Chinese New Year in Next Growth Cities

8/3/2019 Chinese New Year in Next Growth Cities

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THIS IS THE

YEAR OF THEDRAGONIts the most auspicious year in the Chinese calendar. Of the12 Chinese astrological animals, the dragon is the only signthat exists in mythology, not reality.

The dragon represents power and superiority. But Chinese

astrological signs rotate with the five elements, and thisis the Year of the Water Dragon. Water moderates thedragons single-mindedness to produce balance, vision andintelligence. The last Year of the Water Dragon was 1952.

The cycle of the Chinese zodiac expresses both continuity withthe past and the reality of constant change. This yin and yangcombination of opposites captures the Chinese view of the New

Year as a time to find harmony in a blend of ancient traditionsand modern life.


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For anyone interested in unlockingopportunities in China and succeedingin the next wave of Chinas growth,understanding the Chinese New Year is a

master key.

The 15-day festival, first celebrated morethan 4,000 years ago, reveals what theChinese hold important from the pastand how theyre adjusting to the rapidlychanging present of increasing wealth andshifting population.

These opportunit ies are especial lyapparent in large, developing cities, oftenreferred to as Tier Two and below. Theselocations will be the powerful drivers ofChinas next wave of economic growth.Brand success here will result in success

in China. We visited two of these cities toconduct pioneering ethnographic researchabout the importance of brands duringthe Chinese New Year. While gaining freshinsights into the tension between holidaytradition and reinvention is a critical goal,until now its been difficult to achieve.

Understandably, the Chinese havent beeneager to participate in market researchduring the only period of the year whenthey can break from work to focus onrelaxation, family intimacy and reunion.Thats why were especially pleased topresent this report. Our team spent

several days living with two families overthe Chinese New Year holiday, sharing,discussing and documenting its rituals,from preparation through celebration.

The team included photojournalist Ceciliestergren whose striking images fill thisreport. With a unique combination ofphotographs, proprietary research andconsumer insight, this BrandZ Chinastudy documents the contemporarycelebration of the holiday and revealshow people are adopting to moderncircumstances while trying to maintaintraditions. We feature some brands from

our BrandZ Top 50 Most ValuableChinese Brands study 2012, and conclude

by distilling our findings into key insightsand practical steps that brands in China,both domestic and foreign, can take toenhance the celebration, secure their part

in it and be better positioned to win in theexplosive growth that Chinas Tier Two andbelow cities represent.

T h i s B r a n d Z C h i n a s t u d y i s acol laborative effort by several WPPcompanies. It combines BrandZ datawith the quantitative research and analysisof Added Value and CNRS-TGI data.Millward Brown contributed analysis ofsuccessful New Year advertising themes.BrandZ is the WPP proprietary brandanalytics study undertaken by MillwardBrown. Only available to WPP companies,BrandZ includes the worlds largest,

most re l iable and comprehens iveconsumer-focused brand analytics andequity database. Added Value providesconsultancy on brand development andmarket insight. TGI conducts the largestsingle-source continuous survey ofconsumer usage habits, lifestyles, mediaexposure and attitudes in China and 60countries worldwide.

BrandZ China studies exemplify thekind of original and useful knowledge andinsights that can be gained by harnessingthe combined resources, and Chinesemarket expertise, of WPPs companies.

Its appropriate that we launch this firstcollaborative study during the New Yearof the Dragon. The Chinese consider thedragon the luckiest sign of the ChineseZodiac.

We wish you the wisdom, passion andvigor that the dragon signifies.

Best Regards,

David Roth

[email protected]

Welcome


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CONTENTS

Introduction 5

The Chinese New Year | YesterdayHistory and Tradition 6

The Chinese New Year | TodayFamily, Food and Fireworks 12

The Chinese New Year | TomorrowBrand Opportunities Before,During and After the Holiday 71

Take Aways 75

WPP Resources 77

Contributors78


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Chinese New Year is themost important holiday inthe worlds most populouscountry and represents anenormous opportunity forbrands and retailers.

In studying the celebration of the Chinese NewYear, we set out to explore two phenomena:the current role that brands play and the waysin which brands can enhance that role. We

selected two citiesNanjing and Weifang. Withpopulations of roughly eight million people,

these cities are neither leading edge nor leftbehind. They are more representative of Chinathan the coastal enclaves and leading citiesof Beijing, Shanghai and Guangzhou. And thenext wave of Chinas dramatic economic growthis playing out in cities like these where themajority of the countrys 1.3 billion citizens live.

We discovered that, although Chinese peopleenjoy spending the New Year period away fromwork, many also yearn for the more traditionalcelebration they recall from childhood. Parentscomplain they are unable to transmit theculture to their children. Brands and retailershave a major opportunity to address this

yearning with a retail experience that moreclosely matches customer desires at this uniquetime of year, when people break from dailyroutine for a few consecutive days of reflectionand the pleasures of family life.

