The Wall Street Journal Interview: The Barbie Story in China

Recently, I was interviewed by The Wall Street Journal about how American toy-maker Mattel misread feminism in China. As the result, it had to close its flagship store, the House of Barbie, in Shanghai, and threw away over $30 million investment.

Since then, Mattel seemed to have learn a thing or two about the Chinese market. The Wall Street Journal article indicates that the company is making new efforts in China.

The Chinese toy and games market has been growing at 14% in the last five years. The demand will continue to be strong as growing Chinese middle class families want to give their children the best. And, they have the disposable incomes to do that.

There are still opportunities for Mattel to get it right in China. I will soon have an article on Forbes.com to comment on Mattel’s newly launched Barbie “Violin Soloist.” Stay tuned!

Book Review: Living the Chinese Dream

Nearly three years after my book The Chinese Dream was first published, a book review by Samir Jaluria, a management consultant and blogger, shed new light on the importance of understanding the growing impact of the Chinese middle class. I am glad to see people find the book informative. Below is the review:

Helen Wang’s The Chinese Dream: The Rise of the World’s Largest Middle Class and What It Means To You is an informative, well-written book about China’s growing middle class. Wang, an independent consultant who assists companies doing business in China, artfully breaks down the book into a series of themes and interweaves them with a succession of personal experiences and fascinating interactions (including one with a PR manager doing “religion shopping” and another with Jack Ma, the founder of Alibaba). The Chinese Dream’s principal argument is that the rise of a large Chinese middle class is beneficial for both China as well as the rest of the world. Furthermore, Wang believes that middle class Chinese and Westerners have a similar set of core values and share many of the same aspirations and dreams and can thus learn from each other.

To me, the biggest takeaway is how communism and capitalism can co-exist side-by-side in China. Continue reading

The Rise of China’s Generation-2 Consumers

A new research by McKinsey indicates that a new generation of sophisticated young Chinese consumers are changing the rules for China’s consumer market and the companies that serve it. See the video below:

The image of China as a place to sell only low-cost, unsophisticated mass-market products is changing as dramatically as its demographics. Lifted by a wave of growing middle-class wealth, the country’s economy is undergoing significant shifts in consumption dynamics as a new generation of young, prosperous, and individualistic shoppers moves to the fore. Our latest research suggests that within the burgeoning middle class, the upper middle class is poised to become the principal engine of consumer spending over the next decade.

As that happens, a new, more globally minded generation, born after the mid-1980s, will exercise disproportionate influence in the market. In this video, Yougang Chen, a principal in McKinsey’s Greater China office, explores the rise of these Generation-2 (G2) consumers, their buying preferences, and the impact on Chinese and multinational companies as niche product categories and luxury goods become the hallmarks of China’s consumer evolution.

Five New Trends of Chinese Consumers

As 2012 comes to an end, pundits and analysts alike are making predictions for 2013. Many things could happen in 2013, but one thing is almost certain: China will be the largest e-commerce market in the world. Already, the country has the largest population of online shoppers. In June 2012, people who shopped online in China reached 210 million, compared 179 million in the United States.

Chinese consumers have always been a mystery to many Western companies. Little is known about their spending behavior and buying habits. As they come of age, certain characteristics are starting to emerge. Here are five new trends of Chinese consumers:

Value Seekers

A quintessential trait of Chinese consumers is that they are value seekers. They will search hard for the best deals, to make sure they get good value for their money. That means they will spend a lot of time researching products and comparing prices. They tend to resist impulse buying (despite some conspicuous spending), and are more likely to get cues from their friends as to which products to buy.

This trait actually applies to both high- and low-income groups, although it is more apparent in consumers with lower incomes. I know this intuitively, and from first-hand experience. Having lived in the West for over 20 years, I am still “good at saving money” (as my husband put it) when it comes to a purchase. For example, I eyed a giclee painting from ZGallerie for several months before I bought it on sale. I searched on the Internet for comparable paintings, and was willing to wait for holiday sales to make the purchase.

I am not the most frugal person you can find in the world, but like most Chinese, I am naturally good at finding good deals. Continue reading

The Chinese Middle Class Approaches Half a Billion

And how American companies can seize the opportunities…

The Chinese middle class is expanding rapidly, reaching 474 million this year, according to my latest calculation.

Many people may challenge this number. But it’s just arithmetic. In a recent report “Consuming China,” McKinsey indicates that 83 % of households in China’s mega cities (cities with population of over 10 million: Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen, and Tianjin) and 66 % in the rest of the cities are middle class families.

By the end of 2011, China’s urban population reached 691 million. Do the simple math, and you will get the same number I got: the population of the Chinese middle class was 474 million, with 88 million living in mega cities, and 386 million in smaller cities.

This means the Chinese middle class accounts for 68 percent of urban population, which is believable to me. Assuming two percent are super rich, still about 30 percent of the people in urban areas are poor.

Some would argue that there are different criteria to measure the size of the Chinese middle class. A simple and important rule of thumb, as stated in my book The Chinese Dream, is that of a household with a third of its income for discretionary spending. These people have passed the threshold of survival and have disposable income to spend on leisure items. As I travel around China, it’s very clear to me that the majority of people in urban areas have reached this stage.

Chinese Consumers Love “Made in USA” Products

The rising Chinese middle class is the biggest story of our time. However, many US companies are missing the opportunity. US exports to China account for only 6 percent of China’s total imports. The major categories of US exports to are in industrial sectors such as power generation equipment, aircraft, and medical equipment.

The biggest opportunity, however, is in the consumer sector. On November 11, China’s “Single Day” shopping festival, online retailers Tmall (B2C) and Taobao Marketplace (C2C) generated a record revenue of $3.1 billion, more than the total sales in the U. S. on Black Friday and Cyber Monday combined. Before long, China will become the world’s largest consumer market, and its consumption could reach $13 to $16 trillion by 2020.

Better yet, Chinese consumers love American goods and are willing to pay more for them. Continue reading