LOHAS and Green Consumers in China

China’s “ green ” markets

What is Green in China?
Fundamentally, the issues that Chinese and Westerners face are very different
Western concept of “green” and “sustainability” are intangible for average Chinese
Chinese understanding of “green” and “sustainability are heavily tied to person

.. But it is also Educating the Future Economic Opportunity Quality of Life

Who Buys Green/ LOHAS in China?

What Green Models Exist in China?
Government Procurement
Largest market for “green” in China
Energy, transportation, healthcare, environmental repair are all procured by government agencies
Export Market
Largest market for foreign manufacturers in China
Organics (food and clothing), fair trade textiles, bamboo materials, building materials, automotives, etc
Traditional profit center for manufacturers
Domestic China Market
Private consumers for “green” products
Organic food, health/ wellness, personal transportation, clothing, and baby goods.
The biggest market going forward?

What are the models that have succeeded? Elderly care Green products Organic Farm Children’s products Health / Wellness Education Environment Cleantech What are they buying?

Health & Wellness
Problems of health and wellness:
Lifestyles growing more sedimentary
Food Quality issues
Stress
Pollution
Target markets:
Luxury market - ecotravel, organic clothing, and retreats
Middle class – Elderly centre, organic foods and fat camps
BOP market – HIV/ Aids Training, nutritional biscuits and affordable eye care for rural students

Environment
China’s economic growth has a cost to the environment
Water pollution – more than 95% of China’s water is not drinkable
Air Pollution – 16 of the world’s 20 cities with the worst air are in China
Carbon emissions – China is now #1 emitter of carbon dioxide
Target markets:
In home water treatment / air purification
Organic foods
Overseas real estate

Elderly
In 2010, 21% of Shanghai’s 18 million full time residents were over the age of 60
Multiple districts have more then 25%
By 2050, China will have more than 440 million people older than 60, 31% of the population
Target markets:
Luxury market – Full service retirement facility, organic foods, travel, & lifestyle
Middle class – Elderly centre, family services, clubs & activities
BOP market – Affordable healthcare

Migration / Urbanization
Over 400m people have moved to city in last 20 years, & another 400m will move
When moving from rural parts of China, to urban, traditional communities are being lost.
Migrant children need to be educated
Migrants experience discrimination and locked out of economies/ services
Potential opportunities for Social Enterprise:
Provide a product or service that helps migrants integrate into new setting or help maintain ties to old
Offer critical services (healthcare, education, & finance) to migrants outside the system
Development of new products targeted towards this improving quality of life for group

What Drives Buying? Labor Scandal
Immediate Impact
Domestic and International press coverage
45,000 investigators sent to Shanxi
Public acknowledgement of system failure and call for change by party
Product Recalls
International witch hunt and tit-for-tat
Economic impact to Chinese manufacturers
Questions at home about products surface
Immediate Impact
Immediate Impact
Environmental awareness took a quantum leap
Domestic / International press coverage
National support and sympathy for affected
Taihu Lake 5.12 Earthquake
Immediate Impact
24/ 7 news coverage – with citizen journalists first to report (twitter)
Intense corporate pressure to donate and manage messaging carefully
First time many firms experienced the “mass” media
24/7 Full press coverage on TV, newspaper, blogs, &twitter
Public awareness of problems with food industry, and call for changes
Ongoing investigative reporting into other areas / other companies
Immediate Impact Milk Scandal

Will Green Be Profitable? For a firm to succeed, it must do the following correctly:
Have a clear understanding of target market
Why would your target purchase product/ service?
What is their tangible catalyst for change
Have a credible value proposition
Being the industry leader will provide a premium, and could buy loyalty
Any ambiguity could lead to disaster
Develop organic channels
Using agents long term can introduce risk to distribution and markets, and increase costs
Consumers are looking for intimate purchasing

Takeaways
The markets for green, LOHAS, and eco exist:
Niche markets for luxury items
Largest markets found in addressing the needs of middle class (organic foods / baby products)
Value trumps price:
Chinese consumers will pay premiums for safe products, but needs to be more than “green”
Product must have a tangible product proposition
Chinese are not buying green as part of mission to save Earth
Buying to improve their immediate environment/ community/ family
The problems that are faced are complex, dynamic, and growing
Credibility Counts:
Chinese consumers are looking for credibility in market.
Word of mouth counts for more than a label

“ In the end, environmental, social and economic sustainability cannot be separated. A sustainable planet must include a sustainable human civilization – resilient human systems that respect the complicated relationships among poverty, human rights, economic development, environmental health, and human success” - Institute for the Future, 2008
Richard Brubaker
Founder and Managing Director, Collective Responsibility
Founder and Executive Volunteer, HandsOn China
Adjunct Professor, Sustainability and Responsible Leadership, CEIBS
[email_address]

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LOHAS and Green Consumers in China

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