Chinese consumers today value brand names and the quality they represent.
Economic change has been considerable in China since the early 1990s, and today there is an entire generation that has never known anything but prosperity, Andrew Wu said during a special seminar in Calgary sponsored by the Alberta Livestock and Meat Agency.
“The speed of change is unprecedented anywhere in the world,” he said.
As well, imports are welcome, and there is potential for an exporting country like Canada.
However, Canada may have been too passive and needs to find ways to brand itself and offer quality goods. It has a reputation for plentiful natural resources and clean water, soil and air, but it needs to find something with which consumers connect.
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Brands are hard to define and there is no specific model for selling them. It also takes more work to sell a finished product as opposed to raw materials.
“Nobody will wait for Canada to go up in the chain,” Wu said.
Trade missions visit China regularly, and he suggested rather than just meeting with government officials, Canadians need to visit supermarkets to get a better sense of what the new China is really like.
Born in Shanghai, Wu was educated at York University and worked at Maple Leaf Co., where he sold premix feeds to China.
He returned to China in 1993 to work for Christian Dior and later the Asian division of Sony.
Today, he is group president of LVMH Group for Greater China. The conglomerate represents 60 high end brands in liquor, cosmetics, jewelry and retailers such as Sephora.
Since the early 1990s, a growing taste for high end products has developed and as incomes improved, so did sales. In the beginning, many Chinese were not accustomed to the new style of retail stores that offered self service and an array of choice. Today, many of those stores are posh, sophisticated outlets where quality is king.
While the country’s average annual income is still $4,000, the middle class is growing and there is an increasing number of billionaires.
“Their money was made with vision,” Wu said.
Since 2000, the government has projected seven percent annual growth in gross domestic product, but it has surpassed that by several percentage points each year. However, 2012 is projected to be around seven percent.
The lifestyle of the Chinese is changing. The country has had a reputation for being a cheap source of manufactured goods, but factory worker wages are improving, which could drive up costs but also mean they now have more money to spend.
There are 122 cities with more than one million people, and by 2025 probably 70 percent of the population will be urban based. At one time, most people were government employees but these days most work for private enterprise.
The demographics are also becoming younger. There are 1.34 billion people, and only one percent are in their 70s and 80s who live frugally.
Thirty-eight percent are middle aged and they are the first generation to have money to spend. They have a good understanding of what the old China was like and are enjoying today’s prosperity. They were among the first to start buying cars.
The youth are highly segmented. There are 219 million people in their 20s and early 30s, 171 million teenagers and another 100 million children. They are connected to social media and want choice and quality.
