LOHAS and Green Consumers in China

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In this presentation, given at the 2011 Ecolifestyle forum in Shanghai, I speak about the catalysts, trends, and opportunities for "green" and LOHAS in China. Once a market confined to exporting of products, there is now a growing domestic market for products and services locally.
Transcript
  • 1. China’s “ green ” markets
  • 2. What is Green in China? <ul><li>Fundamentally, the issues that Chinese and Westerners face are very different </li></ul><ul><ul><li>Western concept of “green” and “sustainability” are intangible for average Chinese </li></ul></ul><ul><ul><li>Chinese understanding of “green” and “sustainability are heavily tied to person </li></ul></ul>
  • 3. .. But it is also Educating the Future Economic Opportunity Quality of Life
  • 4. Who Buys Green/ LOHAS in China?
  • 5. What Green Models Exist in China? <ul><li>Government Procurement </li></ul><ul><li>Largest market for “green” in China </li></ul><ul><li>Energy, transportation, healthcare, environmental repair are all procured by government agencies </li></ul><ul><li>Export Market </li></ul><ul><li>Largest market for foreign manufacturers in China </li></ul><ul><li>Organics (food and clothing), fair trade textiles, bamboo materials, building materials, automotives, etc </li></ul><ul><li>Traditional profit center for manufacturers </li></ul><ul><li>Domestic China Market </li></ul><ul><li>Private consumers for “green” products </li></ul><ul><li>Organic food, health/ wellness, personal transportation, clothing, and baby goods. </li></ul><ul><li>The biggest market going forward? </li></ul>
  • 6. What are the models that have succeeded? Elderly care Green products Organic Farm Children’s products Health / Wellness Education Environment Cleantech What are they buying?
  • 7. Health & Wellness <ul><li>Problems of health and wellness: </li></ul><ul><li>Lifestyles growing more sedimentary </li></ul><ul><li>Food Quality issues </li></ul><ul><li>Stress </li></ul><ul><li>Pollution </li></ul><ul><li>Target markets: </li></ul><ul><li>Luxury market - ecotravel, organic clothing, and retreats </li></ul><ul><li>Middle class – Elderly centre, organic foods and fat camps </li></ul><ul><li>BOP market – HIV/ Aids Training, nutritional biscuits and affordable eye care for rural students </li></ul>
  • 8. Environment <ul><li>China’s economic growth has a cost to the environment </li></ul><ul><li>Water pollution – more than 95% of China’s water is not drinkable </li></ul><ul><li>Air Pollution – 16 of the world’s 20 cities with the worst air are in China </li></ul><ul><li>Carbon emissions – China is now #1 emitter of carbon dioxide </li></ul><ul><li>Target markets: </li></ul><ul><li>In home water treatment / air purification </li></ul><ul><li>Organic foods </li></ul><ul><li>Overseas real estate </li></ul>
  • 9. Elderly <ul><ul><li>In 2010, 21% of Shanghai’s 18 million full time residents were over the age of 60 </li></ul></ul><ul><ul><ul><li>Multiple districts have more then 25% </li></ul></ul></ul><ul><ul><li>By 2050, China will have more than 440 million people older than 60, 31% of the population </li></ul></ul><ul><li>Target markets: </li></ul><ul><li>Luxury market – Full service retirement facility, organic foods, travel, & lifestyle </li></ul><ul><li>Middle class – Elderly centre, family services, clubs & activities </li></ul><ul><li>BOP market – Affordable healthcare </li></ul>
  • 10. Migration / Urbanization <ul><li>Over 400m people have moved to city in last 20 years, & another 400m will move </li></ul><ul><ul><li>When moving from rural parts of China, to urban, traditional communities are being lost. </li></ul></ul><ul><ul><li>Migrant children need to be educated </li></ul></ul><ul><ul><li>Migrants experience discrimination and locked out of economies/ services </li></ul></ul><ul><li>Potential opportunities for Social Enterprise: </li></ul><ul><li>Provide a product or service that helps migrants integrate into new setting or help maintain ties to old </li></ul><ul><li>Offer critical services (healthcare, education, & finance) to migrants outside the system </li></ul><ul><li>Development of new products targeted towards this improving quality of life for group </li></ul>