Currently, however, the main retail distinction

from the rest of the year is that shoppingbecomes more stressful and promotion drivenand less enjoyable. Among our key findingsabout these new wave growth cities:

- Brands play an important but not central rolein the Chinese New Year.

- Brand presence during the New Year issignificant in only a few categories, includingalcohol and traditional Chinese medicine.

- Trust and value, always key to brand success,are even more important during the NewYear, based on our BrandZ research.

- Connecting with customers during the NewYear accelerates bonding and should helpboost year-round sales.

IntroductionThe Chinese embrace modern life and the

benefits of greater affluence. But they also seemeager to enrich the present with importantaspects of the past. Brands and retailers thatsensitively evoke the rich traditions of theChinese New Year can enhance the celebrationand deepen their bond with consumers.

Western retailers and brands, in particular,must approach this opportunity with humilityand cultural sensitivity. The Chinese New Yearsometimes is viewed as analogous to theHoliday Season in the West. The comparison isvalid but oversimplified. A central New Yearslegend recounts how a child dressed in redfrightened a fierce beast and saved a village,

not how a man in red delivered gifts to thevillages children.

Whi le gi f t giving i s important and wi l l

grow, its not among the key drivers, whichinclude: experiencing harmonious familytime and conferring and receiving respectand status. Brands that address these driverscan successfully be associated with the NewYear and benefit from increasing gift giving.Association with the New Year could also helpbrands accelerate bonding with customersand enjoy positive consequences throughoutthe year. Its most important to recognize thatChinese New Year is one of the worlds oldestand richest ongoing annual traditions.

As the BrandZ Pyramid i l lust ra tes, brandr e l a t i on sh i p s w i t h con su m e r s s t r e n g t h e nprogressively. They begin at the bottom levelof the Pyramid, which measures presence, orsimple awareness or experience of the brand. Theyculminate at the tip of the Pyramid, which measuresthe emotional bond generated when the brandis believed to offer more advantages than

its competitors.

Stronger bonding, greater sales

Global Average China Average China Top 50 Sales Index (average =100)

Stronger bonding correlates with greater sales. Thelevel of consumer bonding with brands is twice asstrong in China compared with the global average.The level is five times stronger among Chinas Top50 most valuable brands. The BrandZ Pyramidwas developed by Milward Brown, WPPs globaladvertising, media and brand equity consultancy.

Bonding 3% 6% 15% 644

Advantage 24% 30% 54% 212

Performance 35% 36% 60% 169

Relevance 40% 43% 71% 162

Presence 51% 57% 85% 141

No Presence 49% 43% 15% 33

(Base) (13,845 brands) (970 brands) (50 brands)

Brand SpotlightThis report spotlights brands thatconsumers, in this study, saidthey are likely to consider forthe New Year celebration. Weelaborated on these responsesusing CNRS-TGI data. Shopperslook for Chinese brands becausetheyre accessible and generallyaffordable. Most of brandsfeatured in the report rank in theBrandZ Top 50 Most ValuableChinese Brands.

Data source

5 5INTRODUCTIONTHE CHINESE NEW YEAR IN NEXT GROWTH CITIES


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THE CHINESENEW YEAR

YESTERDAYHistory and Tradition

THE CHINESE NEW YEAR |YESTERDAY6 6THE CHINESE NEW YEAR IN NEXT GROWTH CITIES


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The Chinese New Year, knownin China as Spring Festival, isthe countrys most importantholiday. It also is celebrated in

places with substantial Chinesepopulations, particularly inAsia, and in the Chinatownsof cities worldwide. TheChinese New Year is based ona calendar established about

4,700 years ago, although theexact date is disputed.

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Various legends explain theorigin of the Chinese NewYear. One describes howpeople dreaded the New Yearbecause a fearsome beast

named Nian annually terrorizedthe population and devouredchildren. Then one year achild appeared dressed in red.The beast, frightened by thecolor, fled and never returned.Thats why the Chinese NewYear traditionally features redlanterns and noisy firecrackersto ward off evil spirits.

'NIAN'

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The Chinese New Year is basedon a calendar that calculatestime using both lunar andsolar events. Time passes in12-year cycles with each yearrepresented by an animal of

the Chinese zodiac. The zodiacanimals are divided into yinor yang, consistent with theChinese view of the world ascomprised of complementaryopposites. They also are

assigned an element: wood,fire, earth, metal or water. Yinand yang combinations ofanimals and elements producea 60-year cycle.

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Missionaries introduced theGregorian calendar to Chinain the sixteenth century. It wasgenerally adopted early in thetwentieth century and is officiallyused today. But the ChineseNew Year remains deeplyembedded in the culture.

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Traditionally, people preparespecial foods and hope fora future of good luck. Theyattend many family dinners,

starting with a New Years Evefeast. Travel home for thefamily reunion produces amass migration. The New Yearperiod culminates in the lanternfestival, a joyful celebration

around the first new moon inthe lunar New Year.

