Fig. 1: Da-Run-Fa (RT-Mart) in Qingdao - The Taiwan-based company offers probably the best customer service and return policy in the country.

A continuously fast developing economy, cultural changes due to Western influences and rapid technological advancements have changed the mindsets of Chinese consumers. Traditional store formats such as wet markets are being replaced by modern hypermarkets. In the non-perishable goods sector e-commerce is booming with 30% annual growth rates.

In this chapter we will study the retail preferences of Chinese consumers and how to manage marketing channels more effectively, including logistics and distribution.

Definition

Channel Management can be defined as

“the managing of a marketing channel* and the business partners which form part of it.”

(source: GlossaryOfMarketing.com)

*: A marketing channel is a set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process".

(source: American Marketing Association)

Another term for marketing channel is distribution channel.

Consumer preferences

Channel drivers

A recent survey conducted by McKinsey provides interesting insights into retailing preferences of Chinese consumers.

Tab. 1: Key channel drivers in China.

Products assortment ("wide variety of brands/products") and quality of the products displayed turn out to be the dominant drivers to attract buyers in China ahead of the channel's price level. This comes to a surprise to those who mainly view Chinese shoppers as bargain-oriented. They are, but this consumer behavior rather shows on a focus on discounts and sales promotions. Channels with low price levels are often viewed as selling low quality products. In certain regions within China - e.g. in the South-west -  offering a wide product assortment is an even  more dominant channel driver (78% - not shown, as Tab. 1 only depicts national averages; for a list with key Chinese channel drivers that include regional differences go here), and the convenience factor ("convenient location/easy to get there") would rank fourth with 29% (also not shown) slightly behind the channel's perceived price level.