2009年度中国消费者调查报告 (二)

McKinsey Asia Consumer and Retail

2009 Annual Chinese
Consumer Study
Part II:
One Country,
Many Markets – Targeting
the Chinese Consumer
with McKinsey ClusterMap

McKinsey
Insights China


September 2009

2009 Annual Chinese
Consumer Study
Part II: One Country, Many Markets –
Targeting the Chinese Consumer with McKinsey ClusterMap

Yuval Atsmon
Jennifer Ding
Vinay Dixit
Glenn Leibowitz
Max Magni
Daniel Zipser
The authors wish to thank Derek Chang, Alice Zhang,
Rachel Zheng, and Cherie Zhang for their contributions to this report.

McKinsey
Insights China

4

This is the second in
a series of reports on
Chinese consumers
by McKinsey
Insights China

5

Contents
Executive summary 6

McKinsey ClusterMap –
From city tiers to city clusters 8

Crafting a cluster-based strategy 14

About the study 21

6

Executive summary
By many accounts, the southern over a quarter of the population is
Chinese cities of Guangzhou and migrants, more people are older,
Shenzhen would appear to have a speak primarily Cantonese, and
lot in common. Each ranks among enjoy going out to restaurants to
the 4 wealthiest cities in China. drink with family members.
Each has the population the size of
a small European nation. And each While few companies would apply
churns out exports that feed the the same strategy in France as
world’s demand for low-cost goods. they do in Germany, this is in fact
Yet, these two cities, located in the what many companies appear to
same province and separated by just be doing in China today. In the
a three-hour car drive, are about as past, companies could overlook the
different in demographic profile, distinctions between consumers
language, and consumer preference in China’s hundreds of cities
as France is to, say, Germany. because they were focused on
Four-fifths of Shenzhen’s residents establishing a foothold in China.
are migrant workers, mostly under Or, they were chasing scale in the
the age of 35, who speak Mandarin biggest markets, which generally
to communicate across their local meant tier 1 cities such as Beijing
dialects, and prefer to drink in and Shanghai, and the larger of
bars. In nearby Guangzhou, just the tier 2 cities such as Nanjing.

McKinsey Insights China
2009 Annual Chinese Consumer Study: Part II 7

Yet, many companies continue to city by city, as many companies
invest in the large, growing markets continue to do today. Rather than
of yesterday, while overlooking the view China through the simple lens
smaller but faster growing markets of city tier or region, companies
of tomorrow. Others are waking should instead organize China’s 800
up to find that they’ve spread cities into two dozen or more city
themselves too thin, and are failing clusters as defined by the McKinsey
to establish sustainable competitive ClusterMap. These clusters -
positions in the handful of markets consisting of as few as 2 and as many
that really matter to their business. as roughly 70 neighboring cities - are
defined not only by income and
The vast size of the Chinese market geographic location, but also by
and the varying pace of growth economic linkages and trade flows
makes prioritization a must: of between cities, as well as common
China’s more than 800 cities, consumer attitudes and preferences.
200 have a population of over a
million each (versus just 35 in all Utilizing the McKinsey ClusterMap
of Europe).1 Hundreds more cities approach allows companies to define
have populations in the hundreds their strategic aspirations, prioritize
of thousands. Year after year of resources, and track performance
torrid economic growth means that at a level that is far more practical
yesterday’s smaller markets are and cost efficient than managing
now considerably bigger and still their business at the city level.
growing fast, while competition By grouping cities in this way,
in the larger strongholds is companies can leverage synergies in
more intense than ever. salesforces, distribution channels,
supply chain, and marketing across
Our work with companies in China, a wider geographic scope than by
as well as our recent research on the managing on a single city basis, and
Chinese consumer2, suggest a far at a far more granular level of detail
more impactful and cost-effective than by carving China up into large
approach to crafting business geographic regions.
strategies than managing China

1 “Preparing for China’s Urban Billion”, McKinsey Global Institute
2 McKinsey has been conducting the Annual Chinese Consumer Study since 2005. This year’s study covered
15,000 respondents across 58 cities. For more details please visit McKinsey Insights China website at
http://insightschina.bymckinsey.com

