ab_KohlerChinaDesign_260702

8/8/2019 ab_KohlerChinaDesign_260702

1/5

DESIGN AND THE CHINESE CONSUMER: TOWARD A FUSION FUTURE

Jeff Yang, VP, Consumer Strategist, Global View

Client

Kohler Co.

Nona Beining

Business Issue

Kohler is going into design review with Herb Kohler on the 16th. They are exploring global design in China, India, Russia, and Middle

East. This call is meant to be an introduction to Global Advisory.

We've already forwarded folders of observations on design for each region. For this call we'll focus on China and provide them a global

advisory call experience.

Objectives | Key Findings | Insight 1 | Insight 2 | Insight 3 | Insight 4 | Macrotrends

OBJECTIVES

Kohler is interested in how important heritage is to Chinese consumers when it comes to

design.

Do they w ant Chinese heritage inspired design?

Do they want American inspired design? Other regio ns of inspiration? Other elements of

design that appeal to Chinese that we should make them aw are of?

KEY FINDINGSThe definition of home is changing in China, even as homeownership has increased.

More andmore consumers are seeing home furnishings and decor as a marker of

identity and a palette of status yet there's less and less space for them to do so in

urban settings. Historically overlooked as "private rooms," bathrooms and kitchens now

offer tremendous new opportunities for such consumers toexpress themselves.

Nostalgia and identity are huge driving values for Chinese consumers. Updating and

innovating around folkloric themes, elements of cultural heritage (both from recent and

ancient history) and traditional symbolscan be a powerful way of catering to consumers

desire to bridge China s past and future, while playing to their deepening sense of

cultural pride

Western brands must nevertheless take advantage of resurgent interest in Chinese

cultural identity with care:Numerous companies have run afoul by accidentally placing a

Chinese signifier an architectural monument, a historical figure, a symbolic animal in a subordinated, embarrassing or negative situation.

The surest route? Investing in and partnering with local talent.

Insight 1

China's Urban Boom and the Rise in Homeow nership

China is experiencing the most rapid urbanization of any country , with 45% of its citizens

living in urban areas, a figure that has risen 10% in the last decade.

The cities are also absorbing millions of rural workers, who arecoming to the cities to

settle down or to earn more money. The rapid influx has caused housing prices to rise

and puts enormous pressure on public infrastructure.

In parallel to this rural-to-urban shift has been soaring private home ownership. Given

MACROTRENDS AND VALUES

Cultural FusionSM

Proactive interest in experiencingmultiple cultures and new cultural hybrids

grounded in popular and consumer

culture.

VALUES

identity,

authenticity,

style,

change,

pride

Memory

MarketingSM

Using history as an active resource to

take a nostalgic trip through time,

recycling the stuff of our collective past.

VALUES

nostalgia,

heritage,

tradition,

belonging,

identity
http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=21http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=21http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=21http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=21http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6http://www.iconoculture.com/SMART/Resources/Definitions/MacrotrendDetail.aspx?MacrotrendID=6


2/5

Insight 2

the lack of space in city environments, newlyweds are breaking away from tradition and

setting up separate households. This is a monumental cultural change in China, as the

ideal of home is shifting from a shared place of extended family, to a private oasis of

luxury and personal pride.

Home mortgages are still a new concept, having been launched in 2001; they were an

important part of the rapid privatization of government subsidized housing . By 2003,

roughly 80% of families in Shanghai, for example, owned their homes, and almost all

homes were out of government hands. Mortgage lending rose at an annual rate of

115% between 1998 and 2004, and by 2004, 90% of consumer loans representing well

over $218 billion were in the form of mortgages.

Housing privatization has had tw o major effects on the consumer market.

First, when people own their homes they possess tangible wealth. Economists have long

known that the tradeoff between spending and saving is influenced by consumer

perception of wealth. The greater the wealth, the less need to save. Moreover, housing

prices have been rising. Thus, there are now millions of Chinese with considerable wealth

and the expectation of rising wealth. This has stimulated more consumer spending, and

it should also stimulate Chinese consumers to tap into their considerable financial

savings for large purchases. (Chinese households still save over 50% of their income on

average.)

Second, when people own their homes they tend to spend more on their homes . This

means decorating, fixtures, and other forms of home improvement. This is the primary

reason for the accelerated investment in China by foreign home related retailers such as

Ikea, Kingfisher, and Home Depot.

