Understand Chinese consumer trends

The Gallup Organisation's ten-year study of the consumer market in China reveals important differences among product segments. Not all are growing equally; some appear to be quickly gaining appeal, while others are merely edging forward —or even backsliding. Overall, the Chinese appetite continues to be strong for certain must-have items, including TVs and mobile phones, hard goods such as refrigerators and air conditioners, and "fun" products such as stereos and digital cameras (computers and video cameras are just heating up).

I recommend: Get in-depth knowledge of the Chinese consumer by hearing what Gallup executives have to say about the results of their 10-year study. You can subscribe to Gallup Poll on Demand for access to their polling data and analysis, or look through a list of articles on consumer trends in China.

Chinese consumers want more than just function

This is one reason why Nokia, which has emphasized fashion over function, has seen its cell phone sales in China rocket past those of Motorola and Ericsson. If a company wants to sell vacuums or washing machines in China, it had better pay attention to emotional needs as well as physical ones. And if it's selling microwave ovens, air conditioners, and TVs, it should be sure those products are as fashionable as they are reliable.

I recommend: Find out what the Cheskin consulting firm says about how "linglei", or self-expression, is an important component of product-buying in China. For example, Cheskin's China Markets blog discusses how Chinese women consider mobile phones to be reflections of their femininity and individualism.

Start-up in a second-tier city

While it's true that average disposable income has increased, some Chinese are benefiting far more than others. Some divide China into two worlds: the cities of Beijing, Guangzhou, and Shanghai; and all other locations And while there are sharp differences between the incomes of urban and rural dwellers (urban Chinese earn almost three times more than rural dwellers do), affluence is growing not just in the big three cities but in what has been termed the "third China"—the midsize cities such as Xi'an, Nanjing, and Wuhan, which may afford some of the largest opportunities for small businesses.

I recommend: Cambashi marketing consultancy provides insight to what starting up in these second-tier cities entails.