8

McKinsey ClusterMap –
From city tiers to city clusters
Recognizing the limitations of
sorting China’s cities into tiers or Exhibit 1:
We divided China into 22 clusters representing
broad geographic regions, as most
~92% of urban GDP in 2015
companies do today, we employed
in our study a very different
approach to segmenting the Chinese
market, what we call the McKinsey
ClusterMap. We divided China into
twenty-two city clusters: groups of
cities that are developing around one
or two large hub cities. To ensure
that the clusters are actionable and
relevant to companies, spoke cities
are located within 300 kilometers
of one of the hub cities, and the
total GDP of any individual cluster
exceeds 1 percent of China’s total
urban GDP (Exhibit 1).

1 Macroeconomic, demographics and consumption data are updated twice yearly to
account for rapid changing conditions in China

Source: McKinsey Insights China – Consumer Survey (2009); McKinsey analysis

10

The McKinsey ClusterMap covers Industry composition
a total of 606 of China’s 815 cities,
In plotting China’s city clusters, we
holding 82 percent of China’s total
looked at industry structure - an
urban population, and comprising
economy’s orientation towards
92 percent of projected urban
services, manufacturing, or
GDP by 2015. Of the 22 clusters,
agriculture – as well as the
we classified 7 as “mega”, with
integration of economic activity
populations ranging from 19 million
and trade flows between cities
to 55 million people, and each
within a cluster. Industry structure
comprising as much as 5 to
and economic linkages shape the
12 percent of total urban GDP in
demographic break-down, income
2008. An additional 10 clusters we
levels, and, ultimately, consumer
called “large”, with populations of
preferences and behavior within city
13 million to 39 million.
clusters.

The actual number of clusters
The formation of end-to-end
that a company may identify
industry value chains is one factor
will vary. Some companies may
that reinforces the integration of
decide to combine clusters because
economic activity within clusters.
of opportunities to reap scale
For example, the presence in
economies in distribution, or
Shanghai of SAIC, China’s largest
because media viewing habits and
domestic automobile manufacturer,
preferences for media channels are
and its successful joint venture with
consistent across those clusters.
GM, has led to the formation of a
Some companies may choose
comprehensive network of auto
to divide some clusters into two
parts suppliers in the suburbs and
or more clusters because the
cities surrounding Shanghai, earning
differences within a given cluster
the city the moniker “the Detroit of
in say, competitive dynamics or
China.”
consumer behavior, are substantial
enough to merit different strategies. Another factor promoting tighter
economic ties between cities
In mapping out the clusters,
within a cluster is the distribution
we analyzed China’s 815 cities3
of certain business activities
along four dimensions: industry
between cities. For example, many
composition, government policies, 3 This number includes around
high tech companies have set up 200 additional unofficial cities
demographic characteristics, and
their administrative operations that “behaved” like cities ac-
consumer preferences. cording to government criteria
in Shanghai, while locating that prevailed in 1996 but
which the government did not
manufacturing in a neighboring city designate as such. For more
or economic zone such as Kunshan information, see “Preparing
for China’s Urban Billion”,
or Zhangjiang High-Tech Park. McKinsey Global Institute.