When Chinese purchase a new flat in a high rise building, they are essentially purchasing

rooms that are no more than empty concrete boxes. Everything else must be added by

the owner including plumbing, electrical wiring, shades and curtains, bathroom and

kitchen fixtures and appliances, and flooring. It's a blank canvas and middle class

and affluent consumers are taking advantage of it. Meanwhile, given the limited space

in urban dwellings relative to traditional homes, consumers are looking to new rooms for

self-expression and the enshrining of status: The bathroom and kitchen, both of which in

traditional homes were "private rooms" that were kept entirely separated from social

areas and thus hardly treated as showcases.

Some consumer trends that have come out of the rise of private homeownership:

An increased interest in displaying economic success and cultural refinement through

home decor. As in the West, kitchen appliances and electronic entertainment are

increasingly used as displays of status.

Large circulation home decor magazinesare encouraging people to furnish their homes

with more upscale and sophisticated cultural tastes.Growing preference for expensive luxury furniture and fixtures , despite their expense

vis--vis salaries.

At the same time, the intersection of urbanization, aspiration and the changing nature of

family in China have all contributed to a radical redefinition of h ome.

In urban areas, where the bulk of the middle class resides, apartment living is universal.

The typical home in China features a small kitchen, one to two bedrooms, one

bathroom, a living/dining room combination, and a big balcony.

The typical urban household of three has on average between 1000 and 1200 square

feet of living space.

Private outdoor space does not exist, though blocks of t owers tend to have shared

courtyards and play areas. White-collar professionals are gravitating to skyscrapers

offering luxurious amenities, such as playrooms and even preschools or private daycare

for children.

Because both parents usually work outside the home, they usually turn to grandparents

to take care of kids but due to space constraints, the old "multigenerational"

household is increasingly rare. Instead, a child s life is divided between her parents and

her grandparents home, usually a cup of soup away.

China and the West: Ambivalent Aspi ration

I have heard about Paris for so long that when you say luxury, I think of Paris fashion and

dessert.

Cynthia, 23, female, Shanghai, executive assistant


3/5

Insight 3

Cosmetics products from France are very good, expensive and 100% natural.

Kiki, 27, femal e, Shanghai , boutique sales

I think most people will associate France with luxury because it is just so classic. I think

they have the techniques to design great brands.

Jay, 24, male, Nanjing, travel agent

To be honest, Im not sure how many luxury brands are actually made in their own

countries. A lot of them are made in China but why do we still have to pay much more

compared to the consumers overseas?

Winni e, 23, female, Shanghai, HR representative

When I think of things made in China, I associate a lack of deli cacy, customization, andgood after-sales service.

Sophie, 22, female, Shanghai, PR

Chinese brands dont sell their best quality goods to Chinese. Contrary to the Japanese, we

send our best goods to other countries, and the left-overs and poor quality items are left

here to be sold.

Cynthia, 23, female, Shanghai, executive assistant

I dont know of any but I dont think I would buy it anyway. A luxury brand needs time to

prove its value. Whats more, I believe western brands have better design.

Lena, 25, female, Shanghai, computer pro grammer

I t s undeniable that China covets certain traits of its developed-world peers: wealth,

pow er, respect (fear, if necessary) and recognition as a global leader. But they don t want

to bow to Western expectations or be forced to embrace W estern values and in factmany Chinese remain strongly xenophobic.

Indeed, while the Chinese pay lip service to some Western political ideas (democracy,

free speech), they do not define them the same way. The West misread the Tiananmen

protests as a budding American Revolution, but rather than overthrowing the

government, they were seeking to engage with it to purge the things they felt were

ruining the Party.

Where design is concerned, China aspires to Western brands because they have a

legacy that conveys status and quality and legacy is something that Chinese

consumers deeply respect. But they do not aspire to them because they are Western!

The Chinese would like their domestic products to reach the same quality and status of

Western goods, which would allow them to switch their allegiance to the hom e team.Already, in many commodity areas that are not perceived as threatened by consumer

safety concerns (as are foods, medicines, etc.), pride in the nation s accomplishments

compel many consumers to prefer local brands, all other things being equal.

Ultimately, the truth is that Chinese consumers have mixed attitudes tow ard brands.

When it comes to luxury products or products for w hich quality is perceived as highly

important, consumers are highly brand-conscious. Luxury brands are sought after when

purchasing apparel, footwear, jewelry, or cosmetics.

When purchasing home-related products, brands are important as well. Chinese

consumers prefer to spend more on a known brand name for such products as kitchen

and bathroom fixtures, appliances, housewares, and furniture. All of these are products

that may be seen by others thus, the status of the brand is critical in those purchases.

On the other hand, for many packaged goods that have commod ity-like appeal, and

which friends and neighbors are not likely to see, brands hardly matter.

