Stanford University

News Service


NEWS RELEASE

06/26/92

CONTACT: Stanford University News Service (415) 723-2558

Income, not ethnicity drive Asia-Pacific consumers, consultant says

STANFORD -- If you could afford only a refrigerator or a television set, which would you buy? consumer researcher Roxanne Westendorf asked.

A refrigerator, her audience of Stanford faculty answered in typical American style. The answer for most people in the rapidly growing economies of south and east Asia, however, is - a television.

Televisions are in 88 percent of the households of three cities in the People's Republic of China, whereas refrigerators are in 17 percent, Westendorf said at a June 19 seminar on emerging consumer patterns in the developing countries of the Asia-Pacific region.

"The percentages change but the relationship between refrigerators and television sets stays the same," Westendorf said, as she travels from country to country throughout the region for the research and development division of Procter & Gamble Co. of Cincinnati, Ohio.

The lesson for people who hope to sell goods and services in this region or in any new market, she said, is that "you need to be aware of your own biases - things like your preference for refrigerators over television, which we take for granted. If you haven't looked at what drives your decisions, you won't be able to understand theirs."

There is an underlying continuity to Asia-Pacific consumption patterns, despite the many language, religious and ethnic differences, said James Castle, founding partner of Business Advisory Indonesia, a consulting firm whose clients want to do business in countries such as Indonesia, Malaysia, Thailand and the Philippines.

While some products are sold only to a particular ethnic group for a specific use, he said, study after study found that overall buying patterns are "driven by household income, not ethnic lifestyle differences."

Castle and Westendorf spoke at the 16th seminar in a series sponsored by the Asia Pacific Research Center of Stanford's Institute for International Studies. Center researchers are gathering a wide range of information on what is believed to be a different form of economic regionalization in the Asia Pacific area than in Europe or the Americas, said James Raphael, the center's director of research.

"There's something happening in terms of the integration of economic systems and growth of economic interdependence between these countries that is different from the mandated formal structures you see in Europe with EC 92 or in North America with the Free Trade Agreement," Raphael said.

"It's a bottoms-up informal knitting together of these economies." Stanford faculty are studying the regionalization process with a focus on Japan's role, he said.

There are consumer differences from country to country, some of which are ingrained habits, Westendorf said. For example, people tend to use the type of washing and cleaning products that were first produced and marketed in their locale.

"Philippine households use bars of soap, Indonesians prefer granules and cream, and Indians use granules and bars," she said.

Because she works for a company that makes its profit on mass-marketed items, Westendorf visits lower- and lower middle-class households that are still the bulk of the mass market in these developing countries. She shops the way they shop - in small neighborhood shops or market stalls rather than in supermarkets and department stores, which tend to serve expatriates and an emerging class of upscale consumers.

Refrigerators are not a necessity for those on tight incomes, she has learned, because "people buy food daily and prepare it immediately. Everything that's made is eaten."

Sachets of shampoo sell better than bottles because many low-income people are paid by the day and can neither save up cash nor afford to tie up all their cash in a single-use product.

Television is valued because it "can be the only link with the outside world or even people's own country. It's the only thing that keeps many people from being isolated," she said.

Televisions also are more practical than refrigerators because they don't require a reliable supply of electricity, and electrical brownouts are an infrastructural feature of many countries and communities.

"There is a lot more access to western ideas, names, products and even other people's views of their country" through television than when she first started visiting the region six years ago, Westendorf said.

"The globalization of commerce, I think, will change attitudes, including those on the role of women. Younger women are going to work more."

Now, though, most women do not work outside the home and are not especially attracted to products that make housekeeping easier.

"In many ways, it's like the '50s in the United States with strong pressure on women to be good homemakers and mothers. They will tackle cleaning tasks with great vengeance. If a woman doesn't feel like she's expending enough effort, she doesn't feel like a good person," Westendorf said.

"In some Moslem and Hindu cultures, the woman gives the shopping list to the husband and he shops. In others, he goes with her. I've been in homes where I'm interviewing the woman on housework and the husband answers for her," she said.

In some ethnic Chinese communities she visited, "Women's clothes are dirtier than men's. They are separated out and done in the dirty water. There's a psychological dirt level to their clothes."

The so-called yuppies, or members of the emerging professional class, are more interested in washing machines, healthy foods, convenience items, credit cards and supermarkets, Castle said. "Often they don't have maids or grandparents living with them anymore, so they behave much like young people in U.S." he said of the "young smart Indonesians who no longer go into civil service to get ahead."

"They go into business. That's where political issues will come in the next 20 years," he said.

Indonesian supermarkets moved 1 percent of the consumer goods in the country a decade ago, and approximately half their customers were expatriates. Today, they sell 20 percent of the goods and expatriates are only 5 to 10 percent of the clientele.

Since deregulation of the banking system two years ago, he said, credit cards are now available in Jakarta to upper-income people, and supermarkets take them.

Personal loans are generally not available because of high inflation, and most homes must be bought with cash, which is one reason why most people are renters, the speakers said.

Asked about household saving patterns, Castle said that "People value different things. Rural Indonesians will still buy gold and land. Gold is passe with the urban population but land is important.

"Education is considered an important investment but not long- term home improvements like aluminum siding. They value real estate but not housing per se."

-kpo-

920626Arc2148.html


This is an archived release.

This release is not available in any other form. Images mentioned in this release are not available online.
Stanford News Service has an extensive library of images, some of which may be available to you online. Direct your request by EMail to images@news-service.stanford.edu.

© Stanford University. All Rights Reserved. Stanford, CA 94305. (650) 723-2300. Terms of Use | Copyright Complaints