Chinese Consumer Behavior: Historical Perspective Plus an Update on Communication Hypotheses

CHINESE CONSUMER BEHAVIOR: HISTORICAL PERSPECTIVE PLUS AN UPDATE ON COMMUNICATION HYPOTHESES

Thomas Irby Kindel, University of Montevallo

[Those wishing to contact the author please write to Dr. T.I. Kindel, Associate Professor of Marketing, College of Business, University of Montevallo, Montevallo, Alabama 35115 USA.]

ABSTRACT -

Chinese in the People's Republic are strongly influenced by their traditional classical cultural values when they enter the marketplace. They make much more use of informal channels of communication and rely more heavily upon opinion leaders and reference groups. To effectively penetrate this market, Western firms must adapt their managerial strategies.

Historical Perspective

There are several early writings about Chinese consumers and related Asian groups which are particularly noteworthy. Most of the work has to do with particular topics (i.e., advertising to Chinese); also, the earlier work of this author tries to handle the question of a comprehensive model of Chinese consumer behavior involving the broad spectrum of products and services-.

Given that Chinese have spread out among all the Asian countries and that classical Chinese values have clearly extended to all of Asia in their influence, it is right to point out the fine pioneering work of Mehta on Indian consumers in which he lists numerous hypotheses. He includes, amongst others: (Metha 1973, pp. 23-25)

1. "Owing to certain cultural factors, consumers . . . are slow in the acceptance of new technology and resist marketing innovations involving complicated features . . .

2. "There is a general lack of confidence in . . . new products . . . as compared with the confidence they depose in the established brands."

3. "There is a great need for security and the risk taking ability of the consumer is low."

4. "Kinship consideration and primary group factors continue to have a strong hold over the family and vital purchase decisions are taken after due consideration with these groups."

5. "There is a general distrust of the marketer and his gimmicks."

In the early 1980's the work of Thorelli is most noteworthy, particularly his research on middleclass Chinese consumers which represents the first such effort by Western researchers. Thorelli points out the increased consumption of such consumer products as televisions, wrist watches, and sewing machines among the middle class in China. He also raises the issue of whether or not this group has "shed predeterminist values." His pioneering work also includes the first evidence about Chinese satisfaction or dissatisfaction regarding consumption behavior. He notes the Chinese reluctance to complain about products which do not meet their expectations. (Thorelli 1982 and 1983).

Thorelli developed a significant data base in his 1982 study in Thailand in which he obtained questionnaires from 1,000 respondents (Thorelli and Sentell 1982). Recently, he has drawn numerous parallels between his Thailand and middleclass Chinese students (Thorelli, Shenzhao, and Sentell 1985).

The very earliest book on Chinese consumers dates back almost 50 years. Crow pointed out that Chinese "are the world's most loyal customers," plus have a high degree of brand consciousness, reliance on their family to form business judgments, and a quite negative view toward a salesman (Crow 1937).

Apparently, the first major attempt to model the comprehensive behavior of Chinese in the marketplace was published by this author (Kindel 1983). Of course, the evolution of the model, in part, continues in this paper. The particular perspective of this author is to attempt to study Chinese via the exogeneous variable of "classical Chinese cultural values."

The Contemporary Chinese Market

Interest by the Western world in the Chinese market has increased substantially over the Past decade since the end of the cultural revolution. This is due mainly to two factors. First, policies of the Chinese government have changed so as to encourage business relationships with the West. Zhang Wenjin, Chinese Ambassador to the USA, recently stated that "It is China's firm national policy to open up the outside world" (China Daily newspaper, March 22, 1985). Almost one thousand joint venture manufacturing contracts have been entered into by China with Western firms since 1982. Second, personal incomes have risen dramatically thereby allowing Chinese consumers to provide for more than mere necessities. Average income of Shanghai residents increased by 23% in 1984 and farm incomes rose 377 (China Daily newspaper, Feb. 16, 1985). Further evidence is seen by the increase in the number of television sets in use of from 7 million in 1980 to 45 million in 1985 (Asian Wall Street Journal, March 11, 1985). The potential of the consumer market in China can be seen by the recent moves by Coca-Cola and R.J. Reynolds (tobacco) to set up operations in China.

The author feels that the salient approach to understanding the Chinese consumer is to begin with the classical Chinese cultural values which have been so influential for over 2,000 years. There is now a broader recognition of the importance of the cultural framework for analysis especially within the international business world.

