Doing Business in China

Retail China Services

Retail services in China have traditionally been somewhat limited during the State-Run era. Consumers going out to shop for products are accustomed to dealing with poorly trained sales people with little knowledge of the products that they sell and little interest in helping their customers.

However, as Chinese consumers’ incomes increase and they travel to Hong Kong and shopping centers farther abroad in Milan or London, they are demanding a level of service that is comparable to what they can find in other countries.

The last 10 years have been hugely important in terms of developing a consumer class with both the money and desire to buy a broad range of products from beauty products from Estee Lauder (EL) and Revlon (REV) to high end mobile phones from Motorola (MOT) and Nokia (NOK). Now, when Chinese consumers enter a retail environment they also want to interact with staff who can discuss their products intelligently.

We have found that Chinese consumers want to deal with sales people who can talk about various brands and their strengths and weaknesses rather than sales people who are touting a specific brand because they receive commissions on sales of that brand. Best Buy (BBY) has been a leader at training good salespeople, according to interviews and surveys we conducted at Best Buy’s flagship store in Shanghai.

Consumers always want to be able to touch products and compare different brands directly rather than being limited to looking at products from behind a counter. The stores that have benefited the most are foreign retailers like Carrefour that have come in and localized based on Chinese needs and preferences, but also adopted a higher level of basic service than what can be found in typical big box retail stores like in Hua Lian.

As Chinese consumers mature the retail environment is going to have to continue to change to suit their needs. In China this increasingly means providing consumers with a high level of service that allows them to learn more about the products that they are interested in while offering them a comfortable shopping environment and a large selection of products and brands that they are interested in.

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