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THE CHINESENEW YEAR

TODAYFamily, Food

and Fireworks

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The Chinese New Year remains Chinas most

important national holiday.

But as China becomes a wealthy, modernsociety the celebration of the Chinese New Year reveals how people both connect anddisconnect with the past. Some traditions areabandoned, while others are reinvented andnew ones emerge.

Just a generation ago, people anticipated the

New Year as an occasion celebrated with newclothes, special foods and visits with family.Many families saved all year to afford theirpurchases. It was the only time that new clotheswere purchased. Today, items once desirable

because of their scarcity have bec ome routine.

In the past, preparationbuying fabrics andingredients to sew new clothes and cook specialfoodswas part of the holidays excitement.Today, preparation time is crowded with newopportunities, obligations and stresses.

When family members lived near each other,gathering for meals during the 15-day New Yearperiod was easy. Today, large distances separatemany families all year and reunions are moredifficult with individuals, in pursuit of economicopportunity, dispersed across the country.

Connecting andDisconnectingWith the Past



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But in China, these changes exist comfortablywith counter trends.

Greater material abundance comes with afaster pace of l i fe that sometimes seemsoverwhelming. While grateful for improvedmaterial standards, some Chinese people feelthe need for spiritual balance. More peoplenow visit Buddhist and Taoist temples duringthe New Year. They pray for longevity, healthand wealth as they traditionally did in earlierperiods when daily life in China was moredifficult and the New Year resonated with hopefor a better future.

But not everyone prays in a traditional way.Some people simply pray that their goodtimes become even better. Also, the New Yearhas become somewhat more of an economy-driving, gift-giving opportunity both for

The Continued Importanceof Reunion

expressing sentiments to family and friends andfor lubricating business relationships. Somepeople, particularly in the coastal cities, usethe 15-day holiday period as an opportunity tospend new wealth on an overseas vacation.

But because more families are separated formuch of the year, reunion has become evenmore important. Young people increasinglyleave their villages for university study and towork as professionals in cities. Similarly, migrantlaborers often spend the entire year away fromfamily and from their young children, earninga living literally building China and sendingmoney home. The New Year is the only time

when young professionals and migrant laborersreturn from the places where theyre employedto the villages where they were born.



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Worlds largest

human migration

More than two billion tripson public transportation takeplace during a 40-day periodaround the Chinese New Year.During this migration, calledChunyun, ticket buyers crowdtrain stations and overburdenonline travel sites. Calls tobook train tickets reached arate of 19 million per hour in

one major city.


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The Chunyun underscoresthe importance of theChinese New Year and theenduring centrality of family.We followed two familiesas they journeyed home fortheir family reunions and wejoined them for their New

Year celebrations.


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Three generations of the family live togetherin a home in Weifang, a city of 8.5 millioninhabitants near Chinas northeastern coast.The household includes Zhang Yun andZhuang Yujuan, husband and wife, 10-year-old daughter Zhang Shudi and the maternal

grandparents.

Mr. Zhang Yun works as a chef. Ms. Zhuang Yujuan sells jeans at a market stall she owns.The three generations cooperate closely to

succeed as a family. Grandmother Zong Fuyinhelps at the market stall and both grandparentsparticipate as care givers for their grandchildand in household chores.

Introducing theZhang family of

Weifang

Father: Zhang Yun

Paternal grandfather:

Zhang Qiyi

Mother: Zhuang Yujuan

Paternal grandmother:

Wang Yuhua

Daughter: Zhang Shudi

Paternal great grandmother:

Ding Jihua

This involvement is driven by family affectionbut also by a desire to create wealth andensure the success of Zhang Shudi, an onlychild. A poster hanging in the main room

of the home summarizes this ambition. Itsays in handwritten Chinese characters, To

be modest is to allow others to take a stepahead.

The familys celebration of the New Year alsoreflects its ambition. While the generationsspend time together to enjoy the holidays richtraditions, they also visit business associates tostrengthen those relationships.

Maternal grandfather:

Zhuang Guoliang

HuahuaMaternal grandmother:

Zong Fuyin



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The Zhang

extended family

A time for family reunion,relatives gather forrelaxation, renewal andpreparation for the future.Today, people usuallyemphasize the first few daysof the 15-day New Year

period, celebrating withfamily visits and feasts.



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Liu Ming and Wu Bihong live with their eightyear-old son Liu Ruizhe in Nanjing, a city ofeight million inhabitants along the Yangtze Riverin eastern China. They inherited their apartmentfrom Mr. Liu Mings parents who lived togetherwith the family until five years ago, when theypurchased a home in the suburbs.

The young couple operates a small butgrowing accounting firm. Their success enabledthem to replace a used car with a new Suzukihatchback. Theyre saving to fulfill a lifelongambition, buying a new home.