Runyon (1977 p. 95) writes of the significance of culture in his statement that "The major problem U.S. marketing managers face in marketing to foreign cultures . . . is to assume that these cultures hold the same values, use the same symbols, exhibit the same behaviors, and utilize the same decision processes to which the managers are accustomed . . . they (managers) should first ascertain the central values of the target cultural group . . ." Reynolds (1978 p. 28) concurs in his statement that the increased complications associated with managerial decisions made in the overseas context are due to cultural differences. Further, Hall (1973) states that ". . . it is so important for American businessmen to have an understanding of the various social, cultural, and economic differences they will face when they attempt to do business in foreign countries." Other authors concur with that judgment including Douglas and Dubois (1977), Markin (1974), and Sheth and Sethi (1977). Howard and Sheth (1969) and Howard (1977) point out the significance of 11 values" as they relate to behavior of consumers.

In short, the Western business executive must fully understand Chinese cultural values in order to effectively and efficiently sell to Chinese consumers in the years ahead. The changes within China, as interpreted mainly by the Western press, are generally superficial changes. The old motivations and perspectives are still very significant and pervasive. An astute Western researcher having lived in China wrote, "Emotionally what impressed me most after two years in Beijing is the resilience of Chinese society and culture. Despite all that has happened, traditional cultural norms, lifestyles, and ways of thinking are still very much in evidence, even in the cities where Western influence cut deepest" (MacKinnon 1983).

The Classical Chinese Cultural Values

One surprising conclusion about studying Chinese culture and their values is that they have a rather clear and consistent value system which has endured for many generations. As one authority stated, "The Chinese way has been maintained for more than two thousand years" (Hsu 1970, p. 16). Further, the Chinese have absorbed other cultures when contact was made and have not been seriously changed by such contact.

A major point to consider is that Chinese values have a much, much stronger impact on the daily behaviors of individual Chinese than is true of the value system impacting individuals in the USA. This is due to a number of factors such as the rigid socialization process, social controls, the reward and punishment system - both formal and informal, the strongly morality-based legal system, the offical policy of a rather stern national government and their political system. Further, much of the value system in the Western world (Judaic-Christian) is eschatological and other-world in emphasis. The Chinese value system (Confucian) is totally concerned with daily behaviors of the individual. Unfortunately, the Western observer all too often fails to realize the full impact which cultural values have on Chinese people.

A traditional beginning point to understand Chinese culture is through the work of the philosopher, Confucius, who lived about 2,500 years ago. A major authority suggests that "his (Confucius) teachings have profoundly affected a quarter of the population of this globe" (Smith 1958, p. 178). Confucius emphasized the importance of interpersonal relationships or a social-orientation which is still a basic pillow of Chinese life today. The Confucian philosophy was one of great conservatism in which things remained as they always were. It placed emphasis on the status quo and was never concerned with the life after death or any religious dogmas. Jarvie and Agassi (1969, p. 151) pointed out the consequences of the Confucian philosophy in stating that "the highest value in China is to live properly, which particularly concerns being polite and obeying the rules."

The emphasis on conservatism and living properly, based upon introspective Confucianism, leads to the attributes of Chinese modesty, humility or self-effacement which we see today. One can contrast this orientation with the widespread Western values of self-serving motivation and behavior resulting from a philosophy of individualism.

Confucius established the principle of filial piety which is still pervasive today. It is found among those Chinese living in the Western world today. Confucius saw this devotion to parents as the "only way to save a troubled world" (Cheng 1980, p. 90). There have been criticisms of this principle of filial piety, in particular, and of Confucianism, in general (Louie 1980, p. 7). However, it remains a basic element of their culture.

Shively and Shively (1972) applied the value-orientations model of Kluckhohn and Strodtbeck to the Chinese culture. They concluded, first, that in terms of human nature, Chinese see man as a mixture of good and evil. They further analyzed Chinese as wanting to live in harmony-with-nature, that Chinese are past time oriented or have respect for the past, have a being orientation (taken from the Taoist thought 'that a man must follow his instinct' and 'that there is no principle that is right in all circumstance'), and have a lineal nature (one based on age) toward interpersonal relationships. one could contrast this with the Western view of man as basically good, with mastery over nature, present and future time orientation, and emphasizing individualism in their interpersonal relationships.

The concept of living properly, mentioned previously, manifests itself in the classical Chinese preference for aversion to situations which may be embarrassing or produce conflict. This results in a desire for harmony which is seen by some as "a sign of inscrutability or even deviousness" (King and Myers 1977). King and Myers also point out the eight constant virtues of Chinese culture as face, chih (shame or guilt), love, righteousness, propriety, wisdom, sincerity, and modesty. English terms can have different meanings when applied to the Asian situation. For Asians, in general, sincerity means to "follow the appropriate social norms" regardless of one's private views (Bond 1981). For Westerners, it normally means a consistency between one's private self and public self.

