Meet the Grandparents
This recession is going to have a strange affect on your local Chinese staffers – and customers. They’re going start aging before you eyes until they turn into their own grandparents. Physically they will appear the same as they ever were – but emotionally and mentally they are going back in time to a time 15 or 20 years ago when Chinese life was characterized by shortage, deprivation and insecurity.
The good news is that suddenly a steady job is one of the most important things in the world to them as they save every mao in anticipation of tough times ahead. The bad news is that Chinese customers and purchasers are going to do pretty much the same thing.
Ostentatious consumption is out. Paranoid saving is in.
I know this script well. My grandfather was an accountant at Western Union when the Great Depression hit. He felt it was his duty to indoctrinate all of us grandkids to be good savers and to beware of the specter of ‘hard times’. I grew up during the optimistic go-go years of the 60s and early 70s, but my parents would often invoke the spirit of Grandpa Sol and the Great Depression to get us to waste less and save more. Even though those particular hard times ended 60 years before I was born, they still made up part of my consciousness and identity.
Local Chinese have the same type of memories – but theirs are stronger and more recent. China has only been open to the West since the late 70s, and wasn’t really prosperous until very recently. Sure, they love to spend and to job-hop so much that it seems like part of their DNA. But that’s a blip on the radar of Chinese history. Deep down, the Chinese consumer is skeptical, conservative – and a cutthroat negotiator.
If your market includes Chinese middle-class buyers, you may want to moderate your approach. Try a tack that is less aspirational and high-status, and more practical and value-oriented. This item is more expensive- but not because it is European or the same one used by movie stars and royalty – it costs 20% more because it will last 75% longer. It is a better value.
Local workers are going to become more dedicated and committed to their jobs – which is both good and bad. Of course it will be great to field a team that really cares about holding on to their positions – and will be a refreshing change from the revolving door HR reality that plagued managers in the past. But you can also forget about voluntary head count reduction or furloughing unneeded staff until business picks up. If you have gotten used to Chinese staffers who don’t even bother to show up to tell you they are quitting, then you’re in for a shock. Any western manager who tries to fire Chinese staffers had better consult with their HR specialist AND a well-informed lawyer before moving forward. There will be trouble.