How Do Confucian Values Affect Chinese Consumers?

Ivan Karabelnikov
MGIMO School of Governance and Politics;

Egor Zlobin
MGIMO School of Governance and Politics;

Gleb Krasnov
MGIMO School of Governance and Politics.

Abstract

In recent years, there has been an increasing interest in such processes as globalization, digitalization and the shift to Generation Z, which gets more influential on the consumer market. Considering these factors and that China is one of the biggest emerging markets with promising opportunities for western business, the research on how Chinese Confucian society adapts to such global developments seems to be relevant and highly demanded. For the purpose of this study, it suggests a hypothesis that Confucianism still influences Chinese consumers and identifies their purchase habits. However, generation changes and ongoing processes of globalization and digitalization bring new typical features of consumer behavior. Examining the impact of Confucianism on individuals’ consumption, the paper focuses on civilizational factors such as culture and religion, which are claimed to crucially influence consumer behavior. Thus, from the perspective of methodology, the research identifies key Confucian values that affect Chinese consumers and regard data related to consumption in the context of these values.  Having examined empirical evidence, the paper finds that penetration of western values leaves a footprint on how younger Chinese do shopping, although group identification, trust-building, face-saving remain determining for Chinese while making purchasing decisions. On this basis, the article concludes that having decided to enter the Chinese market, the western private business should not underestimate the impact of traditional Chinese values on consumer behavior that is the civilizational factor.

Key words: Chinese market, consumer behavior, Confucianism, globalization, digitalization, generation shift.

Introduction

Confucianism is one of the significant philosophical teachings in Asia that was elaborated to resolve practical socio-political problems by recovering and maintaining stability through harmony in turbulent times of Fragmentation in China centuries ago. Having gone through revolutions, especially the Communist one followed by the Cultural Revolution, Confucianism seems still to be deeply rooted in the behavior of some Asian nations, including their consumer habits. Therefore, it appears relevant to investigate, which Confucian values affect consumers, how they impact their consuming practices, and how such global processes as globalization and digitalization, which fundamentally change our lives, coexist with these traditional values.

Due to the format of this paper, the limitations of the analysis are as follows. Firstly, the authors examine the consumer behavior only of the Chinese. Secondly, the article considers the factors of consumption that include primarily Confucian values. Age, gender, location, income, and others are mentioned but not profoundly analyzed.

Analysis of the impact of Confucianism on consumer behavior

The literature on Chinese consumer behavior identifies various Confucian values that influence it. Mainly, they are group orientation (collectivism), face-saving, and humility.[1] Collectivism could be a Confucian central provision since it is a group of people that defines a code of conduct and with which one associates itself.  Relations within and between groups are what harmony (understood in the narrow sense of interpersonal interactions) depends on.[2] That probably determines three other values. So, face-saving refers to one's feeling of being treated by others in accordance with his or her position in a hierarchy (in family, job, society, etc.). That implies dependence of one’s satisfaction on others’ appraisals and recognitions. Besides, collectivism and face-saving quite logically encompass the concept of trust since it is unlikely to save face being dishonest and unreliable, which also cannot contribute to harmony-building. Finally, humility means being modest and relatively at the same level as other members of your group. In other words, one is not supposed to stand out by showing off his or her wealth or other advantages. Overall, group orientation implying building relationships on trust could encourage people to meet group standards, which means having an appropriate "face" and remaining humble.

In practice, economic development and increasing prosperity have caused a shift from utilitarian to hedonistic consumption, which broadens the role of goods from merely a means of survival to a social tool of building one’s image.[3] That reflects different attitudes of Chinese to public and private consumption. Interestingly, one can have two cigarette packages: a more expensive one for public use and sharing with others and a cheaper one for private use.[4] Certainly, cigarettes are not the only product that defines one's social status. For example, the luxury market thrives in China, accounting for 20%[5] of the global luxury market partly thanks to the same social standards. In addition, a survey reveals that one of the motives of Chinese consumers to buy high-tech products and luxury goods is to be appreciated by others. Fewer respondents have mentioned home appliances and Western food to serve the purpose of face-saving. This study also demonstrates that the reasons why the Chinese go without labor-saving home appliances (e.g., a dishwasher) are not expenses, but their lifestyle habits and, what is more important, no contribution to face-saving since others within their social groups do not use them either.[6]