The concept of face is pervasive in Chinese culture. They distinguish two types of face, one called lien and the other called mien-tzu (Hsien 1944). Lien deals with the moral character of an individual. It is earned by a person of good moral reputation such as the person who always fulfills their duties and obligations. A person with lien has high status by fulfilling a role and following proper standards of behavior. Mien-tzu involves prestige or reputation based on personal effort such as the acquisition of wealth, position or power. Both lien and mien-tzu result from a highly structured society in which the social system is carefully graded with clear lines of demarcation. Those who follow the rules and act properly can move higher up the status order.

A concern with proper living, face, harmony, social consciousness, moderation, etc., leads to a high degree of moral self-control, at least publically, for the individual Chinese. Today, only on rare occasions would one see a Chinese lose control and become angry, insulting, or threatening in public. The moral code is so pervasive in influence that one expert suggests that "moral codes are often inseparable from Chinese laws" (Chang 1979, p. 13).

The earlier writings of Confucius identifies cheng as a key concept. It means sincere motivation or being genuinely honest with oneself. A related value is chih, mentioned earlier as shame or guilt, which implies a conscious awareness of moral norms of conduct. The work of Lifton points out the Chinese values of balance, moderation, and harmony which leads to a "cult of restraint" (Lifton 1967).

By studying the child-rearing practices with Chinese families one can see dramatic differences from Western cultures. This author feels that a study of the socialization process beginning with child-rearing practices is clearly a key to understanding the Chinese way of thinking and behaving. The child in a Chinese family is brought up "on the assumption that maturity means a movement towards an integration into the social fabric of the family, the clan or the village" (Waldie 1981). Whereas, the Western child is reared to mature into an independent and autonomous person who is highly individualized and apart from the nuclear family. Consequently, Hsu calls "mutual dependence" the outstanding characteristic of Chinese (Hsu 1970, p. 278).

Training in school simply continues the child-rearing practices with Western schools emphasizing acquiring skills for self-expression by students. Whereas, in Chinese schools the emphasis is on stiff exams (with rote memory type of learning) and heavy amounts of work. The traditional Confucian education ideal was to train the student "first and foremost with his place in the scheme of human relations (Hsu 1970, p. 91).

Chinese today are frequently considered situationally-oriented or very pragmatic as opposed to strict adherents to principle. Again, this is due to child-rearing practices in which a child is taught by parents, extended family and other adults, exposed to many points of view, and allowed to accompany parents even on business meetings. Consequently, Chinese children learn that circumstances have a major bearing on what is right or wrong and that compromise is almost inevitable. Western children are under the guidance of one set of parents, are rarely exposed to various points of view, are kept in a more closed relationship with life's events, and grow up with the concept of one right way to do things. They become more dogmatic or inflexible in following a learned principle (Hsu 1970, p. 103).

The emphasis on past-time orientation, harmony, veneration of age, and learning of proper behaviors so as to receive social approval has led to a rather hierarchical society. Chinese, even today, seem to have a strong admiration for authority.

One can see an obvious sign of this preference for hierarchy even in contemporary Chinese conversation (Bond 1981). Chinese prefer to address someone in more structural or hierarchical-like terms (i.e., older brother Chan or Chairman Mao) rather than the egalitarian emphasis that one would find in the United States (i.e., Bob or Linda). Helping to preserve a hierarchical arrangement is the Chinese devotion to loyalty as a virtue to be admired. Consequently, seniority within an organization is very significant in the status categories.

The sense of security for Chinese comes not from acquisition of material rewards and great personal wealth as in the Western or capitalist states but from their family and kinship system. The idea of mutual dependence mentioned earlier means a Chinese is expected to assist family and friends and expects the same in return.

The classical Chinese status or class order (still common today) places scholars at the top followed, in order, by farmers, craftsmen and laborers, and finally, merchants. The most important division is between "those who have mastered the classics and the rest of society" (Hsu 1970, p. 150). This is in stark contrast, at least, to the United States where intellectuals are often viewed ambivalently, at best, and business success along with wealth has been highly admitted throughout its history.

The Chinese view competition quite differently than do Westerners in terms of the effects. They use it to bring people together such as families trying to see which one can have the most elaborate ceremonials. One gains face in such a competition and all participants share the honor. There is no loser in a collectivist system because it would disrupt harmony. Even in highly competitive national sports contests today in the People's Republic of China, banners above the stadium typically read "Friendship first, and competition second" (Bond 1981).

In summation, we have a people whos culture placed heavy emphasis on social-consciousness, family ties, mutual dependence, high moral values, hierarchical systems, harmony, the status quo, development of a social self rather than a private self, and pragmatism amongst other values.

Given the probably impact of classical values on modern Chinese (although the degree of the impact can be debated), we now turn our attention to the Chinese response in the marketplace. Here we hypothesize about purchasing behavior within the People's Republic of China to the extent consumers are influenced by these classical values. In general, we consider communication hypotheses covering such general topics as the significance of word-of-mouth communication and reliance on opinion leaders and reference groups in the purchasing process. The consumption behavior of Chinese is contrasted with that of consumers in the USA. The hypothesized differences in the two consumer groups would suggest a needed change in managerial strategies by firms from the West who try to sell to Chinese consumers. The paper concludes with a number of new strategies Western firms could employ to more effectively reach the Chinese consumer market.