Government policy towards an economy mostly driven
by, say, producing and trading milk
In China, the influence of
government can be felt strongly in its and dairy products, people will be
approach to urban development. In drawn to the jobs in that sector, will
recent decades, a mix of industrial, earn comparable levels of income,
economic and population policies and will likely develop similarities in
devised at the central, provincial preferences and attitudes.
and city government levels have
catalyzed the formation of city Demographics
clusters. Since 1989, the Chinese
The share of local residents versus
government has announced several
migrants, age break-down, income
policies that have encouraged tighter
levels, and household savings rates
economic collaboration between
are key demographic variables that
large cities, and between large cities
we used to define city clusters.
and smaller ones. Some of these
policies were designed to ensure that Massive waves of migrants from the
smaller cities benefit from the flow countryside are rapidly remolding
of talent and investment that larger the contours of China’s urban
cities nearby are attracting, and to
landscape. Recent research by
balance economic development and
the McKinsey Global Institute
ease population pressures.
(MGI) showed that between 1990
and 2005, 100 million migrants
In its 11th Five-year Plan in
moved into China’s cities. By
2005, for example, China’s
State Council identified eleven 2030, MGI estimates that nearly
regional city clusters with the 1 billion urban residents will
aim of driving economic growth, be living in China’s cities.4
strengthening transportation
The impact of China’s urbanization
linkages, and influencing
phenomenon varies widely across
patterns of migration. Cross-city
city clusters, however, and the
infrastructure and development
contrasts between clusters can be
projects have also reinforced
stark. Fully 86% of Shenzhen’s
economic and transportation
linkages between cities. residents are migrants from other
provinces that speak Mandarin (as
Other policies are targeted at specific well as their local dialect), while
regions, and have very specific 73% of Guangzhou’s residents were
purposes, such as those aimed at born and raised there, and speak
transforming Inner Mongolia into primarily Cantonese. Because
4 “Preparing for China’s Urban the “dairy capital of Asia”. As the of the predominance of migrant
Billion”, McKinsey Global
Institute industry structure gradually shifts workers, Shenzhen is a younger city

12

than Guangzhou: 55% of Shenzhen a particular city belonged to, rather
residents are 20-34, compared with than a geographically contiguous
just 35% of Guangzhou residents. cluster. However, in our latest
19% of Guangzhou residents are survey of 15,000 Chinese consumers,
older than 49, compared with just conducted in the first quarter of
7% in Shenzhen. 2009, 11 of the 14 attributes could be
explained by city clusters (Exhibit 2).
Consumer profiles
We observed substantial variations
The litmus test of whether city
in consumer behavior across China’s
clusters really matter to companies
clusters in most of the attributes
is the degree to which clusters
shape consume behavior. Indeed, of consumer behavior that we
our study showed a very strong looked at in our study. For example,
correlation between the two. When while 52 percent of consumers in
we first conducted our survey of the Shanghai cluster prefer well-
Chinese consumers in 2005, 9 of the known brands, only 36 percent of
14 biggest differences in consumer consumers in the “Xiamen-Fuzhou”
attributes such as brand loyalty or cluster (which includes cities such
the willingness to pay a premium as Shantou, Shishi and Chaozhou)
could be explained by the city-tier share the same preference.

Relevance of geographic clusters is increasing steadily as income differences across city tiers decrease

#1 determinant of variance in consumer responses (city tiers vs. city clusters) 1
2
3
Tier-driven Exhibit 2:
2005 2008 2009
Cluster-driven
Relevance of city
▪ Outlook towards financial future
1
2
1
2
clusters is increasing
steadily as income
3 3

▪ Importance of saving
1

differences across city
2
3

General
attitudes
▪ Concern about product safety tiers decrease
▪ Willing to try new things
▪ Individualism
▪ Preference for well-known brands
1
2
3

▪ Preference for Chinese brands
1 1
2 2
3 3

▪ Price sensitiveness
1
2
3

Attitudes
▪ Loyalty to preferred brand
1

towards 2
3

consumption
▪ Willingness to pay premium
1 1 1
2 2 2
3 3 3

▪ Preference for modern channel
1 1 1
2 2 2
3 3 3

▪ Internet activity
1 1 1
2 2 2
3 3 3

Cluster driven differences 3/12 7/12 9/12

Source: McKinsey Insights China; McKinsey analysis


Consumer preferences for product spend heavily on TV advertising
features also vary widely. For may identify ways to allocate their
example, consumers in the Shenzhen spending across different clusters
cluster tend to prefer lighter, thinner more effectively (Exhibit 3).
digital cameras, while consumers in
the Guangzhou cluster prefer a large A virtuous cycle is at play in
preview screen. the formation of city clusters:
government policies shape
Media preferences also vary widely industry structure, which impact
among consumers in different demographic composition, and
clusters. For example, 95 percent which is, in turn, reflected in
of consumers in what we call the consumer behavior. Over time, these
“Central cluster” (which includes forces reinforce the linkages between
cities such as Zhengzhou, Luoyang, cities, and cause consumer behavior
and Kaifeng) prefer to watch to converge within a cluster.
national TV. By contrast, 62 percent
of consumers in the Shanghai
cluster prefer to watch local city-
based TV channels. With a better
understanding of TV viewing habits,
consumer goods companies that