However, it does not mean Chinese consumers are not inclined to savings. Although income influence on consumption is not considered in this analysis, it is necessary to clarify that such hedonistic consumption might be typical of those who do not suffer from financial troubles. It seems contradictory, but the growing importance of high prices in gaining face accompanies one of the highest worldwide Chinese savings rates (44,3% of GDP, 2019)[7]. This tendency to saving could reveal two more behavioral patterns of the Chinese – thriftiness[8] and uncertainty avoidance, which emphasizes, among other things, the value of trust between suppliers and consumers and reliance on established brands (brand loyalty). That also determines the Chinese to be long-term-oriented, focusing on future benefits[9].

At the same time, it should be clear that understanding of these values transforms during social development being affected by domestic and global factors. Globalization, including the Western values penetration, could not help leaving a footprint in the Chinese culture, and digitalization appears to have got some Chinese characteristics.

Thus, having accepted some Western lifestyle features, young Chinese, especially in the coastal regions, tend to reconcile individualistic values of success and pleasure with collectivistic virtues of humility and harmony.[10] So, younger generations that do not know the horrors of poverty and the Cultural Revolution are prone to spend more money on famous brands (e.g., apparel, high-tech) for self-expression, which challenges the virtue of self-restraint.[11] That could be a profitable market for Western companies to target more consumers since 15-44 years old consumers make up almost 35%[12] of the population, and urbanization goes on climbing up to 60.6%[13].

Furthermore, digitalization has created a large Chinese online market, which revenue estimates at $1,5 trillion and the number of shoppers – 855 million.[14] The cases of eBay’s failure and Taobao’s success demonstrate the influence of Confucian values on e-commerce[15]. In fact, uncertainty avoidance and the importance of trust background the necessity for consumers to take control over transactions during the online shopping as much as possible. That includes, for example, permanent interactions with suppliers to get more information about a product, different ways to conduct money transfers, various options to call off an order and refund payments, and so on. Generally, all these measures aim to build trust by replicating face-to-face interactions and brick-and-mortar shopping.

The findings of the research

The results of the research indicate that Confucian values, inherent in Chinese society, to a greater extent predetermine their consumer habits, with collectivism being the central feature.  The results also indicate that economic development and increasing consumption enable Chinese to purchase more luxury goods, that are mostly regarded as a tool to improve one’s image and to be appreciated by others. The findings underline the fact that such features as thriftiness and uncertainty avoidance are typical of Chinese consumers and explain trustworthy relations between suppliers and clients and loyalty to particular brands and goods. Further analysis shows that such a new trend as digitalization contributed significantly to the creation of large Chinese on-line market platforms,  the key features of which is providing security of transactions and close cooperation with consumers to better understand their needs.

Conclusion

The article concludes that, Confucian values still impact Chinese consumers. Although the understanding of Confucianism has changed in the course of economic development, globalization, and generation changes, Western culture has not replaced these values. The key point to be noted is that hedonistic consumption and Confucianism force the Chinese to make decisions according to the group standards they refer to and, simultaneously, relying on their previous experience of consumption and trust in the suppliers. That has a significant effect on the private, public, and online behavior of Chinese consumers. Therefore, western private companies willing to reach success in China should adapt western products in the way that they correspond to Chinese culture.  

References

Sources

1. Bu L., Wang J., Wei Wang K., Zipser D. China digital consumer trends 2019 (Report) // McKinsey. September, 2019.
2. Lannes B., Zhang C. China’s Unstoppable 2020 Luxury Market (Report) // Bain & Company. 2020.
3. Population pyramid of China. [Электронный ресурс]. URL: https://www.populationpyramid.net/china/2020/
4. The World Bank. Gross domestic savings (% of GDP). [Электронный ресурс]. URL: https://data.worldbank.org/indicator/NY.GDS.TOTL.ZS?locations=CN&most_recent_value_desc=true
5. Urbanization in China // Statista. [Электронный ресурс]. URL: https://www.statista.com/statistics/270162/urbanization-in-china/

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