Some last longer than others, but consumer goods and trends have limited lifespans. First, the novelty of a new product can lead to a craze. Then the hype gives rise to a critical backlash that creates a balance. Next, consumers evaluate the product or trend for what it can actually do, not what marketers promoted. Soon, it fades away and gets supplanted by the next big consumer fad.
Chinese consumer behavior follows the same pattern. After China began adopting freer policies in the mid-1980s, Western companies lined up hoping to tap into the newly opened market. KFC became the first fast food franchise to land on Chinese soil, but they were far from the last. Chanel, Cartier, Rolex, Hershey’s, and McDonald’s each have a presence in China today. However, the initial wave of consumer euphoria in China is likely to be closer to the end than the beginning.
After thirty years, Chinese consumer culture has forged its own unique identity with increasingly distinct demands. The honeymoon period has now subsided and consumers are looking for something more. In fact, China now resembles the US with a crowded marketplace where people vote with their wallets. International food and beverage companies increasingly target Chinese consumers’ penchant for wine and chocolate, among other luxury products, rather than another demographic in the midst of fast food mania.
China plans to lift the entire country out of poverty by 2020. Urbanization, along with all the opportunities a city can provide, will be essential to creating a moderately prosperous country. China’s urban population surpassed its rural population by 2011. In 2017, 57.9 percent of the total population live in China’s cities. City living can mean a better education, more job opportunities, and increased wages. It also tends to include more disposable income. Urban per capita disposable income grew 5.6 percent to 33,616 yuan ($5,062) in 2016. In 2010, China announced its goal to double disposable income for urban and rural populations by 2020, and so far, things are going to plan. As urbanization and growth progress, businesses have opportunities to develop brand loyalties in a growing population of increasingly wealthy Chinese consumers.
Even if urbanization hits a snag, China may have the ability to create a wealthier country with the stroke of a pen. President Xi Jinping recently reiterated his aim to float China’s currency. If policy changes cause the exchange value of the renminbi to rise, Chinese consumers will feel richer overnight as imported goods revalue downwards.
In just three years, 167 million urban Chinese households—close to 400 million individuals—will be categorized as “mainstream” consumers, according to McKinsey & Company. McKinsey’s report identifies “mainstream” as households with disposable income between $16,000 and $34,000/year. An additional 116 million urban households—307 million individuals—will be “value” consumers with disposable income between $6,000 and $14,000/year. Discretionary spending will increase while spending on necessities like food will shrink as a proportion of the total. Dining out and delivery businesses will both find growth opportunities with urban consumers who may not have the time to cook at home but do have disposable income.
In the past few decades, a growing Chinese middle class led to soaring protein demand. Growth has since slowed and consumers have made their protein preferences known. Pork remains the principal protein while beef demand has grown only slowly. Chicken has had some success, but seafood consumption continues to see strong growth. Chinese consumers often seek products that reflect their own cultural heritage, failing to conform to foreign patterns of protein preference.
Consumer packaged goods companies have had success in China simply by associating products from the US or Europe with quality. While that connection still holds in many cases, healthy lifestyle trends have aroused some interest from Chinese consumers. Fast food companies have been hit particularly hard by this change in tastes, and the opening of a new McDonald’s or KFC in China no longer meets with fanfare and long lines.
KFC was the first Western-style fast food restaurant to open in mainland China in 1987. The fried chicken franchise, founded in 1930 in Lexington, Kentucky, became an instant success. Novelty combined with a naive upscale perception led to KFC becoming firmly entrenched in Chinese culture. In fact, China has 5,324 KFC restaurants, the most of any country. The US sits at a distant second with 4,141 franchises.
McDonald’s soon followed KFC’s lead and opened their first restaurant in 1990. The world’s biggest McDonald’s opened in Beijing in 1992. The massive restaurant could seat 700 guests, utilized 29 cash registers, and served 40,000 customers on opening day. While the super-sized McDonald’s in Beijing has shuttered, there are still over 2,200 restaurants featuring golden arches in mainland China.
Close to three decades ago, McDonald’s and KFC represented a rare window into a vastly different life. An American—or capitalist—lifestyle was inconceivable in a country that only began to embrace an open market approach in the 1980s. In 2017, a Chinese lifestyle does not stray too far from a Western one. European fashions, the latest technological gadgets, and expensive beauty products can be easily found in stores and on consumers.
