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Global executives seek to lure Chinese consumers

By Xinhua writers Lyu Dong, Yu Li (Xinhua)

08:05, June 09, 2013

CHENGDU, June 8 (Xinhua) -- Companies must first succeed in China in order to be successful globally, a panel of corporate executives told a forum Saturday while discussing how multinationals can appeal to Chinese consumers.

The rise of the service industry in China poses both opportunities and challenges for foreign firms as they have to compete with local companies with better understanding of Chinese customers and a growing awareness of brand building, WPP CEO Martin Sorrell told the Fortune Global Forum in Chengdu, capital of southwest China's Sichuan Province.

"There is a mythology that China is about cheap manufacturing and stealing intellectual property," Sorrell said.

"The reality is that Chinese companies are beginning to understand the importance of branding," he said, adding that it is local firms that have a stronger formula to compete.

As growth of the world's second largest economy slowed to 7.8 percent last year, China is willing to trade breakneck speed with quality expansion, emphasizing the role consumption and services can play in a sustainable growth model.

"If you run a multinational company, you have no choice but to focus on China," Sorrell said, adding that disruption is taking place in the Chinese marketplace.

To Victor Yuan, founder of China's leading research consultancy Horizon, the disruptive changes are found in the new generation of consumers, who are brand-savvy and too busy to do housework.

"They don't do housekeeping, they don't cook but they are willing to buy such services from the market and that's opportunities for business," Yuan said.

However, he said quality service has to be delivered by well-trained, service-minded people.

"Most young people are well served, but they don't serve others," he said, noting that the education system focuses on elitism, but good service people can also be elite.

Francois-Henri Pinault, chairman and CEO of Kering, a leading apparel and accessories group that owns Gucci and Puma, also takes a bullish view when it comes to Chinese consumers. He said his company uses China to test ideas.

"Luxury consumers in China are much younger compared to Europe and the United States, they are confident, they have no fear of losing jobs and respond to new things quickly," he said.

According to Pinault, the number of Gucci stores in China grew from five in 2005 to 71 in 2013.

Executives on the panel also noted that as a country of diverse demographics and different development levels, companies should tailor their strategies to target specific groups.

"Companies really have to narrow their focus," said Sorrel. "It is one country, but with many markets."

The forum is being held in Chengdu from June 6 to 8.

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