Chinese consumers are willing to pay for sustainability

We have already talked about China as one of the fastest growing markets in terms of customer awareness towards sustainability: Chinese do appreciate and search for sustainability.

A study released on April 18th by global advertising and international marketing firm Ogilvy & Mather answer to the question that our customers usually ask: “Do consumers are willing to pay more for sustainable products?”. The study shows that the answer is “Yes, Chinese consumers are willing to pay a small premium for environmentally friendly products”, but they place responsibility to fix China’s environmental woes on the government.

Convenience is the main factor driving shopping decisions for more than half of the 1,300 Chinese consumers across China, but 71 percent said they would pay up to 10 percent more or higher for some “green” products.

“Within about a 15 percent price band, if two items have comparable brand image, people will go for the sustainable option,” Kunal Sinha, the lead author of the study and head of the company’s sustainability practice in China, told Reuters.

“But if you were going to sell it purely on its sustainability credentials, it wouldn’t fly,” he said, referring to the range of green products and sustainable behaviors covered in the study, from toiletries to food and vacations.

Shoppers were willing to open their wallets the widest for sustainably produced milk, at premiums of 17 to 20 percent, the study said, an indication of how severely scandals involving tainted milk have damaged China’s dairy industry.

The study noted large gaps between the sustainable behavior Chinese consumers profess to and their actual consumption habits, a trend that also exists in developed markets such as the United States.

One measure of their optimism: more than 90 percent of those surveyed said they thought the sustainability movement was growing. But fewer than a fourth or respondents said they felt empowered to solve environmental problems on their own, and instead looked to the government to fix the country’s environmental woes.

Chinese consumers have long been hesitant to loosen their purse strings, more so than consumers in other countries at a similar stage of development. But domestic consumption is picking up quickly and many analysts think it has reached a turning point.

That means Chinese consumers’ buying power may be out-pacing their green ethos. The survey said the concept of sustainable living is not yet mainstream, with respondents saying those leading the movement in China are seen as idealists.

Joel Backaler, a director at the consulting firm Frontier Strategy Group who blogs on Chinese consumption trends, says mainstream Chinese consumers are focused on aspirational purchases in the short to medium-term and will not begin focusing on green and sustainable consumption for years.

“The vast majority of China’s middle class are for the first time learning how to spend and join the consumption phenomenon that their counterparts in the U.S. and Western Europe have long enjoyed,” he told Reuters in an email. (Source: Reuters)

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