Three Dimensional - China, Korea and Japan

Topics: Gross domestic product, Brand, Purchasing power parity Pages: 13 (3180 words) Published: August 31, 2010
Article 44

Three Dimensional
The markets of Japan, Korea, and China are far from homogeneous.

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sia is one of the world's most dynamic regions, and offers multiple opportunities for businesses and investors. In terms of its nominal gross domestic product (GDP) in 2005, Japan has the largest economy ($4.S0 trillion), followed by China ($1.S+ trillion) and Korea ($.lZ trillion). China's real purchasing power exceeds $7 trillion, Japan's is estimated at $4 trillion, and Korea's is estimated at $1 trillion. These giants'combined purchasing power is comparable to the $12 trillion U.S. economy. One of the challenges faced by American and other Western

Executive Briefing
Globalizing markets might not mean that markets have

become similar. Although multinational companies
tend to believe that all Asian markets are the same, a comparative analysis proves that consumers in Japan, Korea, and China differ in their brand orientations, attitudes toward domestic and foreign products, quality and price perceptions, and product feature preferences. To ensure success, companies must set aside narrow and risky assumptions, and tailor country-specific strategies to target these consumers.

multinational companies is a tendency to lump together these markets and assume that Asian consumers have similar tastes and preferences, moderated by different income levels. This is not only a very shortsighted view, but also a risky assumption when entering these markets. Asian countries have distinct cultural, social, and economic characteristics that affect consumer behavior, with consumers in Japan, Korea, and China differing in brand orientations, attitudes toward domestic and foreign products, quality and price perceptions, and technology feature preferences. A comparative

analysis of consumer behaviors can help companies identify effective marketing strategies, and enable them to successfully tackle these Asian markets (see Table 1).

importance to the reputation of the merchandise than to their personal social classes. Noticeably, the country's consumer markets have expanded to China and Korea. In Shanghai or Seoul, you can see the influence of Japan's fashion trends and products. There's even a Chinese word for this phenomenon: ha-ri, which means the adoration of Japanese style. Korea. Consumers have very sophisticated tastes, show immense passion for new experiences, and favor premium and expensive imported products. In 2004, the Korean Retail Index showed continuous growth of premium brands in certain product categories, such as whiskey, shampoo, and cosmetics. Consumers also demonstrate great interest in generational fads (expressions of their generations and cultures, not just of their economics or regions), thereby selecting products that follow their generations' judgments and preferences.

Brand Orientation
Japan. Of all the developed countries, this is the most brandconscious and status-conscious. It is also intensely styleconscious: Consumers love high-end luxury goods (especially from France and Italy), purchasing items such as designer handbags, shoes, and jewelry. Since 2007, Hermes, Louis Vuitton (commonly referred to as LVMH), and Coach have opened glitzy flagship stores in Tokyo and enjoyed double-digit sales growth. And the country represents 20Vo of Gucci's worldwide revenueo l5%o of LVMH's, and 127a of Chanel's. It seems that a slumping economy has not inhibited its consumers. Eager to "know who they are," they prefer brands that contribute to their senses of identity and self-expression. These highly group-oriented consumers are apt to select prestigious merchandise based on social class standards, and prefer products that enhance their status. Accordingly, they attach more 184

China. Roughly 10 million-l3 million Chinese consumers
prefer luxury goods. The majority of them are entrepreneurs or young professionals working for foreign multinational firms. Recent...
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