products that will appeal to the Chinese consumer, if “presented to him attractively, in small packages, within his means”, and if “their trade-marks have been made known to the consumer through advertising, sales can, be expanded indefinitely within the space of a few years as China’s industrial life grows, simply because people are there to produce or consume in unlimited quantities”.

But of course advertising for the China market must, the re port says, take account of “the fundamentally different man ner of living of the Chinese and the Americans and their divergent methods of thought”.

American business is already in China in a big way, of course. “In an hour’s walk down Nanjing Road in Shang hai, the writer counted more than 100 different articles of American manufacture in shop windows”. It is further noted that “of all the countries of Asia, China is the second largest purchaser of American products”.

Low Labour Costs, Yet High Logistics Costs Nevertheless

As we all know, China is not an easy market. As the author says, “the greatest single hindrance to China’s commercial advancement is its lack of means of communi cations, particularly transportation…despite unlimited sup plies of…man labour, which is the cheapest in the world, the cost of transportation is 10-20 times as high in China as it is in the US”. In addition, the “apparently inextricable mazes of the Chinese currency monetary system” may deter many potential investors.

IP Infringement Concerns

IP infringement is, as the author says, “insidious in China, where the theft of trademarks nearly always involves an imi tation of the goods themselves”. He adds, “sometimes only the stolen trademark is used, the package itself contains goods of an entirely different nature”. He notes that one diffi culty is the lack of familiarity with the English - “for the most part they [the Chinese] are only acquainted with it in a very general way, and then not with the detailed features of English letters, the conformation of which is so different from their own familiar ideographic characters”. In addi tion, they do not know much about foreign branding. The report quotes one example where a popular brand of whisky with a copy of the brand’s label and the inscription “Made at 236 Church Street, Scotland. Beware of imitations”. As the author notes wryly, “either the manufacturer himself did not know that Scotland is not a city, but a country, or counted on the ignorance of his native customers”.