Interview: "Increasing numbers of Chinese people can now afford consumer goods"

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Mr Glaser, over the last few decades China has developed into the third-largest trading nation on Earth. What are the reasons for this rapid growth?

As a result of the programme of economic reforms and increased openness introduced at the end of the 1970s, China’s trade volume literally exploded. The leader of the country at the time, Deng Xiaoping, recognised that China could not continue to develop successfully under its own steam, and he began to open the country up to foreign investment. Most of the developments that have taken place thus far can be traced back to that: almost 60 percent of all Chinese imports and exports are on behalf of companies who have invested in China and have relocated their production facilities to the land of the Great Wall. Another reason for the country’s positive development is that the Chinese are highly flexible and are quick to take advantage of possibilities: a European usually sees the risks first, while a Chinese person sees the opportunities.

What kinds of opportunities exist for foreign retailing companies? What needs to be kept in mind when entering the market?

Market opportunities generally exist for almost all sectors – from food and clothing to cars and machinery. But you won't get far without some intercultural competence and knowledge of the market. One European deodorant-maker, for example, had assumed that 2.6 billion armpits were out there, just awaiting him. That was a mistake, as most Chinese people don't use deodorant. Each investment therefore needs to be preceded by a thorough market analysis. In addition, entrepreneurs need to have a certain command of local customs. Personal contact between trading partners, for example, is extremely important in China. Transactions aren't made between companies, but between people. In summary, companies need to take a long-term view. Building up a countrywide sales network is a major undertaking: it requires time and money.

How would you characterise the Chinese consumer?

Increasing numbers of Chinese people can now afford consumer goods. The growing middle class has a distinct taste for quality and brands. From foreign products in particular, Chinese consumers expect a higher quality of craftsmanship and a boost to their own prestige. They're prepared to pay a higher price for that. Foreign goods have become more and more popular in past years: these include clothing, household appliances, furniture, decorations, children's products and also foods. For example, China now is not only the largest potato producer in the world, but is also the world's biggest consumer of potatoes. Why? Because the Chinese have recently discovered a passion for French fries.

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