Chinese Consumers Eager to Excel at the American Pastime

(By Andy Wong -- Associated Press)

The only bright spot in corporate earnings reports in recent months has been revenue in places such as Brazil, Russia, India and China. This year, their contribution to global growth from consumption is predicted to reach $164 billion, compared with $30 billion from the United States, according to Merrill Lynch.

Nowhere is the buzz of activity greater than in China, where consumer spending hit $1.3 trillion last year. For American companies, China represents an alternate consumer universe where the slate is clean and marketers can rewrite the story of their brands.

Wrangler jeans, which in the United States are associated with cowboys and rodeos, are urban in China. A Wal-Mart opening is the social event of the year. Buicks are young and hip. And KFC and Pizza Hut are hot places for dates.

Coach, the upscale handbag brand, plans to add 50 shops in China within five years. Sports shoemaker Nike, which has 3,000 retail outlets in 300 Chinese cities, is expanding into smaller cities. And jeweler Tiffany recently opened stores in Chengdu, Tianjin, Shenyang and Qingdao, for a total of eight in mainland China, and hopes to continue opening four to five a year.

James E. Quinn, global president for New York-based Tiffany, said in an interview that Chinese customers are the "fastest-growing segment" of its business. "A lot of American customers have a complete wardrobe of jewelry, passed down from previous generations. That's not the case in China. Chinese consumers are at the early stage of acquiring a sense of style and appreciation for design in jewelry."

U.S. companies have been so successful in China because "Chinese consumers have a 'look up to the rich' attitude and the United States is the world's top developed country in their eyes," said Gao Tao, a consultant for the International Brand Association in Beijing.

Take Wal-Mart, which has 215 stores in China and is expanding aggressively into smaller markets. The company said Thursday that in the first nine months of this year, net sales in its international division were up 16.5 percent compared with the same period last year, while in the United States they were up only 7.1 percent.

In the United States, most locations are big-box stores in the suburbs or in rural areas, but Wal-Marts in China are almost exclusively in downtowns. The food aisles are filled with everything from fresh squid and duck neck to kimchi-flavored potato chips.

Terrence Cullen, Wal-Mart's vice president of development in China, said store openings -- there were 30 last year -- often feature dragon dances and fireworks, and attract thousands.

"It's a big deal," Cullen said. "Chinese really like brand names. And many people who may not have seen a Wal-Mart have heard of a Wal-Mart. So suddenly when they have a big brand name in their city, they have to go see what it's like."

The company that best epitomizes the realization of the American dream in China may be Yum! Brands.

Faced with a declining consumer base at home, the Louisville company sought a new market in China in 1987 when it opened its first KFC in Beijing. Now the company has more than 2,300 restaurants in mainland China and hopes to increase that to 20,000 in the long term.