East is East and West is West – regional consumer attitude comparisons – Introduction
Emulation or divergence – to what extent do different politics, history and culture make for a different consumer mindset?
Attitudes in Asia are compared with those in the US and Europe
This introduction is the first in a series of articles on the differences and similarities between Western and Eastern consumers in terms of attitudes to spending, saving, shopping, aspiration, luxury, the Internet, leisure, entertainment, wellness, beauty and personal care, the environment and ethics.
Consumers, for the purpose of this article are non indigents above the poverty level with sufficient disposable income to be discretionary spenders.
The starting point for assessing regional differences is money and the obvious point that average consumer spending power is far greater in the US and Europe than it is in Asia. However, in all three regions there are wealthy consumers and, in all three regions, consumer spend is dominated by a middle class and the Asian and the Eastern European middle classes wish, to varying extents, to emulate aspects of lifestyles in the US and Western Europe.
These aspects are: the home, technology, wellness and leisure. Thus much middle class spending and particularly developing country middle class spending, is aspirational and aimed at emulation, but actual inclination to spend is also influenced by other factors such as confidence.
|Regional weather forecast|
|Aspirational spending||Strong||Strong||V strong|
|Tobacco, drink, fast food||Declining||Declining||Growing|
|Shopping as entertainment||Moderate||Moderate||Strong|
|Mall as community||V strong||Moderate||Weak/strengthening|
|Health and beauty||Strong||Strong||Moderate/strengthening|
|Source: Euromonitor International|
The first major difference in attitudes to spending relates to the economic gestalt of the country concerned. The importance of consumers within the economic mix of Asian versus US/European countries is a factor here. In the US and Europe consumer spending accounts for over half GDP. In China and developing Asian countries it accounts for closer to one third.
The consequence is that the US has a growing deficit and China has a growing surplus but the economic consensus is that an economy more based on consumer spending than exports is more stable and less vulnerable (for example a spending downturn in the US would actually have a more damaging effect on China than on the US).
This perception among Governments leads to encouragement of the consumer spending side of the equation and is not confined to developing country exporters – in three of the four biggest exporters in the world – China, Germany and Japan – increasing the contribution of consumer spending to GDP is regarded as desirable.
Spending, saving and borrowing.
One reason for the disproportion between export revenues and consumer spend in China (in addition to the artificially low exchange rate and the low wages which make the products so cheap) is that consumers use a lower proportion of their disposable income to buy consumer goods and services and save a higher proportion.
The difference in inclination to spend is also related to attitude to borrowing and penetration of credit cards and also to attitudes to e-commerce: nervous spenders are even more nervous about spending online.
Cultural differences also impact on spending. These may be based on recent political or economic history. Low consumer spending is both a consequence and a contributory cause of low GDP growth. Penetration of debit and credit cards also influences spending and particularly online spending. Penetration is far lower in Asia than in the US and Europe though this is changing. Half of urban Chinese now use plastic cards.
Cultural differences and stage of consumer society evolution create differences in attitudes to shopping. Research indicates that the new middle class shoppers of Asia are more likely to regard shopping as a leisure activity – the world’s biggest shopaholics (in terms of shopping for pleasure) are in India. In both the US and Asia the shopping mall is viewed as a ‘hang-out’ and community though for different reasons.
In the US the reason may be providing a focus and leisure amenity centre for widely spread communities, in congested Indian cities where earning consumers may live with extended families, the mall is an escape and a place to socialise as well as shop. This is less true in Europe. Asian consumers are still however, more likely to shop in markets than US or European consumers. Jumbo malls in China contain hundreds of small outlets.
Face and aspiration
Because ‘face’ and image is more important in Asia (or at least more associated with products and ownership of certain goods), brands are more sought after and respected and own brand/private label is less popular. This issue of trust in brands and particularly foreign brands is of great importance to Western manufacturers in view of the growth potential of the Asian middle classes.
A key concern is loyalty and the extent to which the newer luxury brand consumers will switch on the basis of price. Another key issue is that of national luxury brands beginning to compete with the international names and thus the whole issue of nationalism as it relates to purchasing attitudes.
Research in China shows the young more likely to favour foreign brands while the older generations, also less influenced by celebrity culture and endorsements, prefer indigenous brands. Consumers in Europe and the US are more sophisticated and possibly less impressed by luxury brand names though these still wield considerable power.
Convenience is the global megatrend which has been perhaps most influential in shaping consumer purchasing and is responsible for the rise of self service and the hypermarket. For Asia the development of the hypermarket culture is at an earlier stage – there is more market shopping and more ‘mom and pop’ family stores.
Thus in Asia the personalised buying mentality remains far more important than in the US and Europe where the process has become essentially depersonalised – e-commerce depersonalises the process even further while increasing the convenience element.
Health and wellness
Health and wellness is a global trend which encompasses healthy eating, the cosmetic culture, fitness and healthy lifestyles. As a trend it also includes reaction and quest for solutions for unhealthy lifestyles – smoking, obesity, alcohol abuse etc.
Asian consumers are behind their Western counterparts in terms of adapting purchasing to the achievement of health and wellness objectives and so likely to adopt more obvious approaches to H&W solutions such as double digit growth of isotonic drinks in Malaysia. The health versus convenience issue is far more advanced in the US and Europe than in Asia.
This is not the case, however, in terms of attitudes to technology, the Internet and e-commerce. Although across the regions penetration of PCs, Internet, broadband are far higher in the US and Europe, Asian consumers, when the technology is available, are possibly even more enthusiastic adopters of technology than their US and European counterparts.
South Korea has the highest per capita broadband penetration in the world and there is a feeling among consumers (which influences purchasing) that Asia is the global hub of consumer IT development.
Not surprisingly ethical attitudes to purchasing are more developed in the US and Europe than in Asia: the typical consumer is more likely to buy fair-trade, organic, free range etc and to ponder his or her carbon footprint, to look for food miles information on the products on sale in a hypermarket. This is not to say that green thoughts always beat price thoughts in the West or that there is no green purchasing momentum in Asia.
Looking ahead, attitude change among Asian consumers may be classified in two ways: 1) playing catch-up with US and Europeans 2) taking contrary or diverging attitudinal paths. Examples in the former category include: interest in personal care, hedonism and personal indulgence in some cases at the expense of traditional confusion attitudes.
Examples of diverging attitudinal paths may be summarised as national pride possibly translating into national products, and decline in the West is Best mentality.
Asian consumers to spend more on personal care
The recent survey by Taylor Nelson Sofres survey forecasts that Vietnamese consumers will spend more on shopping, particular for personal care products like insurance, health services, cosmetics for men, and child care. The survey also found that Vietnamese consumers are seeking products that bring convenience and have high quality.
A more existential Asian consumer is evolving for whom the West is no longer the arbiter of fashion and social conformity and status are not the primary purchasing motivations. Two key perceived Asian attitudes have been social conformity and a ‘West is best’ belief as far as many product sectors (excluding IT) are concerned.
There is now evidence of national and regional pride shifting the axis away from Hollywood glamour, New York glitz, and European sophistication, and towards a new belief not only in Asian technology but also in Asian style and creativity.
According to a report by Synovate Trends, national pride grows stronger as technology contracts the world, ie world interest in a country, enabled by the Internet, increases national confidence and a country’s inclination to export its culture as well as its products.
Thus such countries as China, India, and South Korea are coming to be regarded as global cultural hotspots and influencers of the future.