Different TV channels are preferred across geographic areas

Exhibit 3: Local TV National TV

Different TV channels are
preferred across clusters TV impact1 Cluster Description

Shanghai 62 38

Shenzhen 45 55
Local TV Strong preference for
(City TV and local media; cannot be
Changzhutan 44 56
Provincial effectively covered by
TV) national TV
Guangzhou 38 62

Hangzhou 31 69

Central 5 95

Yangzi
11 89 Can only be effectively
mid-lower
National TV reached by CCTV or
(CCTV and Taiyuan 16 84 PSTV
PSTV)
Kunming 20 80

Jingjinji 25 75

1 Percent of respondents who have received product/service information from TV ads in the past 2 months, think this is a credible source, and will pay
attention to the information

Source: McKinsey Insights China; McKinsey analysis

14

Crafting a cluster-based strategy
With the clusters mapped out, consumption could top 13.3 trillion
companies then need to choose renminbi (US$1.94 trillion)5 by
which ones to target, and what then, making China the third largest
strategies to employ for each. Four consumer market in the world only
key steps are essential in making after the US and Japan.
these decisions: look for the fastest
growing clusters; prioritize target But wealth is developing unevenly
clusters; set cluster level aspirations; across China, and companies
and define strategic archetypes and that extrapolate new market
tailor go-to-market strategies. opportunities by simply looking at
past sources of growth are unlikely
to succeed. Understanding which
Look for the fastest
clusters will yield the most attractive
growing clusters growth opportunities is critical
Between 2008 and 2015, 75 million for prioritizing investments. The
urban households will be joining the decision a company takes to invest
ranks of the middle class, defined as in capturing market leadership, or
consumers that have annual income focus on holding market share, will
of 50,000 to 120,000 renminbi. hinge largely on the foresight it has
As incomes go up, so does the about which markets will be the
ability to spend: by 2015, per capita most attractive in coming years.
consumption in China could reach
17,000 renminbi, up from 13,400 For example, Hefei’s middle class
renminbi in 2008. Total urban population is expected to swell
5 2005 real renminbi


from 35 percent in 2008 to 67 As more and more Chinese
percent in 2015, in contrast with households join the ranks of the
Hangzhou, which is expected to see middle class they can increasingly
its middle class population inch afford to buy more than just the
up from 73 percent to 75 percent bare necessities of life such as
over the same period. Different food or healthcare. As they move
growth rates of the middle class up the income ladder, consumers
translate into varying rates of shift their spending toward home
growth in consumption. Of China’s appliances, personal computers,
100 largest cities, 25 are expected and personal care products, as
to see a doubling of consumption well as discretionary items such as
between 2008 and 2015. Cities in entertainment or luxury goods.
this category include Beijing, Yantai,
Weihai and Songyuan. Another 25 The rapid emergence of the middle
cities, including Shanghai, Wuhan, class in some cities will drive
and Zhanjiang, are expected to see above-market growth in certain
their consumption increase more categories. For example, while
than 50 percent and up to almost Hangzhou is expected to enjoy
100 percent over the same period. an impressive 14 percent average
Even many of those cities that are annual increase in the demand for
expected to eke out single-digit automobiles between 2008 and
growth rates will still exceed global 2015, Hefei, with its surging middle
benchmarks, representing attractive class, is expected to see an annual
business opportunities. increase in demand of 36 percent.