Hybrid Vigor: Toward a " Glocally" Optimized Future

Where design-focused brands are concerned, the emerging ideal is a blend between

traditional (Chinese) and contemporary (Western) semiotic cues, across all categories,

driven by both nostalgia and identity, as demonstrated by Chinese brands that are

succeeding in the market:


4/5

Insight 4

Shanghai Jahwa has re-launched a high-end beauty brand (Jing Daily, 08.24.10) that was

very popular in the Shanghai of the 30s, Shuang Mei under the name Shanghai Vive.

With very Art Deco packaging, the brand store is located in the famous Peace Hotel,

which just reopened its doors. Besides beauty products, one also finds there jewelry and

accessories, helping establish it as a true "lifestyle" brand evocative of Shanghai and its

jazz-era status as "the Paris of Asia." This brand provides a luxury step-up point for

Shanghai Jahwas portfolio, anchored by Herborist, a masstige personal care brand that

puts TCM ingredients in Western formulations and packaging, which saw its sales rise by

60% in 2009). (http://www.shanghaivive.com.cn/english/)

The LAYEFE store, located in Shanghai's upmarket Xintiandi district, has created a space

where people can buy products that are entirely Asian: hand-embroidered bed linen,

glassware, vases, lacquered wooden trays and fine porcelain from Jingdezhen, in Jiangxi

province. Owner Chen Yifei believes that China's expanding ranks ofyoung, middle-class

home owners are ready to start filling their homes with stylish furnishings and are

seeking a distinctly Chinese "lifestyle" brand that embodies mainland sensibilities

presented with contemporary flourishes . To foster this kind ofcultural cross-

pollination , Chen is planning together with Stanley & Partners to build a creativity center

which will be over 20,000 square meters in size, housing art and design workshops, a

cinema, an exhibition space and other creative amenities.

First Auto Works, a long time provider ofofficial Party cars in China, recently

announced a relaunch of the famous Red Flag limousines as a prestige brand in their

range. In the Fifties, the Red Flag cars were Chinese copies of official Russian

limousines. Now, they present a unique opportunity for China to establish an upscale

luxury marque that owes its legacy not to the West but to its own history and heritage,

while jumping on the recent surge in Revolutionary Era nostalgia (for example, the hot

theme nightclub Red Capital, http://www.redcapitalclub.com.cn/RedCapital.html)

What This Means to Kohler

Nostalgia is a huge driving force for Chinese consumers. Post-80s parents are nostalgic

for the innocence and simple pleasures of their childhoods; their parents (todays

grandparents), growing up in times of chaos, are nostalgic by proxy for things they

never had. Updating and innovating around folkloric themes, elements of cultural

heritage (both from recent and ancient history) and traditional symbols is a powerful

way of catering to consumers desire to bridge Chinas past and future.

Yet beyond mere nostalgia, there's a potent nationalistic desire to reflect, represent and

celebrate Chinese identity in the present tense, by taking intrinsically Chinese concepts

and phenomena and building them into modern consumer lifestyles.

While Western brands can't draw from the consumer value of nostalgia, they do have the

ability to take advantage ofresurgent interest in Chinese cultural identity but this

must be done with care, deep cultural sensitivity and real engagement.

Numerous companies have run afoul by accidentally placin g a Chinese signifier an

architectural monument, a historical figure, a symbolic animal in a subordinated,

embarrassing or negative situation. This has been particularly problematic when such an

image has appeared in an ad from a country seen as one of Chinas direct or historical

rivals, e.g., America or Japan. A few years ago, Toyota ran a magazine ad in which

stone lions were depicted bowing to a Toyota Prado as it drove past, with the copy

stating: Prado. You have to respect it. Because stone lions are such a potent culturalsymbol, Toyota and the magazine were both driven to make an official public apology to

China.

The best route? Investing in and partnering with local talent . Chinas design

communities are expanding and increasingly drawing international attention, and local

efforts in fine arts, architecture and industrial design are at the forefront of the campaign

to integrate the countrys cultural heritage into its modernization efforts.

And the pool of talent is surging: In just the past few years, there's been an increase in

design schools in China from 0 to 450, while design spaces like Factory 789, formerly an

East German military factory in Beijing, and Shanghai 1933, a one-time slaughterhouse

turned gallery, exhibit and performance space, have proliferated. The buzzword: Turning

the M ade in China image to a Designed in China reality.

ab_KohlerChinaDesign_260702

Documents

Transcript of ab_KohlerChinaDesign_260702