Introducing theLiu family of Nanjing Father: Liu Ming

Paternal grandmother:

Huang Yongming

Mother: Wu Bihong Son: Liu Ruizhe

Paternal grandfather:

Liu Huahu

While material wellbeing is important tothem, the couples primary focus is ensuring asuccessful education and future for their son.They encourage him to study hard and invitefriends to visit, hoping to foster strong socialskills. Concerned by their sons poor eatinghabits, they prepare his meals to be visuallyinteresting as well as tasty and nutritious.

Focus on their son also influences their attitude

toward the New Year. The greater availability ofbetter foods and new clothing once reservedfor the New Year has diminished the holidaysspecial character. These days, every day is likeChinese New Years, said Liu Ming. They wantto restore some of the traditions and warmth.The family will spend part of the holiday withthe grandparents.

Maternal grandfather:

Wu Keyi

Maternal grandmother:

Wang Guilan



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SHOPPINGAND

PREPARATION



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A hypermarket visitbecomes a familyexcursion


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Prior to the New Year,families visit hypermarketsand other modern retailoutlets for a variety ofproducts including holidayclothes, alcohol, snacks andother packaged foods.



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Brand Spotlight:Li-Ning

Li-Ning is a leading sportswear brandnamed after its founder, Li Ning, amedal-winning Chinese Olympicgymnast famous for his performance at

the 1984 summer games. The brand isoften chosen as a New Year purchase.Although the brand still trails Nike andAdidas in overall popularity in China,Li-Ning narrowly surpassed Adidasrecently in sales to women. Li-Ningranks number 37 in the BrandZ Top50 Most Valuable Chinese Brands.www.brandz.com/china

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At the hypermarket



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The family chooses itshypermarket destination

based mostly onconvenience and usuallyvisits the store only one time,just before the New Year, tostock up.



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THE CHINESE NEW YEAR | TODAY

Brand Spotlight:Mengniu

Mengniu is Chinas leading producerof dairy products. It promotes thebrand by connecting the nationalvitality of China with the importance

of consuming dairy products. Thatstrategy is in part responsible forthe 68 percent penetration Mengniuenjoys among milk drinkers. Mengniuproducts are increasingly beingconsumed as ingredients in ChineseNew Year celebration meals. Recentpublicity about contaminated productreflects the Chinese dairy industrysongoing struggle to sustain food safetystandards. Mengniu ranks number 18in the BrandZ Top 50 Most ValuableChinese Brands.www.brandz.com/china

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Shopping at thetraditional market


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To assure food quality andfreshness, a few familymembers make daily visitsto a traditional marketwhere merchants offer freshproduce, meat, poultry andother items.



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Bargaining atthe traditionalmarket


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Bargaining remains part ofthe shopping experience,not simply to assure the bestprice but also to be seen asa smart shopper.

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Meal preparation




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Meal preparation beginsafter most of the shoppingis completed.



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Cooking is communal



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Typically, women prepare themeals, but men participate,too, especially to create

favorite dishes.



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EATING



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Days of feasts



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The first and most importantfeasts happen on New YearsEve and the first days of theNew Year period. At leastone meal is spent with thehusbands family and anotherwith the wifes.



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The extended family



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Other members of theextended family host mealsduring later days of the holiday.



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When the extended familygathers, men tend to sittogether at one table.



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Some celebratein restaurants


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Brand Spotlight:ChangYu

ChangYu, a leader in Chinese wine,was founded in 1892 in Eastern China.Consumers appreciate the heritageof the ChangYu, which is viewed asa sophisticated drink for the mass

market, but not a luxury brand. Itelicits high desire that justifies its pricepremium. ChangYu ranks number 20in the BrandZ Top 50 Most ValuableChinese Brands.www.brandz.com/china


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Some foods havesymbolic significance

Traditionally, fish is eaten onthe first day of the New Yearand sometimes a portionis left over to symbolizeabundance for the family inthe coming year.


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Other foodsbring luck

Platters of dumplings ofteninclude one dumpling witha peanut cooked into thecenter. According to tradition,the lucky people who selectthe dumpling with the peanutcenter enjoy good fortune inthe New Year.


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People celebratewith liquor and wine


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Alcoholic beverages, includingChinese liquor and increasinglywine, are consumed during thefestive meal, mostly by menbut also by women. With a5,000-year-old heritage, Baijiu,the Chinese white alcoholdistilled from Sorghum, is firmlyassociated with all important

celebrations and occasions.



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Brand Spotlight:Wu Liang Ye

Wu Liang Ye is a leading distiller ofbaijiu, the traditional liquor producedfrom sorghum. High desi re andpremium pricing position Wu Liang Yeas an aspirational brand. Its the brand

people want to be seen drinking. WuLiang Ye is number 17 in the BrandZTop 50 Most Valuable Chinese Brands.www.brandz.com/china



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RELAXING



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Fireworks fill the air



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To take a break betweenthe many meals, families gofor walks and also purchaseand set off vast amounts offireworks, filling the air withfestive sound and light.


