How to understand the purchase behaviour of Chinese consumers in just three characters: 性价比

I have always found it interesting that no matter how wealthy a Chinese consumer may be, they are insistent on trying to get a better deal on most of their transactions. Whilst I knew this was cultural, I never truly understood it until I learned the three characters 性价比 (xìng jià bǐ). Literally this translates as:

性 quality

价 price

比 compare

The Chinese apply this quality-price ratio assessment to every purchase decision, no matter how cheap or how expensive the item is.

If a Chinese consumer (for example, my wife) believes that a silk scarf is over priced in a market at 50 RMB she may argue/negotiate relentlessly for what seems like hours until she achieves a price that provides her with sufficient xìng jià bǐ. And yet if a Chinese consumer (for example, my wife again) spots something in a London antique shop that she believes offers xìng jià bǐ, she will buy it in a flash, even if the cost is 100 times that of the silk scarf.

It is essential that brand owners and marketers truly understand this when making pricing decisions in China. It is rarely relevant what it costs to make, it is simply about what value the Chinese consumer places on that item, and if that value exceeds the selling price. If it does, it will sell.

Consequently, the importance of the back story and brand heritage of international brands cannot be understated - if a consumer feels they are buying into a tradition or intangible benefit that cannot be found in any other product, then the more usual price comparison becomes an irrelevance in the purchase decision.

xìng jià bǐ is all you need.
(And you thought marketing in China was complicated?) :-)