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Hear ye, hear ye: It's perfect time for Singapore companies to step in China
67% of Chinese scrutinize products' country of origin.
According to research firm Mintel, Singaporean companies considering entering the Chinese marketplace may have more reason than ever to make the next step, as with food scares and demand for foreign brands at a premium, Chinese consumers are paying more attention to the country of origin.
Here's more from Mintel:
Indeed, some 67% of urban Chinese consumers now name looking at the name and address of the manufacturer and distributor as an important factor of purchase.
In addition, some 66% of urban Chinese consumers claim that they check for an industry certification label, while Brand also remains a key issue - with 92% claiming they would check this.
Furthermore, while the habits and desires or many of the burgeoning middle class are changing, the opportunities for Singaporean businesses both locally and in China, still show significant growth potential, a larger portion of which will come from the “nouveau riche” from Tier 2 and 3 cities in China.
More and more often luxury products are bought outside China by Chinese consumers, and Singapore is one of their key shopping destinations. While the Chinese middle class shopper is less likely to shop as conspicuously as in the past, 46% of those surveyed claimed to own a Chanel product, 28% an LV product and 23% a Rolex product.
For Singaporean companies eyeing the massive market opportunity in China, it might be the right time to consider entry. According to Mintel’s director of Asia Pacific research, Matthew Crabbe:
“China’s consumer sectors continue to grow fast, but mostly remain highly fragmented. China’s post-1980 consumers have grown up with and become expectant of continual rapid change and so continue to seek out new products and brands that satisfy new and diversifying consumer lifestyles. Foreign products retain a strong competitive edge thanks to concerns over domestic product and service quality. Value for money remains key, but innovation, improvement and individualisation are increasingly what differentiates those brands that succeed among the mass of competitors. A lack of trust among Chinese consumers for local brands has led to an upswing in the sales of foreign companies across the food industry, with categories such as premium baby food growing at over 400% in just six years.”
When it comes to shopping, Singapore benefits from Chinese tourism dollars out of proportion with its small size, with waves of tourists spending significant sums in the stores of Orchard Road and elsewhere. Indeed, 90% of China's hundred million middle class holiday annually, and international travel is growing as a destination.
In the luxury goods market, 2010 showed Asia Pacific accounted for 36% of the global luxury consumer goods market, followed by Europe at 35%, Americas at 26% and 4% for other regions (including the Middle East, Africa, and India). In 2011, Asia Pacific grew share further, to account for 38% of the market. Mintel predicts a continuing rapid growth through to the end of 2012.
“Due to high taxes on luxury goods taxes in China and greater global travel opportunities for Chinese citizens, those PRC shoppers desiring luxury goods are increasingly purchasing abroad. A combination of regular flights, easy visa access, shopping and property buying trips, the new casinos and discreet off-shoring of assets for mainlanders in Singapore makes the island state the perfect destination for a wide range of mainland visitors from hi-rollers to group package luxury bargain hunters. As travel grows, it is now not just the usual overseas luxury purchasing destinations for the Chinese. Hong Kong, Macao and Singapore are all benefitting but competition is fierce and Singapore business needs to be aware of the changing market to continue to benefit.” Matthew concludes.
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