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The red paperdebris fromexploded fireworkscovers the groundlike fallen leaves.


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Ground firescontinue the glow

Legend says that fireworksscare away evil spirits andassure good luck in the NewYear. To prolong the powerof the fireworks, peoplesometimes turn glowing

sparks into small fires.



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Children maketime to study



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Although children are offfrom school during theholiday, families rememberthat this period is a short

break from a competitivelife. Driven by an overridingrequirement to improvetheir childrens chances forsuccess, parents enforcetime for study.



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Children alsofind time to play



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Reflecting the growinginfluence of technologyin China and the rapidgrowth of the Internet,children spend much ofthat time playing online orwith electronic devices likecameras.


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Technology substantiallydrove the brand valueincrease for Chinesebrands last year with webportal sina.com being thefastest riser, according tothe BrandZ Top 50 MostValuable Chinese Brands2012 report.www.brandz.com/china



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GIFT GIVING


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Red envelopesof money



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The New Year is a time forgift giving. As more materialgoods are available in China,

the variety of gift items isexpanding, but the traditionof placing a cash gift in a redenvelope remains a regularpractice called hongbao.Children generally receivehongbao from parents andgrandparents.



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Red signifies luck



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Because the color redsignifies good luck, peoplebuy an article of clothingor some other object in thecolor red. They invoke artisticrepresentations of dragonsas symbols of power andgood luck.



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Alcohol

Alcoholic beverages, suchas baijiu, are seen as anappropriate gift especiallyfor men, as drinking remainsan integral part of the NewYear celebration.



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Traditional Chinesemedicine


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Traditional Chinese medicineis considered an ideal gift forthe elderly. The gift showsrespect and concern for therecipients health.



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Brand Spotlight:Ye Dao

Ye Dao is a well-priced wine positionedas a functional drink that provideshealth benefits l ike a traditionalChinese medicine. Ye Dao is a populargift item during the Chinese New Year,particularly for a grandfather to receive.During the New Year, 41 percent of YeDao purchasers buy the brand as a giftcompared with 33 percent during therest of the year. Its normally high loyaltyrating of 69 percent rises to 74 percentduring the New Year.

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THE CHINESE

NEW YEARTOMORROWBrand Opportunities Before,During and After the Holiday



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Both the Zhang family from Weifang and theLiu family from Nanjing spent about RMB2000 (US$ 300) during the New Year period.The largest portion went for purchasing foodand drink for consumption during the reunionfeasts. They spent a smaller amount for gifts,such as traditional Chinese medicines andalcohol. Two conclusions emerge from thespending of these families and others like them:

First, affluence is increasing in the large butless developed cities sometimes designatedas Tier Two and below. While spending seemsslight compared with some western countries,its much more than Chinese families spentin the past. And the year-on-year growth rateof affluence and spending is now greater inthese cities than in the urban centers alongChinas coast.

Second, people spend their money somewhatdifferently today. They continue to maketraditional purchases of food and drink andsome gifts. But theyre spending more. Thecountrys compensation structure helps drive

spending. Effectively, people in non-farmingparts of the economy have extra cash duringthe New Year because annual salaries are

divided into 13 increments with the extrapayment timed for the Chinese New Year. Itsalso important to remember that Chinese NewYear is different from the Holiday Season inthe West. Gifting does not, and will not, attainequivalent importance.

Insights

This inaugural study into brand opportunitiesin the fastest-growing regions of China yieldedmany new and unique insights.

1. People yearn to connect with traditions.They especially feel the impact of modernlife on traditional values during the New Year when they have time to reflect andreconnect with family.

2. Although gifting consistently has played arole in the Chinese New Year, until now itsbeen limited to certain categories.

3. Brand importance during the New Year islikely to expand in those categories, such asfood and drink, where its already a factor.

4. Brand importance can expand into certain

other categories, such as ingredients, snackfood and other treats that enhance thecelebration of the New Year.

5. Its a mistake to equate the Chinese NewYear with Christmas and the holiday gift-giving season in the West. Its different andit will remain different.

6. The expansion of gift giving may developin at least two directions: the traditionalgifts to indicate status or show affectionor respect to a family member; and the

enabling gifts, probably of money, fromparent or grandparent to child, to spend ontechnology, connectivity or other consumerproducts.

7. Traditional gift giving will drive sales in keycategories such as alcohol and traditionalChinese medicine before the New Year. Theenabling type of gift giving will drive postChinese New Year purchasing.

8. B rands and re ta i l e r s have a ma jo ropportunity to bond with customers byintroducing packaging and design that helpmake the New Year feel special, evoke some

of the traditions from the past, and connectbrands more firmly with the holiday.

