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When the Cutting-Edge Doesn’t Cut It

Jun 17 • Morry Morgan Articles, Sales and Negotiations, Trainer Articles • 3401 Views • 1 Comment on When the Cutting-Edge Doesn’t Cut It

Source: Søren Niedziella @ Flickr

THE GERMAN MADE MIELE W 5873 can spin clothes at 1600 rpm. The V-164 wind turbine, made by Danish Vestas, has an internal elevator that can carry it’s occupants safely to the top of the tower in seconds. And Apple devices come with iTunes.

These are all ‘cutting edge’ technologies that are also irrelevant in the China market.

Chinese consumers don’t see the benefit in 1600 rpm. In a McKinsey on China podcast focusing on Chinese consumer behaviour, it was discovered that 800 rpm for a washing machine was ‘good enough’.

800 rpm for a washing machine was ‘good enough’.

Paying for twice that speed was considered a waste of money. So too is the investment in a wind turbine elevator. With the cost of labour significantly less than that of Europe and North America, having engineers climb ladders is seen as more than acceptable. It’s fiscally rational.

As for Apple’s iTunes, while this feature is one of the key selling points of Apple devices worldwide, it is all but ignored by the Chinese. Music and movies are generally pirated and there are only a tiny fraction of podcasts in Mandarin, compared to those in English. According to Apple, in 2013 there were over 250,000 unique podcasts published on iTunes, but only approximate 2,150 are in Chinese language. That’s less than 1%.

Of course, Apple’s ‘bells and whistles’ hasn’t prevented it from becoming the market leader in the iPhone market. In the first quarter of 2015  the company shipped 14.5 million iPhones, representing a 62.1 percent gain over the same period a year earlier. It just hasn’t become leader through its features. Rather, Apple’s success has been based on style.

Apple has replaced Hermes as the top gift choice among the country’s rich

According to the Hurun Report’s Chinese Luxury Consumer Survey 2015, Apple has replaced Hermes as the top gift choice among the country’s rich, meaning that the cutting-edge technology on the inside, is less of importance than the logo on the outside.

So if Chinese aren’t attracted to cutting-edge, what are they attracted to?

For one, food safety. Chinese regulators have a difficult time simply because of the sheer number of companies involved in the food industry. Horror stories, like that of the 2010 toxic infant formula have created a paranoia not limited to parents. Chinese customers of all ages have lost confidence in many domestic food products, which has helped build the demand for produce from abroad, namely Australia and New Zealand.

Chinese are also attracted to prestige. King’s Harvest, an Australian wine brand, has proven very successful in China due to it’s mix of unusual bedfellows – South Australian Barossa Valley grapes, and all the finery of a 14th century French Count. The bottles are also technology-free, relying on old-fashion cork, and copious amounts of black and gold frill, adding to the pomp. In short, this is a combination of old and new world grandiose, and unsurprisingly, the Chinese love it.

So this year, as you ponder your Chinese strategy, beware of the R&D department. Their latest gadgetry might be all the rage in Australia, Europe or North America, but in China this ‘cutting-edge’ technology might not cut it.

Well, unless you are Brown Brothers. We’ll wait and see on this one.

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One Response to When the Cutting-Edge Doesn’t Cut It

  1. lily says:

    You gave me a new perspective on using state of the art as a sales advantage. I just assumed it was a plus in any market. Thanks.

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