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The mystery of the Chinese consumer

LILY LI wears a lanyard with a little plastic card around her neck, even at weekends. It is a badge of honour: it shows that she has a white-collar job. (She is a secretary at Access Asia, a retail-research company in Shanghai.) She uses Apple earphones for the cheap Chinese mobile phone in her pocket, so it looks as if she owns an iPhone. And she drives to work, though it takes four times longer than public transport, just to show off her little car.

After decades of deprivation and conformism, Chinese consumers regard expensive consumer goods as trophies of success. In public, they show off. In private, they pinch pennies. The owner of a gleaming new BMW will drive around for half an hour to avoid a 50 cent parking fee. And she will hesitate to spend much on interior decoration, because only her family sees the inside of her flat.

By some forecasts China will be the second-largest consumer market in the world by 2015, not far behind America. Chinese people already buy more cars than people in any other country: 13.5m last year to Americans’ 11.6m. China is on its way to becoming the biggest luxury-goods market. The central government made an increase in domestic consumption one of the priorities of its latest five-year plan.

Small wonder that Western firms are piling in. On July 4th Nestlé, the world’s largest food maker, confirmed that it is in talks with Hsu Fu Chi, one of China’s biggest makers of confectionery and baked goodies, with a view to buying the firm.

If a deal is sealed, it would be one of the largest foreign takeovers yet seen in China: Hsu Fu Chi is valued at $2.6 billion on the Singapore stock exchange. China is currently Nestlé’s ninth-biggest market, with sales of SFr2.8 billion ($2.7 billion) last year. That is less than half what Nestlé sells in Brazil, although China has seven times Brazil’s population. Hence Nestlé’s hunger for Hsu Fu Chi’s distribution network.

“Understanding the consumer is the most important thing for us,” says Paul Bulcke, the boss of Nestlé. Nestlé has been sniffing around for takeover targets in China for the past two years. Hsu Fu Chi is not its first bite. In April it took a controlling stake in Yinlu Foods Group, a family-owned maker of peanut milk and canned rice porridge.

Multinational firms trying to woo Chinese consumers have so far concentrated on the country’s developing coastal regions. P&G, an American maker of shampoo, toothpaste and other sundries, has its Chinese headquarters in Guangzhou. Its Anglo-Dutch rival Unilever’s home is in Shanghai. Yet both firms are preparing for a “second consumer revolution” among the 665m Chinese who live in rural areas. The income gap between China’s coastal cities and rustic interior is still six-to-one, but rural incomes are rising and 665m heads could use a whole lot of shampoo.

The Economist

1. Many Chinese people save money in order not to show their big incomes.

2. Now China is the second-largest consumer market in the world after the USA.

3. Western companies make every effort so as to break into the Chinese market.

4. Nestlé has been trying to buy different companies in China for the past two years.

5. The majority of multinational firms’ head offices are situated in rural areas.

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Pack and Ship Services

As you can tell from the name, a pack and ship service handles the packing and shipping of merchandise. They typically concentrate on providing services to small businesses who are either unable or merely don’t want the hassle of shipping for themselves. They provide an excellent alternative to developing and maintaining an in-house mail room.

Pack and ship services typically do not store inventory, but concentrate on shipping services. Invoices, billing and all customer contacts continue to be done by the retailer. These services can be especially worthwhile to those who need to ship hard to package items or items that need special shipping or insurance.

Most pack and ship operations use several carriers – DHL, USPS, FedEx, UPS and others. Some will also arrange local transport and may provide custom drop-offs at airports. Many will pick up items as well as send them, so you could use them as virtual addresses.

Pack and ship services might be the better choice when you only need to send a few items or if you need to send very few expensive items. They also offer the additional benefit of being able to accept, as well as send, packages. This becomes very important if you want to send valuable or fragile merchandise, when the loss of even a single item might adversely affect your bottom line. If this is the case, insurance and package tracking are more important than the need to store large amounts of inventory.

Pack and ship services allow you more control over the order. Because you begin the process you can decide when the item will be shipped. If the item has a longer distance to travel before it reaches the hands of the customer, a pack and ship company would also be more likely to ensure a timely arrival.

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