"Made in America" is Hot with China’s "Chuppies"

UPS Survey Reveals Insights On Marketing to Chinese Consumers

ATLANTA, Aug. 21, 2006 - What do blue jeans, DVDs, moisturizer and athletic shoes have in common? They are among the American products that Chinese consumers desire most, according to a UPS survey of 1,200 middle-class consumers in six Chinese cities.

The second annual UPS survey of Chinese urban consumers - often referred to as “Chuppies” - reaffirms their demand for high-quality U.S. products and unearths more detailed insight into their buying preferences and demographic differences. UPS, which flies to more points in China than any other U.S. airline, commissioned the survey to help its customers do business in the world’s fastest-growing market.

“The survey highlights the need for small-to-mid-sized businesses to be prepared and focused on exactly what it is they want to accomplish by entering China,” said Kevin M. O’Connell, senior partner of the law firm O’Connell and Co., which handles foreign direct investment and general business matters in China. “They need to set themselves apart from their competition and from the large multi-nationals and market to a very specific niche.”

The most sought-after products in this year’s survey were American videos/DVDs, music or books and consumer electronics - which also were the top categories in the 2005 survey. For those Chinese consumers interested in purchasing products in the following categories, some specific findings include:

* More than three-quarters (76%) of urban Chinese consumers say that they would like to buy American DVDs in the coming year (up from 71% in 2005), and 60% say they would like to buy American CDs (up from 51%).
* Moisturizer is the most attractive American beauty product to Chinese consumers, with 73% saying that they are likely to purchase it in the coming year.
* More than 70% of consumers say they want to buy American athletic shoes and 64% say they want to buy blue jeans, up substantially from 2005 numbers.
* The most desired American home appliance is a washer-dryer, with almost one-third of consumers saying that they were most likely to purchase one in the coming year.

When considering imported products, 85% of Chinese consumers say that quality is a critical factor in their purchasing decision. “I think quality is very important,” said Jennifer Cheng, 33, of Beijing. “It is especially important for high-tech products such as laptops or mobile phones.”

Not a mass market
Much like the United States, China is a melting pot of demographic distinctions and the survey reveals varying purchasing preferences by age group, gender and location. For example, younger consumers are more open to buying U.S. products in general than their older counterparts. Younger consumers also say that they buy imported products to enhance their image and status, with laptop computers, video/digital recording systems and coffee makers among the most attractive American products to them.

“Older consumers grew up during much harder times and their life experience is analogous to the Great Depression generation in the United States,” said Sam Flemming, CEO and founder of CIC Data, a China-based Internet market intelligence service. “Younger consumers have grown up with more money and are used to being bombarded with marketing messages. This means they are less inclined to ’penny pinch,’ have more disposable income and are more informed about products and services.”

Thinking inside the box
Some interesting information emerges from the survey to help businesses market to Chinese consumers. For example, more consumers (56%) want to hear messages about quality ingredients or workmanship in advertising about American products. This number increases to 65% when it comes to advertising fashion and apparel. Young consumers prefer celebrity endorsements in advertising, whereas older consumers would rather see professional endorsements.

In terms of packaging, the survey found that younger, high-income consumers prefer American or Western-style packaging, especially for beauty products. And 37 percent of consumers say that they prefer blue packaging for American products - nearly double the next color choice (white at 19%).

More opportunities to reach Chinese consumers likely will emerge as their use of credit cards and frequency of online shopping increases. The survey reveals that more than half of urban Chinese consumers use credit or debit cards for shopping, and 84% of those with credit cards expect their usage to increase or remain the same in the coming year.

“China presents tremendous opportunity for U.S. businesses, and not just as a manufacturing base,” said David Abney, president, UPS International. “China is one of the fastest growing markets for U.S. exports. Our hope is that the survey findings will help U.S. businesses consider what opportunities may exist for their products in China.”

UPS offers a range of services to help businesses deliver to China. Last year, the company became the first carrier in the industry to acquire direct control of its operations in China. This year, the company expanded its international express service to 22 more business locations in China, bringing total number of cities served in the country to 330. Those cities account for roughly 85% of China’s international trade. Most recently, UPS opened two retail centers in Shanghai, giving customers there greater shipping convenience.

For full survey results and other information about doing business in China, log onto www.pressroom.ups.com/chinasurvey.

UPS is the world’s largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS’s stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.

# # #

About the survey
Conducted by Research International, the survey was a quantitative study of 1,200 Chinese consumers in six Chinese cities: Beijing, Shanghai, Guangzhou, Shenyang, Chengdu and Wuhan. Respondents were all between the ages of 20 and 59 and have high household income levels in China (monthly income of RMB 3,000 or above in Beijing, Shanghai and Guangzhou, and RMB 2,000 or above in Shenyang, Chengdu and Wuhan). The survey was conducted as computer-aided telephone interviews between June 2 and 20, 2006.

Contact Information

Rebecca Treacy-Lenda

UPS

Contact via E-mail