Impulsive Purchasing Behaviour in China

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Although Japan felt immediate effects of the 9.0 earthquake on March 11^th, the aftershock made its way to China in a different form. Panic due to radiation scares from Japan’s Fukushima Daiichi nuclear plant quickly spread across the Middle Kingdom. Following a mass text message guised as an important BBC announcement, hundreds of thousands of Chinese consumers hit the markets to stock up on salt – which was thought to combat radiation. What they didn’t know before impulsively purchasing lifetime supplies of salt (marked up to 10 times the typical price for the special occasion) was that the distressful text message was a hoax. By the time impulsive consumers realized that there was no radiation scare (and even if there was, salt wouldn’t remedy it) mega-chain stores had released statements reinforcing their non-refundable food product policy.

Before I had time to brush this salt incident off my shoulder, there was already a new craze – laundry detergent – a product that just happened to be on my grocery list a few days ago. I strolled over to my local Carrefour and perplexedly gazed at an entire aisle of desolate shelves where the detergent once was. This time consumers were reacting to Proctor & Gamble’s announcement of a 5-15 percent price increase on products, effect April 1^st (no joke). During what some journalists have called the “detergent dash”, some consumers reportedly bought a year’s supply of items like paper napkins, only to save a few Yuan in the long run.

White, granulated products aren’t the only popular items either.  Last week it was reported that Hong Kong mothers were hoarding Japanese baby formula among other “pre-quake” imports as fears spread over contaminated food from Japan.

From a PR and marketing perspective, I’ve gotten a few golden nuggets of information from China’s impulsive purchasing behaviour in the past few weeks.

For PR:

How to proactively avoid a crisis situation by monitoring the news

1. Monitor the media for news that can connect to your company in ANY way
2. Be the first to acknowledge your company’s connection to the event – transparency is key
3. Communicate with the public, whether your company was effected or not (shortly after news of the radiation scare, China Marine Food sent out a press release to ensure customers that their food is still safe)
4. Monitor feedback from key audiences – open a two-way communication channel
5. Provide continuous updates until the situation has passed

For marketing:

An assessment of Chinese mass-consumerism based on these events

• Purchasing behaviour is influenced by environmental conditions, WOM marketing and the purchasing behaviour of others
• The most significant cases of impulsive buying are for health reasons – emphasis on health benefits for products
• During what may be perceived as a crisis situation, people in a middle to lower income bracket and with less access to information are more prone to mob mentality when it comes to certain purchases; upper-class citizens were not reported to impulsively purchase high-cost remedies (difference in mentality)
• Government intervention significantly decreased impulsive purchasing, but thousands still continued the impulsive purchasing regardless – consumers often need the approval and opinions of people around them and in this case, the reacted to fellow purchasers rather than messages coming directly from the government or a specific company
• Chinese have different spending habits than Americans; they will not spend more than they earn for short-term gratification, especially lower class citizens who typically do not own a credit card

 How to make your product/service desirable to mass consumers in China

1. A publicity stunt or major occurrence (creation of hype) 
2. Limited time offer catering to the hype – market through WOM
3. Accessibility and low cost of product/service
4. Media coverage while running with the hype to entice others

At my request for a colleague to proofread this post before submitting it, he mentioned the implication that I’m suggesting to take advantage of the consumer’s fear to sell products. Rather than changing my findings, I would just like to note that I am not suggesting that marketers induce fear to sell their products or services. However, I am suggesting that typical marketing methods, such as WOM and publicity stunts, may prove useful in reaching these specific consumers.

Interesting Facts

• China’s national sales of salt peaked on March 17^th at 370,000 tons; after government crack down on the rumours, sales dropped to 82,000 tons on March 19^th, still well above the average daily sales of 15,400 tons
• The last time China faced similar panic buying was during the epidemic of severe acute respiratory syndrome (SARS) in 2003, when shoppers bought vinegar under the mistaken belief that it could prevent the deadly disease

Public Relations开国元勋 (Founding Fathers)

Anyone who has studied public relations knows of the industry’s so-called “founding fathers”.

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 P.T. Barnum (1810-1891) cleverly promoted his eccentric museum and circus with media stunts and provocative ads. From salesman to circus king and politician to philanthropist, Barnum dubbed himself “showman by profession.” In choosing Barnum as one of the 100 most important people of the millennium, LIFE magazine dubbed him “the patron saint of promoters.” The PR industry credits Barnum for his mastery of promotion and press agentry, which helped developed the modern publicity model of PR.

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Ivy Lee (1877-1934) was a journalist for the New York American, New York Times and New York World. In 1903 he became the publicity manager for the Citizens' Union and formed Parker and Lee public relations firm with colleague George Parker. In 1906 he worked for the Pennsylvania Railroad company, which was under scrutiny for withholding information of an accident to reporters at the time. He immediately issued what is considered the first press release and took reporters to accident sites, regardless of the company’s scepticism to release such information. Lee was promoted after receiving positive feedback, and his job description provides archives for one of the first VP-level PR positions. He later became personal advisor to John D. Rockefeller.

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 Edward Bernays (1891-1995), a soldier exposed to WWI propaganda and marketing techniques, applied his uncle’s (Sigmund Freud) ideas in the commercial realm to control how people behaved and thought. Not only did he coin the term "counsel on public relations", but he also founded the first American public relations firm in 1919. His career led from journalist to press agent and publicist for the American Tobacco Company and General Electric Company. He tutored presidents, political leaders and companies in the use of mass media.

The 19^th century seems to hold distant memories in American and Canadian history; back then the second largest country in the world was populated by roughly 400,000 people and business still revolved around fur trade. Meanwhile, during the Qing Dynasty (1644-1911) China's population dramatically expanded to 400,000,000. Merchant guilds proliferated in all of the growing Chinese cities and often acquired great social and even political influence. Although this period was also faced with immense military and social conflict, it saw outstanding achievements in science, art and architecture.

