Lisa Deng, petite and fastidious, is co-owner and business manager of Circle Furniture—a small manufacturer in China’s southern Guangdong province that employs about 300 workers sawing, assembling, and polishing tables, desks, cabinets, and fireplace mantles. The factory floor hums with the sound of machinery, and a layer of sawdust coats the ground. Deng says orders from the United States and Europe still lag behind pre-recession levels, but fortunately demand is steadily picking up among Chinese consumers; within five years, she expects to sell 30 percent of the factory’s furniture within mainland China.
Defying stereotypes, Deng says her Chinese customers often expect higher quality than her western ones. “Chinese like solid wood furniture, and they want it to be durable. In China, apartments now are very expensive, so families want to buy one-time furniture for their whole lifetime.” By contrast, she says, “foreigners like elegant-looking styles, but the furniture doesn’t have to last as long because they will move again and again.” With limited square footage in typical urban Chinese apartments, Chinese consumers also expect more drawers, shelves, and collapsible table wings.
Deng says Internet sales are growing quickly: Customers order tables and chairs through e-commerce sites such as Taobao.com and also directly from the factory over social networking sites like Tencent’s (700:HK) Weixin and QQ. “Sometimes on QQ, people will get friends and strangers together to all order a product at once—maybe they can order 200 to 300 pieces; it is easy for us to do, and it lowers the price for them.” (It takes the same amount of set-up work to configure an assembly line to make five units as to make 500 units.) Deng has also started advertising new furniture designs directly over Weixin to her friends and to friends of friends. “We need to adjust our products for Chinese customers.”
An Aug. 21 report from the American Chamber of Commerce in Shanghai and Booz & Co., “Winning In a Transitional China” (PDF), highlighted Chinese consumers’ affinity for online shopping and their increasing willingness to pay higher prices for quality. The 90 multinational and Chinese companies responding to the AmCham-Booz survey identified the evolution of Chinese consumers from price-driven to value-driven shoppers as the top trend driving their marketing strategies. Chinese shoppers, especially those in wealthy first-tier cities, now want reliability and consistency, as well as a bargain. The survey’s corporate respondents expect the emphasis on quality to be especially pronounced among Chinese consumers aged 31 to 40—those most likely to be establishing households and furnishing homes.
The hunt for quality goes hand-in-hand with the rise of online retailing in China, which allows for easy comparison-shopping. Even fairly small vendors such as Deng’s Circle Furniture are beginning to develop ad hoc social media strategies to reach and retain customers. “It’s easy to use Weixin for customer service,” she says.
Larson is a Bloomberg Businessweek contributor.
