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Courting China's Super Consumers

China’s Super Consumers:  What 1 Billion Customers Want and How To Sell It To Them (Wiley), is required reading for elite travelers whose companies want to tap into the Asian market.

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The book is by Savio Chan, a specialist in American and Chinese business relations and former founder, Chairman and CEO of Microsoft Certified Technical Education Centers. His experience in China includes international business development, product sourcing, licensing, start-ups, and government relations. He has been featured in The New York Times and is considered an expert on doing business in China.

As President and Chief Executive Officer of US China Partners Inc., a privately held business development firm specializing in Market Entry, Strategic Sourcing and Marketing Development in China for U.S. companies, he facilitates local and cross-border joint ventures among leading Chinese multinationals as well as Fortune 1000 companies.

Among his credits Chan is a frequent keynote speaker and panelist at various business and technology events including the American Express Minority Small Business Seminars, Microsoft technology conferences and the e-Business Conference and Expo, co-organized by Business Week and Information Week.

He also hosts the PBS syndicated TV show, “Asian America,” sponsored by Wal-Mart. Recently, Savio was awarded 2009 CUNY (City University of New York) Asian American Distinguished Alumni Award.

However, Chan’s world changed in 2008 when he received an email from Steve Jobs soliciting his advice on breaking into China’s robust mobile phone market.  Chan uses it as an example on how even the most successful consumer products companies can face unique challenges selling to Chinese consumers, navigating the best way to set up shop, who to partner with and staying out of the pitfalls that have haunted many companies.

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Speaking to a CEO luncheon of The Luxury Marketing Council’s New York Chapter hosted at Mr. K’s Restaurant, the author provided both tales of riches and warnings that many foreign companies come in without a proper understanding of how to segment the market.

As an example, he noted that affordable luxury companies such as Apple are having success by tapping into rural markets where disposable income has been increasing but there are no glitzy shopping venues competing for their wallet. A chain of stores selling smart phones and other consumer products is tapping into the market via a network of stores located next to some of the country’s several hundred thousand rural post offices, providing both consumer access and the product’s credibility from the post office. At the same time, he noted China’s version of home shopping television is offering new opportunities for small to medium size businesses to reach consumers outside of the major cities where rents and marketing can be expensive.

Chan says recent laws have relaxed capital requirements to do business in China as the government wants to encourage more foreign companies to set up shop.

He noted how the National Football League, using the Internet to set up shop, is seeing sales of licensed goods rocket despite only having two million fans in China compared to 130 million for the National Basketball Association.

Using the NFL as an example, Chan says, it only takes a small sliver of China’s huge and growing consumer market to make millions of dollars in profits, however the market is more diverse than ever.

At the same time local officials can often be critical and sometimes compete against each other to woo businesses to their towns and provinces.  He noted that the constantly updated central Five-Year Plan provides a road map of what industries the government wants to attract for specific regions.

And then again Chan says marketers need to be tuned into to how Chinese consumers think. For example, they readily consume premium ice cream when they are out, but the same product was a bust in supermarkets as there was no prestige to the consumer for a high priced product in the privacy of their home.

The next wave of wealthy Chinese consumers has a different approach than the old generation. While their parents stayed at cheap hotels and bought expensive watches for prestige, they are more likely to treat themselves to luxury accommodations, but are more practical when it comes to buying hard goods than their parents. China’s strong family dynamic means there are opportunities to sell products to parents that will improve life for their children.

The 240 pages and 21 chapters co-authored with Michael Zakkour is already Top 10 in Business & Money on Amazon. And for those worried that language is an obstacle, Chan says in terms of finding the right partners, most speak English fluently after having gone to school in the West. He notes Alibaba’s Jack Ma in fact was an English teacher before his recent ascent to being one of the world’s richest people.

Hardcover is $18.63 and $11.99 via Kindle.