Ruder Finn Targets China Market Like a Sniper

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Top International PR firm Ruder Finn releases latest data on Corporate Social Responsibility (CSR) within the China market sphere. In collaboration with Tsinghua University, Ruder Finn’s investigation of customer perception within China presents a significant window for examining what people in China need most from suppliers – trust. Much has been revealed about China as a supplier, but not nearly enough about this market’s demand. Let’s take a look at this interesting report.

The China market presents many obstacles to be hurdled for Chinese as well as International companies alike. Each day news of governmental or corporate conflict surfaces is seems. But, some companies (like Ruder Finn) are not only determined to engage in this race of sorts, but to help both sides of the market equation understand one another and go forward in a progressive and meaningful way. Among other things, Ruder Finn’s study reveals some brands have already made significant inroads even against Chinese brands within the market – but in at least one case, not nearly enough.

Two Snapshots

The two industry segments this first annual reports on are; Fast Moving Consumer Goods (FMCG), and the automobile industry. These are obviously examined because of the traffic and volume each sector currently encompasses respectively. First, taking a look at the findings in FMCG, Ruder Finn found that Coca Cola and Proctor & Gamble were the most trusted International brands given product quality and safety as the primary criteria, at least within the food and beverage segment of FMCG. Unfortunately, they are also the only two within the top 10 in the study. This is interesting for three reasons.

  • First, Coca Cola and P & G outperformed many Chinese competitors even considering capital and resource allocation, among other hurdles to market engagement.
  • Secondly, thought Chinese consumers only rate national companies as “fair” for the most part, no significant inroads be other International players has been made?
  • Finally, the criteria for perceived positive CSR for Chinese consumers appears to be different from other International markets.

Ruder Finn found that an overwhelming majority of Chinese consumer would not buy from companies with a low CSR, which is pretty much true in any market. However, the criteria for perceived or real CSR in China appears slightly skewed from other markets. Chinese customers rate quality of products highest, followed closely by how environmentally friendly companies are (or are perceived). This is actually fascinating, but understandable given the Buzz about environmental disasters like 2008 Chinese milk scandal. It also appears management integrity ranks high in the CSR matrix of criteria. This makes sense, and is obviously a sub-set of quality, safety, and environmental concern.

What We Least Expect

According to Ruder Finn’s survey and data, Chinese consumers are far less concerned with intellectual property issues, fair competition, and least of all, employee rights and interests. In fact, these customer concerns are at the end of the list. Perhaps this explains a lot about intellectual property violations, ongoing worker treatment, and considerably unfair competitive strategies there? Maybe these variables also reflect the Chinese government’s attitude toward these aspects too? This can lead to a belief that Chinese customers could care less about the “how” of products, but ultimately care about the “me” of the equation. Maybe this is not so foreign a concept after all? Most consumers worldwide could care less about “how” they obtain value.

Chairman of Ruder Finn Asia Another interesting variable which does not surface in this study is price. Evidently value as determined by cost savings falls farther down on the list? Ruder Finn’s survey reveals some key and rather simple facts for any company intent on engaging the Chinese market however. Maybe the biggest criteria for companies whose brand is nothing like Coca Cola – social and political elements within the market.

Put simply, Chinese consumers are attuned to what is fearful mostly. Being hurt of somehow cheated when buying a product. Now we enter the brand management aspect of the equation, which is better left to Ruder Finn. Obviously they would not have conducted this analysis without having strategies. I took the liberty of viewing some of Ruder Finn’s data on similarly informative aspects like luxury item trends (PDF). Ruder Finn Asia Chairman Jean-Michel Dumont (left) galvanizes what should not be a paradigm shift in human nature:

“..Consumers are demanding healthy and safe products, and are calling for a trustable market environment. This in fact is the most fundamental part of CSR. Therefore, it is logical to find product safety at the top of consumers’ priorities and management honesty in third position.”

Cars, China, and India

The flip side of Ruder Finn’s analysis reveals an auto industry dominated by outside companies. This is true to an extent in the personal hygiene commodity side of FMCG, but for the sake of simplicity, we do not differentiate there. Not unlike the Indian market for automobiles, which is one way or another tilted toward Indian companies, the Chinese car market is dominated by Volkswagen, followed by China’s First Automotive Works (FAW). The rest of the market seems much less organized even in the joint ventures puzzle with Chery and FAW, than say Suzuki’s and others with Indian producers. This market segment is the biggest one in China given it took over the lead from the United States. Ruder Finn’s data apparently shows a huge gap in CSR for buying cars. This is something foreign and domestic Chinese companies should look at closely.

Other Indications

The Ruder Finn joint study with Tsinghua University also opens a window into China’s socio-economic demographics. The findings are not industry shifting by any means, but they do confirm that the more educated a target market segment is, the more concern their is for CSR. This is crucial for companies engaging this consumer segment. More particularly tough, addressing the “real” CSR criteria, as I mentioned, is of paramount importance.

Despite advantaged foreign suppliers may enjoy now, Chinese companies can adhere to suggested facts like these from Ruder Finn, and more quickly engage their own market successfully. As Prof. Zhao Shuguang, head of Tsinghua Media Survey Lab (which conducted the surveys) said though:

“Foreign companies have advantages over domestic companies in terms of management, technology, capital and resource allocation (to CSR). There is a long way to go for Chinese companies to catch up with foreign companies in terms of CSR performance.”

Whether this suggestion is a matter of Chinese business dogma or not, a clear advantage is suggested for whoever strikes first and best. The edge obviously would go to Volkswagen as the leading seller of autos in China. GM lost headway for obvious reasons, and now Toyota has a massive negative branding issue on their hands. As China’s workforce gets more sophisticated, CSR will become more and more crucial, at least in the way the Chinese consumer perceives it. From what I gather from Ruder Finn, the door seems wide open for disruptive innovation in both the auto and FMCG markets. Not withstanding current political tensions, Ruder Finn’s approach seems smart, very smart at this time.

Beyond the fear of International economic and idiologies, it is pretty clear China cannot afford to go backward. So, the next logical step is to engage Chinese consumers with products they trust. The market does not care where the products come from. This is an eye opener, or should be.

For more information about this news, Ruder Finn, or their innovations in Asian market research contact:

Megan MacDougal
macdougalm@ruderfinn.com
+1 212 593 6348

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