  • 11. What Drives Buying? Labor Scandal <ul><li>Immediate Impact </li></ul><ul><li>Domestic and International press coverage </li></ul><ul><li>45,000 investigators sent to Shanxi </li></ul><ul><li>Public acknowledgement of system failure and call for change by party </li></ul>Product Recalls <ul><li>International witch hunt and tit-for-tat </li></ul><ul><li>Economic impact to Chinese manufacturers </li></ul><ul><li>Questions at home about products surface </li></ul>Immediate Impact <ul><li>Immediate Impact </li></ul><ul><li>Environmental awareness took a quantum leap </li></ul><ul><ul><li>Domestic / International press coverage </li></ul></ul><ul><ul><li>National support and sympathy for affected </li></ul></ul>Taihu Lake 5.12 Earthquake <ul><li>Immediate Impact </li></ul><ul><li>24/ 7 news coverage – with citizen journalists first to report (twitter) </li></ul><ul><li>Intense corporate pressure to donate and manage messaging carefully </li></ul><ul><li>First time many firms experienced the “mass” media </li></ul><ul><li>24/7 Full press coverage on TV, newspaper, blogs, &twitter </li></ul><ul><li>Public awareness of problems with food industry, and call for changes </li></ul><ul><li>Ongoing investigative reporting into other areas / other companies </li></ul>Immediate Impact Milk Scandal
  • 12. Will Green Be Profitable? For a firm to succeed, it must do the following correctly: <ul><li>Have a clear understanding of target market </li></ul><ul><ul><li>Why would your target purchase product/ service? </li></ul></ul><ul><ul><li>What is their tangible catalyst for change </li></ul></ul><ul><li>Have a credible value proposition </li></ul><ul><ul><li>Being the industry leader will provide a premium, and could buy loyalty </li></ul></ul><ul><ul><li>Any ambiguity could lead to disaster </li></ul></ul><ul><li>Develop organic channels </li></ul><ul><ul><li>Using agents long term can introduce risk to distribution and markets, and increase costs </li></ul></ul><ul><ul><li>Consumers are looking for intimate purchasing </li></ul></ul>
  • 13. Takeaways <ul><li>The markets for green, LOHAS, and eco exist: </li></ul><ul><li>Niche markets for luxury items </li></ul><ul><li>Largest markets found in addressing the needs of middle class (organic foods / baby products) </li></ul><ul><li>Value trumps price: </li></ul><ul><li>Chinese consumers will pay premiums for safe products, but needs to be more than “green” </li></ul><ul><li>Product must have a tangible product proposition </li></ul><ul><li>Chinese are not buying green as part of mission to save Earth </li></ul><ul><li>Buying to improve their immediate environment/ community/ family </li></ul><ul><li>The problems that are faced are complex, dynamic, and growing </li></ul><ul><li>Credibility Counts: </li></ul><ul><li>Chinese consumers are looking for credibility in market. </li></ul><ul><li>Word of mouth counts for more than a label </li></ul>
  • 14. “ In the end, environmental, social and economic sustainability cannot be separated. A sustainable planet must include a sustainable human civilization – resilient human systems that respect the complicated relationships among poverty, human rights, economic development, environmental health, and human success” - Institute for the Future, 2008 <ul><ul><li>Richard Brubaker </li></ul></ul><ul><ul><li>Founder and Managing Director, Collective Responsibility </li></ul></ul><ul><ul><li>Founder and Executive Volunteer, HandsOn China </li></ul></ul><ul><ul><li>Adjunct Professor, Sustainability and Responsible Leadership, CEIBS </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul>
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