KFC and McDonald’s no longer represent a visit to a different world. People view them as storefronts situated among other businesses on crowded streets in Chinese cities. This sentiment, coupled with a healthier lifestyle that has also led to decreased pork consumption, has led to a decade of decreased or constant KFC sales with only rare demand spikes. McDonald’s has also experienced stagnating growth even as the fast food industry continues to grow in China. Chinese competitors, such as the fried chicken chain Dicos, have eaten into their profits.
KFC has retreated to smaller cities in an attempt to reverse its fortunes. Small only by Chinese standards, these cities provide the embattled franchises with the same traffic as an urban restaurant with the added revenue from dining as a family event. Fast food outlets in the bigger cities are being renovated to appeal to a more discerning crowd. Expect “hip” places, McDonald’s doubling as chic coffee bars, and less-obtrusive branding to lure in new customers.
With fast food moving into the rear view mirror, Chinese consumers have begun to focus on more luxurious items. Wine and spirits demand, along with luxury foods, have seen recent growth in China. Consumers have put down their hamburgers and are now raising glasses of wine.
Europe reigned for centuries as the wine consumption capital of the world. The US took the volume wine consumption crown from France in 2013. The United States now represents the world’s largest wine consumer both by value and volume.
China’s increased appreciation for wine will further erode Europe’s position. Chinese wine consumption by value is expected to reach $22 billion by 2020 to leapfrog past the UK and France to second place just behind the United States. Interestingly, due to wine’s historically upscale image in China, in the near term, the country will remain only in fifth place based on volume, even as it reaches second place by value. When Chinese consumers buy wine, they want to pay for it.
But recently we’ve seen them begin to purchase more mid-range bottles and explore even lower-priced options as the taste for wine broadens to less-elite customers. China already has the second-largest area under grape cultivation in the world, and is expected to surpass Spain in the next few years. This increased production will likely spur further growth in consumption by lowering prices. In time, newly initiated Chinese oenophiles will explore foreign vintages as their tastes mature. Then, even more wine exports will be headed to China in the coming years.
Chocolate consumption growth lags behind that of wine in China, but both are luxury items that increasingly play a part in everyday life for consumers. Chinese demand remains well behind the EU’s and the US’s and barely registers on a global scale. China’s paltry annual per capita consumption of 0.3 pounds is easily dwarfed by 9.25 pounds consumed annually in the US and the whopping 19.4 pounds consumed in Switzerland, the top chocolate consumer in the world. Chocolate remains an acquired taste because Chinese food culture has never featured sweet desserts. Consumers have grown up with a balanced end-of-meal dish, like a red bean bun, that offers a hint of sweetness. Chocolatiers have begun experimenting by incorporating more traditional ingredients, including matcha and green tea, to increase appeal.
With sophistication comes new tastes. Fast food in China will not go away, but McDonald’s and KFC will have to draw up a new plan for continued success. KFC has long embraced Chinese culture and adopted a model better suited for its clients. Larger restaurants made KFC a communal destination for large groups to dine in. A larger menu offers more variety with temporary offerings designed specifically for Chinese palates. For example, KFC also offers traditional congee for breakfast.
Tailoring a market-specific approach is not a new concept—we can see that playing out in similar ways in India. But Chinese consumers have an increasing abundance of options like their Western counterparts. They have more disposable income and express that newfound wealth by exploring more luxury food items. Wine consumption will continue to increase, especially as younger Chinese consumers come of age in a culture that prefers wine to traditional baijiu. Current consumers have begun paving the way for chocolate to become a weekly or even daily treat.
A larger urban population provides opportunities for food and beverage companies to provide high-quality prepared food options that strike a balance between convenience and taste. China’s consumer economy will continue its convergence with Western style and taste, but companies hoping to service Asian demand will need to show sensitivity to the important differences that will remain.
What Information Do We Collect?
The information we gather enables us to personalize, improve and continue to operate the Services. We collect the following types of information from our users.
IP Address Information and Other Information Collected Automatically:
· We automatically receive and record information from your web browser when you interact with the Services, including your IP address and cookie information. This information is used for fighting spam/malware and also to facilitate collection of data concerning your interaction with the Services (e.g., what links you have clicked on).
· Generally, the Services automatically collect usage information, such as the number and frequency of visitors to the Site. We may use this data in aggregate form, that is, as a statistical measure, but not in a manner that would identify you personally. This type of aggregate data enables us and third parties authorized by us to figure out how often individuals use parts of the Services so that we can analyze and improve them.