The most effective brand messages wil lsensitively depict the gap between howsome older Chinese people recall the NewYear of their past and how they celebrate

the holiday today. According to research byWPPs Millward Brown, successful ChineseNew Year advertising and communicationhelps customers find harmony in the contrastbetween their current experience of the holidayand their memories.



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Essential:EXPERIENCING FAMILY REUNIONAND HARMONY

These include the categories and brandsthat families feel are basic to the New Yearcelebration. These products, often purchasedyear round, assume an added significanceduring the New Year because they are, in thebroadest sense, ingredients for making theholiday successful.

These items, for example, include food (cookingoil, snacks) alcohol (baijiu, beer and wine) orapparel. During New Year, however, peoplepurchase more and the purchase intentionchanges somewhat because of the occasion.Shoppers look for a greater degree of certainty.Theyre preparing holiday feasts for extendedfamily. They need larger quantities and greaterassurance that theyll make a good impressionor at least not make mistakes.

Impact for brands and retailers

The family may not trade up to a differentbrand, but the purchase of the current brandwill be more considered. If a more premiumversion is available it may be selected. Theemotional benefits derived may justify ahigher price. While much of the shoppingfor fresh food takes place at traditionalmarkets, modern hypermarkets can attractmore attention, even in food, by being moreculturally relevant in presentation.

Brand

ClassificationsUpgrade:TREATING OUR FAMILIESAND OURSELVES WELL

The categories and brands in this groupinclude alcohol and apparel. Baijiu and Chinesewine are enjoyed all year, of course, but duringthe New Year a person might purchase a moreexpensive brand for personal consumption, asa treat. During the holiday, people use alcoholsymbolically to express affection or respect.Those sentiments are reflected in brandselection when considering the hierarchy ofprice and prestige.


Alcohol brands already benefit from thisinclination to trade-up. But most brands havenot fully or consciously realized the potential.Hol iday promotion usual ly i s l imi ted tobrightly colored red packaging. More originalstrategic positioning, value proposition,packaging, presentation and communicationcan emphasize the emotional and symbolicaspects of the purchase. This is a time when

consumers are in the mood to trade upand even switch brands and embrace newcategories for treating themselves. Brands havean opportunity to serve this consumer mood.

Gifting:SHOWING AFFECTION AND RESPECTTO OTHERS

At the moment, gifting primarily is limited toalcohol for certain friends and family membersand traditional Chinese medicine for olderpeople. Children also receive modest gifts.Those basics are deeply embedded into theculture and are likely to continue. Gifting ishighly ritualized in China as a way to conferrespect and recognize social hierarchy andstatus. Younger people visit their elder relativesat least once during the holiday period.The functional benefit of a gift is especiallyimportant. Gifting is part of the holidaycelebration in China, but its not the centralactivity, as it sometimes seems to be in theWest during December. Rather, the familyreunion remains the most valued aspect of theChinese celebration.


Expectations are key. Its unrealistic andculturally tone deaf to expect that gift giving

during the Chinese New Year is ever going toresemble the Wests December holiday season.But gifting is already part of the New Yearcelebration. Opportunities await brands withinthis context. Specifically, gifting to childrencould increase along with gifting amongimmediate family members in categories suchas apparel. In the absence of other factors,price remains the chief indicator of quality.Brands have an opportunity to expand thenotion of quality, which is essential in gift givingtransactions. A quality gift shows respect andsustains self-respect.

To clarify the role brandsplay - and potentially can

play - during the ChineseNew Year its useful to thinkof brands and productcategories as fitting intoone of the following threeclassifications: Essential,Upgrade and Gifting. Insome cases categories orbrands fit into more thanone group.

Success Factors



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By analyzing the BrandZ data that probesconsumer attitudes toward these brands inChina, we identified Trust and Value as the twokey prerequisites for brand success during theNew Year celebration.

TRUSTWhen thinking about either of the two majorgifting categories, alcohol and traditionalChinese medicine (TCM), the first filter is trust:Am I impressed with the heritage and promisesof this brand? Does the brand continue to fulfillits promises and would I recommend it?

Recognizing that thesethree areas of opportunity-Essential, Upgrade andGifting - exist for brands, itsthen critical to understandthe factors that determinesuccess. We studiedalcohol and traditionalChinese medicine brands,already vital to the New

Year celebration, to learnthe qualities that brandsgenerally must exhibitto become more closelyidentified with the holiday.

Success Factors

Trust is an extremely important factor in theTCM category. In both TCM and alcohol valueis important as a way to show respect to therecipient of a gift. Especially in the alcoholcategory, the interpretation of value variesdepending on whether the purchase is forgifting or home consumption.

Achieving high levels of trust and value isparticularly important in China. Its true thatmany Chinese people are growing moreaffluent. But that doesnt mean theyre goingto spend profligately or become any lessvalue centric. Although self-evident, its worthrepeating: China is not the West. Chinesepeople are inclined to demand a strong

value proposition and save while people indeveloped western countries, at least until therecent economic downturn, are more likely tospend. The only exception in China may beluxury where people trade price for status.Successful luxury brands deliver a strong valueproposition with the status they symbolize.