16

Prioritize target clusters Guangzhou cluster, for example,
TV viewers prefer provincial TV
As lower tier cities grow, strategies
that focus only on higher tier cities which is broadcast predominantly in
are becoming less cost effective. Cantonese. In addition to negotiating
They also risk concentrating better trade terms with retailers
investments inefficiently on cities and logistics providers at a cluster
with lower synergies and missing level, one personal care company
out on a lot of the growth. Instead, quadrupled net margins by cutting
utilizing McKinsey ClusterMap, back on local TV advertisements
companies should focus on pursuing once it learned that advertising on
a limited number of priority clusters national TV was more effective.
where they can build scale and
Just as they make choices regarding
share distribution infrastructure,
which clusters to target, and which
supply chain, and sales force across
to invest in fighting for market
several cities. Companies must also
leadership, companies will also
make choices based on a host of
need to prioritize between cities
factors: the prevalence of modern
channels such as department within clusters, between distribution
stores and hypermarkets versus channels, and even between
traditional mom and pop outlets; individual sales outlets.
the degree to which consumers
are brand loyal or price sensitive; Set cluster level
and their willingness to try new aspirations
products, to name just a few.
As a company thinks about pursuing
market leadership across different
Investing in expanding their
clusters, it needs to consider the
presence in cities surrounding
Guangzhou, before pushing for intensely local nature of competition.
growth in and around Xiamen and Many regional Chinese players and
Fuzhou, for example, may be faster multinational companies have built
and cheaper, and therefore yield a strongholds in some regions which
better return on investment. have contributed disproportionately
to their profits. While national
Beefing up presence in a cluster scale matters to a certain degree
where a company has an established (especially for brands using national
presence not only allows it to TV), regional scale matters even
leverage longer regional expertise more, and many brands have
and share resources, but also allows managed to succeed regionally even
a company to take advantage of though they can’t compete effectively
synergies in TV viewership. In the at a national level.


Take for example the popular chosen by applying McKinsey
Chinese spirit baijiu (白酒). With the ClusterMap methodology,
exception of a few super premium companies should set market share
brands that are pursuing aggressive aspirations at levels that will give
national strategies, most brands hold them a defensible position:
as much as 40 percent to 50 percent 40 percent, for instance.
market share in a certain cluster
or region, but only 2 percent to 3
percent of the national market. This
Define strategic
phenomenon is played out in dozens “archetypes” and tailor
of product categories across China’s go-to-market strategies
more than two dozen city clusters. The idea that a company would need
By focusing on a handful of clusters to devise a different strategy for
in southern China, for example, one each of China’s 22 or more clusters
domestic food and beverage player sounds daunting. Tailoring products,
has built a dominant position with training salesforces, managing
market share of over 40 percent. In distribution channels, and designing
other parts of China, they are either marketing campaigns to appeal to
very small or not present at all. the vast differences among Chinese
consumers in different clusters can
The role of word of mouth in
quickly deplete budgets and absorb
building consumer confidence in
management attention. Thus, to
brands is one reason why companies
prioritize and concentrate their
can establish such strong regional
resources, companies should group
positions. Network effects come
clusters into three or four “arche-
into play: the more consumers
see a brand being consumed, the types” based on shared character-
more confidence they have in that istics and strategic objectives, and
brand, and the more likely they design a specific strategy for each.
are to purchase it. This dynamic is
One food and beverage player
reinforced for products in which
organized their target clusters
their consumption is more visible
into 4 archetypes based on their
to others, or for products that are
competitive position and aspirations
consumed on social occasions.
for particular clusters. The first
Companies will need to adjust their archetype includes clusters that
aspirations based on the inherent they call the “strongholds”, sizeable,
attractiveness of the cluster as well fast-growing markets where they are
as their ability to compete there. already winning and they need to
Once priority clusters have been defend at all cost.

