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Creating day trip destinations for new car owners
New middle class offers great business opportunities, according to Prof. Burgers
The new Chinese middle class is eager to join the world of consumers. Companies and brands that want to target this group need to understand that these consumers are completely blank when it comes to owning products and consuming, says Prof. Dr. Willem Burgers, Dean of the Nordic International Management Institute in Chengdu. “In many markets these Chinese consumers are making their first purchase ever.”
The group that the Chinese government focuses on in its new map for growth, can now afford a car, an apartment, good schooling for their kids and a yearly holiday to a destination like Thailand. They are part of a layer that is more at the top ten to twenty percent of the urban family pyramid.
To Prof. Burgers, a former Bayer Chair Professor of Strategy and Marketing at CEIBS in Shanghai, this is an extremely interesting group. “For the first time in their lives, they can afford a new car. For a large part, this car is bought because neighbours bought one too – ‘face’ is and remains an important cultural driver in China. These consumers are still figuring out how to make buying decisions.”
The new consumer is using his buying power. Burgers: “In a 2010 survey of nearly 3,000 Chinese rural and urban families I conducted for Bayer, together with Nyenrode MSc student Gayaneh Heyne, 48.8% of urban families earning from 70,000 to 200,000 RMB, and 80.5% of families earning more than 200,000 has purchased a car. Among those families in these income categories who did not yet own a car, the vast majority stated that buying a new car was their first priority.”
The problem for the new car owners may seem odd, but is very real: where to go with this car? Where to take the family in the weekend? “In and around many Chinese cities, there are few or no facilities for people that want to relax for a day. No restaurants, no amusement parks or much of anything to do except nature. Even the concept of picknicking is mostly unknown to these new consumers, something they have only seen it in movies.” This ‘problem’ is also a business opportunity, says prof. Burgers, pointing at new business initiatives in the Chengdu region that aim to profit from this lack of short distance travel destinations. One of these initiatives is Legoland, but there is room for many other investments in leisure projects.
Opportunities and challenges
“Creating an infrastructure for day trips is an immense business opportunity in all of China’s large cities and a challenge, in two ways. Firstly, there is not much expertise in China of creating interesting and enjoyable experiences for local tourists. And second: investing in leisure projects and projects requires extensive information campaigns. Explaining the concept of camping, motels and holiday parks is vital if you want to succeed. Marketing has to be educational. Communication strategies need to focus on providing helpful information, if you want to really connect with the new consumers of China.”
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