As Chinese people become more affluent, t heirsense of value will become even more acute.Brands that gain in trust and perceived valuewill be more likely to be considered acceptableduring the New Year. The alcoholic beverageand TCM brands exemplify the success thataccompanies high levels of trust and value.

Some Baijiu is high priced. When gifting,consumers may view the brand as expensivebut still buy it for the prestige it represents.For home consumption, however, consumersoften select a brand that offers a combinationof quality and affordability that equates togood value. During the New Year, Chinese

consumers may trade up slightly even for homeconsumption, and select a more aspirationalbrand whose higher price they accept as ajustified premium.

Not surprisingly, many of these brands rankamong Chinas most valuable. Moutai, a leadingBaijiu, grew 58 percent in brand value during2011 and ranked 13 in the BrandZ Top 50Most Valuable Chinese Brands. The liquorWu Liang Ye grew 65 percent and ranked 17.ChangYu, the Chinese wine, ranked 20, with a77 percent increase in brand value. The Chinesetraditional medicine category exhibits similarresults. Yunnan Baiyao, ranked 26, with a 49

percent rise in value, while Tong Ren Tang, withan 89 percent brand value growth, ranked 36.

These examples illustrate the premise of thisstudy: that the celebration of the Chinese NewYear offers enormous untapped potential forbrands and retailers.

This Valued-D chart measures the gap between the

consumers desire for a brand and the consumersperception of the brands price. The prices of Chinesealcoholic drinks vary. Some brands of Baidiu, such asWu Liang Ye and Moutai, can command high pricesbecause theyre aspirational and highly desired.Value-D is a BrandZ a nalytic tool developed byMillward Brown.

+4

-11

+16 +17

120

115110

105

100

95

90

85Chinese Spir it s Western Spir it s

Wu Liang Ye Moutai

l

l

L

-

L

HighPrice

Good Value

Poor Value

Justified Premium

Expensive

HighDesire

Western SpiritsChinese Spirits

Moutai

Wu Liang Ye

The vertical axis shows the TrustR score. The averagefor all Chinese brands is 100. Brands with high TrustRscores (over 100) are more likely to be considered byconsumers for their New Years celebrations. Wu LiangYe and Moutai score high on TrustR. TrustR measuresTrust (brand heritage) plus Recommendation (currentperformance). TrustR is a BrandZ analytic tool

developed by Millward Brown.

VALUEThe second filter is value. Do I strongly desirethis brand? And does the price match desire ina way that I perceive strong value.


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Chinese brands are rapidly gaining in statureand value across many categories both in Chinaand abroad.

Understanding thei r success i s vi ta l toassuring your success in China. Thats whythe BrandZ Top 50 Most Valuable ChineseBrands 2012 is required reading. Along with

the extensive quantitative valuation analysisof the leading brands by Mil lward BrownOptimor, the report includes:

- Strategic summaries of each brand

- Key developments for 19 categories

- In-depth commentary on the changing roleof media

- Original research into social media

- Fresh insights into consumer shoppingbehavior

Dramat i c pho tos accompany the tex t ,illustrating how Chinese people integratebrands into everyday life. All of this knowledge

- and much more - is packed into this 107 -page report. Short individual videos on each ofthe top 50 brands containing unique contentabout China are also available.

The report is one more example of theChina expertise of WPP companies and theunparalleled brand analytics of BrandZ.BrandZ includes the worlds largest, mostreliable and comprehensive consumer-focusedbrand analytics and equity database exclusivelyavailable to WPP companies.

If your business can benefit from a deeperunderstanding of Chinese brands andbranding, you need to read this free report. Todownload the report and or watch the videosgo to www.brandz.com/china

Required Reading

WPP Resources

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WPP ResourcesWPP is a world leader in

marketing communicationsWPP companies, which include some of themost eminent agencies in the business, provideglobal, multinational and local clients with:

Advertising

Media Investment Management

Consumer Insight

Public Relations & Public Affairs

Branding & Identity

Healthcare Communications

Direct, Digital, Promotion & RelationshipMarketing

Specialist Communications

Collectively, WPP employs over 153,000people (including associates) out of almost2,400 offices in 107 countries. Clients include336 of the Fortune Global 500, 60 of theNASDAQ 100 and 32 of the Fortune e-50.

WPP in China

WPP and WPP companies have offices inBeijing, Shanghai, Guangzhou and many othermajor cities and provinces of Greater China.The Groups Chinese operations are wellestablished in the areas of Advertising; MediaInvestment Management; Information, Insight& Consultancy; Public Relations; Branding& Identity; Direct, Internet and Interactive.The Group currently employs 13,000 people(including associates) across Greater China.

WPP companies work wi th many of thecountrys top brands, as well as multinationalclients wishing to develop their presence in China.

