The Chinese Begin To Buy As Well As They Lend

I would imagine that many marketers' eyes danced when they saw the following banner in the Wall Street Journal this morning: "Shell Shock: Chinese Demand Reshapes U.S. Pecan Business." The heck with the fact the we're in hock to the tune of $1.2 trillion to our "sugar daddy," as Bloomberg News columnist William Pesek puts it in a cautionary piece. If you can get that huge market hankering for your widget, the good times will roll again.

After years of steady decline, pecan prices were double what they were three years ago, thanks to the insatiable appetite of the Chinese people for the decidedly American nut, David Wessel, with contributions from Junting Yolanda Zhang, reports this morning. And it has pretty much happened in the past five years. Perhaps we should take heed of one of the primary reasons for this.

"Pecans are very good for the brain. We older people should eat more pecans so that we don't get Alzheimer's," says Liu Wei, a 61-year-old retired chemistry teacher. "My husband has cardiovascular disease, and Beijing TV said eating pecans can help."

No less importantly, though, "pecans offer a case study in how China is reshaping entire industries for its trading partners -- and not only by exporting goods made by its low-wage workers," Wessel writes. It's a classic case of "finite supply and seemingly infinite demand," as one pecan grower in Georgia puts it.

But the boon is not all it's cracked up to be as far as shellers are concerned, and domestic users such as Stuckey's are scrambling to both meet demand in this country and to figure out a way to catch the wave overseas. Good piece.

Convenience is the main factor driving shopping decisions for more than half of the 1,300 Chinese consumers across China surveyed by for a new study by Ogilvy and Mather, but 71% said they would pay up to 10% more or higher for some "green" products, Reuters Michael Martina reports.

"Within about a 15% price band, if two items have comparable brand image, people will go for the sustainable option," says Kunal Sinha, the lead author of the study.

"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," points out Joel Backaler, a blogger and director at the consulting firm Frontier Strategy Group. He tells Martina that means consumers are putting aspirational purchases ahead of green and sustainable consumption.

David Barboza reports in the New York Times, meanwhile, that there is a mixed blessing to the boon times in China. The specter of inflation is raising its stultifying head so China's central bank yesterday ordered its biggest banks to set aside more cash reserves, reducing the amount of money available for loans.

Carmen M. Reinhart, an economist at the Peterson Institute for International Economics in Washington, tells Barboza that Beijing is "engaged in an economic tug of war, trying to encourage sustainable growth while struggling to control inflation." She also says that the actual numbers are worse than those that have been reported. Money problems in China "can reverberate from Wal-Mart to Wall Street and the world beyond," Barboza points out, as it is now the world's second-largest economy behind the U.S.

Further evidence of China's efforts to join the mainstream in commerce can be seen in its adoption of the China Responsible Marketing Code, a new self-regulatory document. The International Chamber of Commerce (ICC) applauded the initiative last week, according to The Financial, a Ukranian media outlet.

In other news, Chevrolet's sales in China reached 159,303 vehicles for the first quarter, it announced this morning, up 17% from a year ago. Globally, the brand was up 15%.

"See the Yangtze in your Chevrolet" may not may not translate well as an advertising jingle, but it's clearly music to the ears of Joel Ewanick, General Motors global chief marketing officer, who says that by "truly" listening to the people, it has "developed strong connections with consumers in key markets across South America, Europe, and Asia."

Tags: china
Recommend (2)