China Perspective II: Why Status Benefits Matter For Non-Luxury Brands

We all know status is a major factor for the super-rich in Shanghai or Hangzhou. But you might be as surprised as I was to find that status concerns also impact purchases for residents of the country’s much less affluent “tier three” cities, where most of China’s growth is expected in the next 10 years. Apparently, as soon as it is possible for most people to own a refrigerator, the brand of refrigerator starts to have more meaning from a status perspective.

It appears that the need for status is universal, as Alain de Botton wrote in the book Status Anxiety, “Every adult life could be said to be defined by two great love stories. The first – the story of our quest for sexual love… The second – the story of our quest for love from the world – is a more secret and shameful tale … like something of interest chiefly to envious or deficient souls… and yet this second love story is no less intense than the first.”

In recent focus groups with people of little means, I was struck by how well respondents presented themselves, with perfectly clean clothes and immaculate grooming. The care taken in how a person presents himself to others relates to the Chinese concept of “maintaining face”, where it is very important to present a respectable front to the world. This aspect of the culture leads to the natural desire to purchase brands capable of making a statement about the owner’s status in society. I saw a strong desire for brands that could convey a certain degree of success – a badge if you like – in these less developed counties. Even the most price-conscious of consumers saw value in a known brand that could help him or her hold his head higher.

Life can be very hard for people in an emerging tier three city. Some of the people with whom we spoke had annual incomes below $3,500. Still, brands were important to them for purely emotional reasons. In the case of consumer durables like appliances and consumer electronics, these items took a proud place in the home. Beyond making an external statement about “face”, such items could remind the family how far they have come and reinforce self-esteem.

While this is great news for brands in China’s fast-growing third tier cities, perhaps the lessons in China’s counties are just reminders to us all about the universal potential for a brand to offer meaning far beyond the functional purpose of a product.