Contact points in China

Scott Spirit,Global Chief Strategy Officer,[email protected]

TB Song,Chairman for Greater China,[email protected]

Belinda Rabano,Corporate Communications,[email protected]

A complete list of WPP companies anda searchable directory is available at

http://www.wpp.com/wpp/companies/

For further information contact David Roth

[email protected]

Contributors

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Added Value provides consultancy on branddevelopment and marketing insight for iconicbrands, both big and small, around the world.The company helps solve cl ients centralmarketing questions about market equity,positioning, innovation and communications.Added Value specializes in tackling the toughestquestions and providing sharp, strategicanswers. It operates from 23 offices in 14countries. To gain the knowledge and insightthat informs this Chinese New Year report, anAdded Value team from China lived with twodifferent families in the run-up to the holidayand during the New Year celebration. AddedValue is part of WPPs Kantar Group.

www.added-value.com

Kelvin Ma

[email protected]

Janine Hawkings

[email protected]

Target Group Index (TGI), is a global network ofsingle-source market research surveys providinginvaluable, comparable consumer insights forover 60 countries across six continents. It iswidely used for understanding target marketsand to aid in marketing and advertisingdecisions. The TGI-affiliated study in China isCNRS-TGI, published by CTR, which surveysalmost 100,000 Chinese consumers annually.The TGI global network is co-ordinated byWPPs Kantar Media.

www.globaltgi.com

Kevin Collett

[email protected]

BrandZ is the worlds largest and most reliableand comprehensive customer-focused brandanalytics and equity database. It forms the basisof many studies, such as this one on Chinesebrands, as well as the definitive Top 100 MostValuable Global Brands. Commissioned by WPPand conducted annually by Millward Brown,the global study measures the brand equity ofthousands of consumer-facing and business-to-business brands. It is based on interviews withover two million consumers worldwide.

www.brandz.com

Peter Walshe

[email protected]

Sirius Wang

[email protected]

Millward Brown is one of the world's leadingresearch agencies and is expert in effectiveadvertising, marketing communications, mediaand brand equity research. Through the useof an integrated suite of validated researchsolutions both qualitative and quantitative Millward Brown helps clients build strong brandsand services.

www.millwardbrown.com

Adrian Gonzalez

[email protected]

INSIGHT & WRITING

David Roth is the CEO of The Store WPP,

for EMEA and Asia and leads the BrandZworldwide project. He has been associated withChina for the past 15 years and advises manycompanies and retailers on their China entrystrategy, and the changing Chinese consumer.Prior to joining WPP David was a main boardDirector of the international retailer B&Q.

Markus Dunke is a highly versatile brandconsultant and researcher with the Added ValueGroup. Having lived all around the globe, hespent the past four years in China, developingbrands and uncovering insight. Having workedwith various Fortune 500s, his work has beenawarded by Added Values Shine award and

WPPs Highly Commended.

Ken Scheptis a professional writer specializingin articles and reports about retailing andmarketing. He began his career as a reporterand editor for a leading US publisher ofretailing journals and developed internationalpublications, research, conferences and retailstudy tours before starting his own business.

RESEARCH & EXECUTION

Ben Chen is Added Values director of operationsfor Greater China. With over 30 years of industryexperience, he has worked in every aspect of

research and now specializes in the kind ofcomplex fieldwork required for this report.

Jerry Clode is Added Values Associate Directorof Cultural Insight, focusing on Asia Pacific. Heworks on pioneer cultural insight projects forglobal brands in Asia and is a recognized expertin ethnographic research techniques.

Benny Ge is a market researcher and moderatorwith extensive experience exploring thepsychology of Chinese consumers. A memberof the Added Value China Cultural Insight Team,he provides special expertise about youth.

PHOTOGRAPHY

Cec i l i e stergren i s a p r o f e s s i o n a l

photojournalist whose extensive travels in Chinaresulted in two in-depth photo series, one onMongolian Coalminers and one on the roots ofKung Fu. She has collaborated with Danish bookpublisher Politikens Forlag on three occasions,producing travel books across India, Greece andDenmark, her native country.

DATA & ANALYSIS

Kevin Collett is Kantar Medias TGI manager inChina. Working closely with CTR to deliver theCNRS-TGI survey, he helped develop CNRS-TGI research and insight about brands that are

particularly popular during the Chinese NewYear holiday.

Sacha Cody is a Group Account Director inthe Shanghai office of Millward Brown. Heleads a research team that supports clientbrand strategy and growth across China. Herecently completed a study of digital media andconsumerism in China.

WITH APPRECIATION

To Steve Bale, Non-Executive Chairman, AddedValue, China, for his invaluable insights into theChinese New Year. To Amanda Harrison for

expert project management. And, of course,heartfelt gratitude to the Zhang and Liu familiesfor welcoming our team into their homes andgraciously sharing the traditional and changingaspects their New Year celebrations with us.


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