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PRD Patriot's Paradox

China youth nationalism not reflected in brand choices, recent survey finds

Despite growing feelings of nationalism, fuelled, among many things, by China's recent success in space exploration and the upcoming Beijing Olympics, Chinese youths are not discerning when it comes to choosing local brands over foreign ones, a recent survey has found.

Rapid economic development of the Pearl River Delta (PRD) has made its youths one of the Mainland's biggest spenders and most brand savvy consumers. Many foreign brands are seeking to establish bonding with them. The booming fortunes of Budweiser, SKII, Nokia and Nike among these youths represent familiar evidence of some preference for international brands. But at the same time, China's national brands are competing with international ones for the hearts and wallets of China's dynamic youths. Brands like Coca Cola competitor Jianlibao are at the forefront of attempting to harness national pride as part of their offering to the competitive market.

"The key takeaway for Hong Kong and international brands seeking to succeed in the Pearl River Delta is that they need to be seen as trendsetters in their own right. Hong Kong and international brands should balance their need for establishing local relevance without diluting their international credentials when trying to fit into the PRD youth market," says Joseph Wang, Group Managing Director, Hong Kong & Southern China; Vice Chairman, China, Ogilvy & Mather Greater China, which conducted the survey.

As the Closer Economic Partnership Arrangement (CEPA) begins to take effect, Hong Kong businesses have the added edge in creating branded, value-adding products and services targeted at the PRD youth market, he added.

Data from the 2003 China Marketing & Media Study shows that wealth in China has grown "younger," with young adults adopting the same income profile as older adults.

For example, in the RMB 1500-2999 income bracket, 15.2 percent are young adults aged 20 to 24, compared with all other adults who make up 14.6 percent of this income group. In the RMB 800 to 1499 income bracket, 26 percent are youths aged 20 to 24. The average disposable income for youths is RMB 1200, same as the average disposable income in Guangzhou. This underscores the importance of youths, not only as an influential force in society, but also as a key brand growth target.

As the tide of change is driven by these youths, the collision point will be brands. The question is: will young trendy buyers side with Nike or Li Ning.

Pro-China brands

The survey found that a strong sense of patriotism existed among youths in the PRD. When asked how important it was to be patriotic, 34 percent of respondents rated it as "extremely important" (ten on a scale of ten; ten being the most important), while 15 percent rated it "very important" (a nine on a scale of ten). Some 20 percent rated the importance of patriotism eight on a scale of ten.

However, while PRD youths have a strong sense of patriotism, these feelings do not significantly influence the evaluation of national brands against international ones. Usage of international brands among the strongest patriots is nearly as high as those with lesser feelings of nationalism, the survey uncovered. For example, 94 percent of the "more patriotic" used Coke as compared with 100 percent of the "moderately patriotic" surveyed; 59 percent of the stronger patriots used Bossini, compared with 70 percent of the lesser patriots. Therefore, the "patriot's paradox" of vocalizing the importance of nationalism does not yet have a sense of guilt or wrong when choosing international brands over the local equivalents.

"The survey yielded some very interesting findings into this elusive segment," said Salina Cheng, Associate Director, consumer research firm Synovate.

"Respondents did not see any direct relationship between patriotism and buying national brands over international ones. Many brands, including Jianlibao, have built their success so far around patriotism. International brands like Coke and Wrigley's have also attempted to appeal to patriotism. However, the study shows that while youths value nationalism, this is ultimately a weaker consideration in brand choice compared to other more personal factors." 

Originality not nationality is the answer

In fact, only 19 percent of those surveyed considered country of origin a factor in brand choice. Other factors including price, perceived quality, style, brand image, were equally important in affecting brand choice, suggesting that PRD youths placed the greatest value on originality of brands rather than nationality. This is one of the key reasons why international brands are preferred for their clear brand image, while national brands are perceived as copycats.

It was also found that international brands were perceived to be more appealing, superior and aspirational, as confirmed by the quantitative results. For example, respondents rated Nike 7.79 for superiority, compared to a 6.84 superiority rating for Li Ning.

Internationalism the desired destination

Internationalism is the desired destination of brands for Guangzhou's youths. The survey also found that young Southern Chinese wish for their homegrown brands to succeed on the world stage.

The survey also showed that many youths were confused over the national identity of most mass international brands. Given the significance of international success in building brand credibility, to lose this association is to weaken brand equity.

Despite the preference for international brands, it is interesting to note that the perceived performance gap between national and international brands is becoming smaller over time. This can be attributed to the enhancements made to the local products.

"Overseas success of Chinese icons such as Yao Ming and Tsing Tao beer is a big driver of the aspiration to go global," said Edward Bell, Head of Planning, Ogilvy Hong Kong and Southern China.

"This is not about Americanization of local brands or liberalization of values, but the affirmation of local quality and credibility. The belief is that China can be as good as the rest, if not better. But until it is seen as so, there will still be the buying barrier," he added.

Given the pace of the learning curve among the mainland's consumer and professional markets, this advantage won't be available for very long, however, says Mr Wang.

"At Ogilvy we believe that the answer rests in brands and the value it creates for businesses. In the overproduced world, brands represent the only sustainable future differentiation available. More ownable, more emotive and more motivating, brands rather than products are the ultimate battleground for long term growth in mainland markets.

"It is now up to Hong Kong and international businesses to exploit a superior understanding of how brands can be used to connect to the target consumer to grow the business and out-position rivals," says Mr Wang.