Chinese consumers and green consumption: what, why and how.

I have come across a lot of market research studies that provide insights into the Chinese consumer market lately, including this study published by Roland Berger consultants in June (you can download it here).

Today everybody is indeed trying to understand how domestic consumption is unfolding in China as consumer demand in the West is shrinking and exports in China are suffering due to the world economic crisis.

A lot of these reports point out to the rise of green consumption, across all types of consumers in China. However, do we really understand what this is all about, what the Chinese consumer sees as ‘green’ and why eco-friendly attributes of a product or services would be a decisive purchase criteria?

:: Defining green consumption is not as easy as it seems

When researchers ask consumers whether they would prefer to buy environmentally-friendly products , they invariably answer in the affirmative as it makes them feel more virtuous and gives them a certain ‘good feeling’ . However such stated intents rarely aligns with actual behaviors in reality, for many reasons:

• Chinese consumers are still highly cost-sensitive and the premium put on being green is not as high as in Western markets. Beyond cost and price, brand name and image is also a key purchase criteria as it is often seen as a proof of quality and safety, as well as a ’social status symbol’.

• Chinese consumers are not as concerned about climate change and a deteriorating environment as their Westerners counterparts are as their level of awareness and education on these issues is not as high, even though there has been relatively some progress. At the moment environmental concerns directly affect the purchasing decisions of only a small proportion of Chinese consumers: “the wealthy, the ones living in the main cities, the better educated”

• The information needed to make the environmentally-sound or socially-responsible purchase decision is therefore not always easy to find, or to understand (and therefore to trust).

What is key to understand is the fundamental difference between Chinese and Western views on what green or eco-friendly means. For Chinese consumers, it means ‘honest and trustworthy’, ‘innovative’, ‘modern and developed’, ‘well-organized and well-planned’, ‘high quality product and services’, ’safe & healthy’ which is very different from the Western ‘back to nature’ perceptions (for some more takeaways, please check this study published in 2008 here).

Two key takeaways:

• When fine-tuning green marketing strategies and messages, it is therefore key to associate and link ‘green’ with ‘personal health’ and health-related product safety, rather than a much broader ’save the world’ type of messages. Messages have to be ‘audience-specific’ and talk directly to your consumers’ concerns or needs in a human, simple and compelling way (i.e. it is all about ME, rather than a broader US).

• The way Chinese consumers value ‘green’ goes beyond product attributes to relate directly to a company’s reputation.

Product safety & quality issues remain at the top of Chinese consumers’ concerns (i.e., recent melamine-milk crisis), which created some of sort of ‘presumption of guilt of corporations’. Brands and companies can therefore leverage the green credentials of their products and better communicate with their customers to ease tensions and doubts caused by asymmetry of information.

However, it is important to remember that this is a doulbe-edge sword that can potentially destroy brand and reputation: any ‘greenwashing’ type of accusations can be voiced and channeled not only by activists and NGOs, but also by millions of consumers online.