All of this got me thinking. If the foundation of American public relations can be credited to a soldier with an understanding of psychology, a transparent journalist and an extravagant salesman, imagine all of the undiscovered PR practices that must have taken place in the great history of China.

I once wrote an article about Chinese medicinal pear candy that carries a story dating back 1300 years, to the Tang Dynasty period. The candy was supposedly developed by an emperor’s doctor and the recipe was made public after an inside leak… you see, these things happen with or without the help of Assange. Soon after, a group of hawkers paraded the streets selling the candy and generated public interest with improvised jokes, ballads and tongue-twisters. If the practices of these hawkers were also documented, is it possible that they too could be credited for shaping modern day public relations?

University professors, Ping Ping Fu and Gary Yukl, set out to prove that “cultural values can profoundly affect the attitudes, behavior, and performance of individuals” through their research that examines the perceived effectiveness of influence tactics in the United States and China. Their study focused on managerial behaviour and confirmed common perceptions that Americans prefer direct confrontation, while Chinese use indirect forms of influence, often involving a third party. They state, “Even though rational persuasion is a flexible tactic that can be useful in any culture, Chinese managers are likely to use it less than American managers, because it can provoke overt disagreement, which is considered highly undesirable.”

Contrary to most western efforts to influence public behaviour and perception, Chinese will build interpersonal relationships as a basis for influence. Leveraging on trust and respect that are woven into the relationship, individuals can covertly sway opinion. However, it is likely that a formal means of public relations never surfaced in earlier days due to strict government control and influence over business operations. The crafty merchants who originally sold medicinal pear candy were likely lacking the necessary credentials and connections to apply their skills in a professional setting.

Maybe there is another class of individuals who performed PR-type roles in China’s history. It would be fascinating to unveil some influential figures as the profession has begun to really take shape in the past decade.

PR Girls in China

What's in a Name?

In my last post (Lay of the Land), I talked about meeting people at an event who claimed to be public relations practitioners, but were actually nothing of the sort. I examined the situation in terms of hosting events and inviting the right people. However, this post will explore the Chinese linguistic and cultural associations with titles.

After living in China for a while, I’ve found that it’s common to assign respectable titles to individuals in lesser professions to ingratiate someone with respect before requesting a service or to avoid sounding condescending.

For example, let’s look at nuances of the Chinese term “Xiao Jie”. When preceded by someone’s last name, such as “Wang Xiao Jie”, the expression translates as “Miss Wang”.  When interacting with service people in a store or restaurant, many people shout “Xiao Jie” to get the attention of a female clerk or server, but the term is also understood as a name for prostitutes and can be offensive in many situations.

Cultural implications are rooted in most misunderstandings I encounter in this country, so it would only make sense for them to reappear in this self-branding phenomenon. Confirming my theory, I stumbled upon some evidence that the title “public relations” has been misinterpreted throughout the industry’s early years in China.

During my Chinese language lessons, I was rehearsing business terminology and learned that “gong guan” (公关) is the condensed term for “gong gong guan xi” (公共关系) meaning public relations, much like the English term PR. I figured the shorter version would be better for casual conversation, but my instructor said that it could circumstantially portray the wrong message.

Apparently hotels used to make large print advertisements to recruit sexually experienced “gong guan” girls to tend to customers that conduct business over drinks at their in-house KTV. But why call them PR girls? I assumed that someone had misinterpreted guest entertainment as an act of investor relations.

Chunhui He and Jing Xie from Zhejiang University noted this concept in the 2009 issue of China Media Research in an article titled, Thirty Years’ Development of Public Relations in China Mainland. They state:

Beijing built public relations departments in succession, especially in the industry of hotel and restaurant. The hotels such as White Swan Hotel, China Hotel in Guangzhou, Great Wall Hotel in Beijing used public relations as a function of management and established public relations departments to build the model of China's public relations in the early 80's. The TV series “PR Girls,” based on examples of female PR employees in Guangzhou, was very popular then, and introduced the concept of PR to the ordinary Chinese people. But it caused some misunderstanding about the role of women in public relations at the same time.

I wasn’t sure exactly how “PR Girls” conducted themselves in the TV series, but I had a feeling something scandalous is what kept the show entertaining. To further indulge my curiosity, I found a description of the show on the Asia Torrents website. After reading the R-rated synopsis you’ll understand why I didn’t attempt to watch the debauchery.

WARNING – If you thought the movie “Thank You for Smoking” left a bad taste in the mouths of PR critics, I’ve just discovered something far, far, far, worse.

The website states:

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This episodic film follows the lives of several bargirls, including Baby (Grace Lam Nga-sze), who is determined to make her fortune by age 25 and will do anything for money, Matilda (Sherming Yiu Lok-yi), who had an encounter with a well-endowed gweilo soccer player that left her repulsed by sex, Kwan (Angela Tong Ying-ying), who is up to her ears in debt, and their mamasan Julia (Liz Kong Hei-man) who, starting to tire of the girls' foibles and the uncouth customers, longs for the predictability and security of marriage.

I originally thought Sex and the City’s Samantha Jones character trumped all derogatory female public relations impersonations – a nymphomaniac narcissist that runs her own public relations company – what could possibly portray our profession in a worse manner? Cue my discovery of PR Girls. According to China Media Research journal, this is the show that introduced the concept of PR to the ordinary Chinese person… AIYA!

Television has never been kind to our profession. Yet, the negative perceptions are what create the need to keep publishing factual information and setting ethical and professional standards.