Information Collected Using Cookies:
· Most browsers have an option for turning off the cookie feature, which will prevent your browser from accepting new cookies, as well as (depending on the sophistication of your browser software) allowing you to decide on acceptance of each new cookie in a variety of ways.
We collect statistical information about how users collectively use the Services (“Aggregate Information”). Some of this information may be derived from Personal Information. This statistical information is not Personal Information and cannot be tied back to you or your web browser.
How, and With Whom, Is My Information Shared?
IP Address Information:
Information You Elect to Share:
We share Aggregate Information with our partners, service providers and other persons with whom we conduct business. We share this type of statistical data so that our partners can understand how and how often people use our Services and their services or websites, which facilitates improving both their services and how our Services interface with them. In addition, these third parties may share with us non-private, aggregated or otherwise non Personal Information about you that they have independently developed or acquired.
Information Shared with Our Agents:
We employ and contract with people and other entities that perform certain tasks on our behalf and who are under our control (our “Agents”). We may need to share Personal Information with our Agents in order to provide products or services to you. Unless we tell you differently, our Agents do not have any right to use Personal Information or other information we share with them beyond what is necessary to assist us. You hereby consent to our sharing of Personal Information with our Agents.
Information Disclosed Pursuant to Business Transfers:
In some cases, we may choose to buy or sell assets. In these types of transactions, user information is typically one of the transferred business assets. Moreover, if we, or substantially all of our assets, were acquired, or if we go out of business or enter bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of us or our assets may continue to use your Personal Information as set forth in this policy.
Information Disclosed for Our Protection and the Protection of Others:
Information We Share With Your Consent:
Except as set forth above, you will be notified when your Personal Information may be shared with third parties, and will be able to prevent the sharing of this information.
Is Information About Me Secure?
We store all of our information, including your IP address information, using industry-standard techniques. We do not guarantee or warrant that such techniques will prevent unauthorized access to information about you that we store, Personal Information or otherwise.
What Information of Mine Can I Access?
You can access and delete cookies through your web browser settings.
California Privacy Rights: Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice identifying the categories of personal customer information which we share with our affiliates and/or third parties for marketing purposes, and providing contact information for such affiliates and/or third parties. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: 1156 6th Ave, 7th Floor, New York, NY 10036
What If I Have Questions or Concerns?
If you have any questions or concerns regarding privacy using the Services, please send us a detailed message to firstname.lastname@example.org. We will make every effort to resolve your concerns.
Effective Date: March 11, 2014
b. You shall not (directly or indirectly):i. take any action that imposes or may impose (as determined by us in our sole discretion) an unreasonable or disproportionately large load on our (or our third party providers’) infrastructure;ii. interfere or attempt to interfere with the proper working of the Services or any activities conducted on the Services;iii. bypass, circumvent or attempt to bypass or circumvent any measures we may use to prevent or restrict access to the Services (or other accounts, computer systems or networks connected to the Services);iv. use manual or automated software, devices, or other processes to “crawl” or “spider” any page of the Site;
v. harvest or scrape any Content from the Services;
vi. otherwise take any action in violation of our guidelines and policies;vii. decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services (including without limitation any application), except to the limited extent applicable laws specifically prohibit such restriction;viii. modify, translate, or otherwise create derivative works of any part of the Services; orix. copy, rent, lease, distribute, or otherwise transfer any of the rights that you receive hereunder.c. We also reserve the right to access, read, preserve, and disclose any information as we reasonably believe is necessary to:i. satisfy any applicable law, regulation, legal process or governmental request;ii. enforce these Terms of Service, including investigation of potential violations hereof;
iii. detect, prevent, or otherwise address fraud, security or technical issues;
iv. respond to user support requests; or
