China’s consumers have typically made purchasing decisions based on what is good for them and not what is good for the environment, but a new report says that is changing.
A report, The Green Dragon: Sustainability in the China market, by the NZ Consulate-General in Shanghai, says sustainability credentials and messaging can help brands command higher premiums, especially when linked to claims of health outcomes.
Surveys regularly show that China’s consumers rate health benefits as the top consideration for their purchases followed by the quality and safety of a product.
“This requires companies to position how they incorporate sustainability into their marketing, less of ‘it is made naturally so it does not harm the planet’ and more of ‘it is made naturally so it is good for you’.”
Claiming a product is eco-friendly is no longer sufficient as consumers need to see a link between environmental credentials and health benefits that is supported by science and innovation.
The authors note some dairy brands promote the quality and benefits of grass-fed cows in China because customers perceive that farming system to be close to organic.
Others leverage other environment-related attributes, such as being carbon zero, all natural ingredients, biodegradability, and being chemical free.
Unlike Western multinationals, Chinese food and beverage importers are not yet prepared to pay premium prices for low greenhouse gas emission products, the report says.
If that happens, NZ is well-positioned.
“Chinese importers recognise NZ’s track record in naturalness and biodiversity management as a point of difference for them in their premium NZ-sourced product lines.”
China has a top-down approach to environmental regulation, which can quickly change companies’ behaviour, evident by the speed of expansion of renewable energy, electric vehicles, reducing waste and excess packaging and improving resource management.
Investment in solar and wind energy is five years ahead of schedule and the 8.5 million target for new electric vehicles has also been easily exceeded.
In Shanghai alone 327,000 new electric vehicles were registered in 2022.
But China’s government-driven compliance approach to environmental management is not necessarily resulting in intrinsic changes to consumers’ attitudes to the environment, but that is changing.
“There are, however, signs that younger Chinese consumers are caring more about sustainability, in that they are concerned about their own health and welfare, with an embedded expectation within this that higher environmental standards are being met.”
While NZ has a natural advantage in sustainability claims, other exporters are burnishing their green credentials and telling their green stories effectively.
Linking sustainability to value is an opportunity for NZ businesses to leverage and move products and services up in value and closer to the consumer.
“Showing a clear link between sustainability, science and innovation, and better health outcomes it is important in order for marketing to resonate loudly with the broader group of Chinese consumers.”