18

“Must win” clusters are those Of course, what works for one
in which they are not currently company may not work for another.
the market leader, but where While the food and beverage
they want to achieve a dominant company mentioned above settled
position because of the size of on 4 cluster archetypes, a personal
the market and the rapid growth care company identified 3 archetypes
rate. “Must win” clusters are according to whether consumers
those where the company needs preferred traditional bar soap,
to deploy new product solutions whether they used liquid soap, or
and new communications whether they were in the process
strategies to convince of converting from bar soap to
consumers to switch brands. liquid. The company developed
very different product portfolios,
“Up and coming” clusters are those brand and marketing strategies,
in which per capita consumption distribution models, and sales tactics
for a specific category in which they for each archetype.
compete may still be small, but the
expected growth rate far exceeds ***
market average. In these clusters, the Averages no longer paint a complete
company has earmarked marketing picture of the Chinese consumer.
funds for consumer education to By using the McKinsey ClusterMap,
raise awareness among consumers of companies can develop a far
the benefits associated with products more granular understanding of
in that category. similarities and differences in
consumer behavior and consumption
The rest of the clusters are
patterns, and how consumption
categorized as “wait and see”,
will likely evolve over the next
which are either too small or
several years. Equipped with this
too competitive to prioritize.
understanding, companies can
In these clusters, the company
develop more effective strategies,
keeps investment at a minimum
whether they are seeking to enter
to ensure that their brand is
the Chinese market, accelerate
known and products are available
growth by identifying new markets,
in distribution channels.
or improve the profitability of their
existing business.


About the study
The study included a comprehensive survey of
Chinese consumers:
„ The consumer survey was conducted from December 2008
to March 2009. This is the fourth year that McKinsey has
conducted a comprehensive survey of Chinese consumers
„ The survey covered overall consumer attitudes
towards life, general shopping behavior, leisure
activities, financial management habits, product
and brand-specific purchasing behavior
„ The survey covered 7 major product categories,
including food and beverages, consumer electronics,
apparel, automotive, housing, home and personal care,
and healthcare
„ Sample size of 15,000 respondents in 58 cities
(4 tier-1, 10 tier-2, 22 tier-3, and 22 tier-4);
110-700 samples collected in each city
„ Respondents included key decision-makers and influencers
in family purchases; minimum monthly household income
of 800-2,000 renminbi; Age: 15-65 years old

The study also included extensive macroeconomic
research:
„ Econometric model consisting of over 30,000+ equations,
including macroeconomic and demographic forecasts for the
period 2007-2025
„ Over 150 interviews with relevant experts
„ City visits and interviews with more than 100 local
government officials and business leaders to complement
the model findings
„ More than 2 years’ of work by 25 consultants

22

Insights China provides businesses with the data, analytics and rapid,
customized problem-solving and decision-making support to help build
robust strategies for China’s rapidly changing marketplace. The data and
analysis combine results from McKinsey’s annual Chinese consumer surveys
with proprietary macroeconomic and demographic data and analysis from
the McKinsey Global Institute (MGI).

Since 2005, we have interviewed more than 30,000 Chinese consumers,
giving us a deep understanding of Chinese consumers’ attitudes and
spending behavior in more than 100 product categories. The respondents
come from a wide range of incomes, ages, regions and cities, and represent
80 percent of China’s GDP, 90 percent of its disposable income and 50
percent of the population.

In 2008, we conducted an additional study of 1,750 consumers with
annual household incomes in excess of RMB 250,000, giving us
unprecedented insight into the behavior of this fast expanding and
economically important segment. The macroeconomic and demographic
data offers detailed historic and forecast data on population,
income, and consumption for more than 800 cities. We update the
information twice yearly to account for changing conditions.

McKinsey experts are at hand to offer guidance, including the facilitation
of workshops to address specific business issues. In addition, we have a
registered panel of more than 5,000 mainstream Chinese consumers and
500 wealthy Chinese consumers to help further explore such issues in a
timely fashion.

For more information about Insights China, please contact one of
the following experts:

Vinay Dixit
+86 (21) 6132 3095
vinay_dixit@mckinsey.com

Jennifer Ding
+86 (21) 6133 4248
jennifer_ding@mckinsey.com

Or email us at: insights_china@mckinsey.com
Visit our website at: http://insightschina.bymckinsey.com

2009年度中国消费者调查报告 (二)

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