v. protect the rights, property or safety of us, our users and the public.4. Third Party Services. The Services may permit you to link to other websites, services or resources on the Internet, and other websites, services or resources may contain links to the Services. When you access third party resources on the Internet, you do so at your own risk. These other resources are not under our control, and you acknowledge that we are not responsible or liable for the content, functions, accuracy, legality, appropriateness or any other aspect of such websites or resources. The inclusion of any such link does not imply our endorsement or any association between us and their operators. You further acknowledge and agree that we shall not be responsible or liable, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any such content, goods or services available on or through any such website or resource.5. Termination. We may terminate your access to all or any part of the Services at any time, with or without cause, with or without notice, effective immediately. All provisions of these Terms of Service which by their nature should survive termination shall survive termination, including, without limitation, ownership provisions, warranty disclaimers, indemnity and limitations of liability.6. Warranty Disclaimer.a. You release us from all liability for you having acquired or not acquired Content through the Services. We make no representations concerning any Content contained in or accessed through the Services, and we will not be responsible or liable for the accuracy, copyright compliance, or legality of material or Content contained in or accessed through the Services.b. THE SERVICES AND CONTENT ARE PROVIDED “AS IS”, “AS AVAILABLE” AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES IMPLIED BY ANY COURSE OF PERFORMANCE OR USAGE OF TRADE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED. WE, AND OUR DIRECTORS, EMPLOYEES, AGENTS, SUPPLIERS, PARTNERS AND CONTENT PROVIDERS DO NOT WARRANT THAT: (I) THE SERVICES WILL BE SECURE OR AVAILABLE AT ANY PARTICULAR TIME OR LOCATION; (II) ANY DEFECTS OR ERRORS WILL BE CORRECTED; (III) ANY CONTENT AVAILABLE AT OR THROUGH THE SERVICES IS FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS; OR (IV) THE RESULTS OF USING THE SERVICES WILL MEET YOUR REQUIREMENTS.7. Limitation of Liability. IN NO EVENT SHALL WE, NOR OUR DIRECTORS, EMPLOYEES, AGENTS, PARTNERS, SUPPLIERS OR CONTENT PROVIDERS, BE LIABLE UNDER CONTRACT, TORT, STRICT LIABILITY, NEGLIGENCE OR ANY OTHER LEGAL OR EQUITABLE THEORY WITH RESPECT TO THE SERVICES FOR ANY (I) LOST PROFITS, DATA LOSS, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, COMPENSATORY OR CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, SUBSTITUTE GOODS OR SERVICES (HOWEVER ARISING), (II) BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE (REGARDLESS OF THE SOURCE OF ORIGINATION), OR (III) DIRECT DAMAGES IN EXCESS OF $50.00.8. Governing Law and Jurisdiction. These Terms of Service shall be governed by and construed in accordance with the laws of the State of New York, including its conflicts of law rules, and the United States of America. You agree that any dispute arising from or relating to the subject matter of these Terms of Service shall be governed by the exclusive jurisdiction and venue of the state and Federal courts of New York County, New York.9. Miscellaneous.a. Modification. We reserve the right, in our sole discretion, to modify or replace any of these Terms of Service, or change, suspend, or discontinue the Services at any time. Your continued use of the Services following notification of any changes to these Terms of Service constitutes acceptance of those changes.b. Entire Agreement and Severability. These Terms of Service are the entire agreement between you and us with respect to the Services, including use of the Site, and supersede all prior or contemporaneous communications and proposals (whether oral, written or electronic) between you and us with respect to the Services. If any provision of these Terms of Service is found to be unenforceable or invalid, that provision will be limited or eliminated to the minimum extent necessary so that these Terms of Service will otherwise remain in full force and effect and enforceable. The failure of either party to exercise in any respect any right provided for herein shall not be deemed a waiver of any further rights hereunderc. Force Majeure. We shall not be liable for any failure to perform our obligations hereunder where such failure results from any cause beyond our reasonable control, including, without limitation, mechanical, electronic or communications failure or degradation.d. Assignment. These Terms of Service are personal to you, and are not assignable, transferable or sublicensable by you except with our prior written consent. We may assign, transfer or delegate any of our rights and obligations hereunder without consent.e. Agency. No agency, partnership, joint venture, or employment relationship is created as a result of these Terms of Service and neither party has any authority of any kind to bind the other in any respect.f. Notices. Unless otherwise specified in these Term of Service, all notices under these Terms of Service will be in writing and will be deemed to have been duly given when received, if personally delivered or sent by certified or registered mail, return receipt requested; when receipt is electronically confirmed, if transmitted by facsimile or e-mail; or the day after it is sent, if sent for next day delivery by recognized overnight delivery service. Electronic notices should be sent to email@example.com. No Waiver. Our failure to enforce any part of these Terms of Service shall not constitute a waiver of our right to later enforce that or any other part of these Terms of Service. Waiver of compliance in any particular instance does not mean that we will waive compliance in the future. In order for any waiver of compliance with these Terms of Service to be binding, we must provide you with written notice of such waiver through one of our authorized representatives.h. Headings. The section and paragraph headings in these Terms of Service are for convenience only and shall not affect their interpretation.Contact. You may contact us at the following address: 1156 6th Ave, 7th Floor, New York, NY 10036.