HYPOTHESIS #1:  Informal or word-of-mouth communication is much more important for Chinese than consumers in the USA.

Sub-hypotheses

1.1 The informal channel among Chinese is likely to diffuse information more accurately than the informal channel in the USA.

1.2 The informal channel is longer for Chinese than for those in the USA as the typical Chinese individual has more social contacts and a larger and closer extended family.

1.3 Chinese are likely to place more trust in the informal channel than does the individual in the USA.

1.4 Mass advertising through formal channels probably is of much more limited potential for attracting attention than in the USA.

1.5 Mass advertising through formal channels has much less ability to persuade consumers in China.

1.6 Communication within the informal channel amongst Chinese for a given product idea is much faster in diffusion of ideas than in the USA.

1.7 It would be easier for the sender of a message (the commercial firm) to identify and effectively utilize the informal channel for Chinese than for those in the USA.

1.8 Chinese make relatively much more use of an informal channel than do consumers in the USA.

1.9 The informal channel is more important in the short-run for Chinese than is the case in the USA.

1.10 The long-run importance of the informal channel is the same in China or the USA.

11 Given that the informal channel carries both facts and rumors, Chinese are much more likely to rely on the rumor moiety than are consumers in the USA.

1.12 Chinese will utilize the rumor moiety of the informal channel (what they connote and feel about the message) more so than the factual moiety (what was actually stated in the message).

HYPOTHESIS #2: Chinese are much more likely to be influenced in their purchasing by opinion leaders and reference groups than are consumers in the USA.

Sub-Hypotheses

2.1 The extended family is the most influential reference group for Chinese.

2.2 The elder members of the immediate Chinese family are the most influential.

2.3 The concept of extended family for Chinese includes more distant relatives than the concept in the USA.

2.4 Chinese consumers are much more likely to consider opinions, values, and influences of deceased relatives (ancestors) in their current consumption choices.

2.5 For Chinese, opinion leaders are polymorphic and cover numerous product categories rather than only one.

2.6 Characteristics of opinion leaders for Chinese include older people, political leaders, family elders and authoritarian types.

2.7 Chinese are more likely to use opinion leaders in making purchase decisions for products which are privately consumed than are USA consumers.

2.8 The simplified two-step flow of communication process model is likely to be much more applicable to Chinese than to USA consumers.

2.9 Chinese are more likely to be accurately described by the theory of conspicuous consumption than are consumers in the USA.

2.10 Role conflict is much less common amongst Chinese.

2.11 Once a reference group has established a product as the normative standard, Chinese are much less likely to deviate from the accepted product on their own (i.e., by purchasing a competing product).

2.12 Reference groups such as work or employment associates, religious groups, and peers (age) groups are relatively less influential on individual Chinese than are the same groups on USA consumers (due to the Chinese over-reliance on the family group).

2.13 Nonmembership groups (i.e., music ensembles and sports teams) are much less influential on Chinese than on USA consumers.

2.14 Chinese are members of less reference groups than are USA consumers.

2.15 Consumers in the USA are influenced by a larger number of reference groups than are Chinese.

Managerial Implications

The Western executive must view the informal communication channel within China as the primary channel to diffuse company and product information. It must be a major element of the promotion mix for the marketer and should be considered as a mass media tool. It must be consciously manipulated simultaneously with the formal mass media channels in a promotional campaign.

In terms of effectively influencing Chinese consumers, the Western firm has to address the Chinese love of rumor and gossip. Hence, connotations of company and product brand names must be examined before introduction of the product into the market. In fact, off-duty, personal behavior of Western managers working in China is highly important to the firm's image and its effectiveness.

Firms will have to consider the extended family as the focal point for marketing research rather than isolation of the individual consumer. Research into opinion leadership is necessary as the profile of opinion leader characteristics will differ. This would suggest newer approaches to advertising are needed. The personal characteristics of models used in commercials could easily change to include older people of a more authoritarian Personality. Clearly, effective communication in the formal mass media must picture groups of Chinese in the advertisement speaking directly about the new product which somehow fits into the older value system. The communication would present a family setting as the key reference group of influence.

Western firms which have educated their Western managers as to differences in the Chinese culture have a distinct "competitive advantage" over other Western firms which utilize the standard Western themes and expectancies in approaching the Chinese market. Eventually, commercial advertisements as well as products will have to be "localized" for the Chinese market to reflect cultural value differences. The firms which begin this process first will be the most successful in the long-run.

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