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    Chinese consumers are becoming more price conscious, less brand-loyal and generally harder to please, according to a McKinsey survey that suggests increasing competitive pressures in the Chinese consumer goods market.
    The report comes at a time when many multinational companies are counting on strong Chinese domestic demand to make up for global economic weakness.

    Last month, retail sales in China grew by 23 per cent year-on-year and consumer activity remains “buoyant”, despite signs of a slowdown in sales of some items such as cars, says Jing Ulrich of JPMorgan Securities.
    But consumer goods companies will have to work harder to satisfy “increasingly discerning and sophisticated” Chinese consumers, the report says.
    “This is not an easy market,” says Max Magni of McKinsey in Shanghai, one of the authors. China is still a gold mine, but now there are thousands and thousands of miners that have discovered it.”

    The conventional wisdom that Chinese consumers are more brand-driven than shoppers in more developed markets remains true. “But the importance of brands, and brand loyalty specifically, is falling as the choices facing consumers multiply,” the report said.
    Chinese shoppers are markedly more value-conscious than last year, and loyalty to particular brands is waning: the proportion of consumers who said they would continue to buy their existing food and beverage brand has halved.
    But the weakening of brand loyalty could be good news for foreign companies, the report says, because shoppers are less nationalistic in choosing a brand: a small majority of those surveyed showed no clear preference for brand origin.

    And premium brands could also benefit from a willingness to pay more for high-end products. The top 15 per cent of consumers will pay 60 per cent more for high-end consumer electronics, and 300 per cent more for some personal care products. If the trend continues, “it will lead to the kind of polarised consumption patterns familiar in the West”, between “no frills” goods and high-end products, the report says. Companies should compete at one or both ends of the market – but avoid being stuck in the middle, it advises.
    Companies needed to differentiate more between regions too, the report says, noting that the traditional marketing strategy of classifying consumers by the size of the city they live in may no longer work.