Reverse Price Wars

Just another example of how China is weird

http://blogs.hbr.org/cs/2010/03/chinas_reverse_price_wars.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+harvardbusiness+%28HBR.org%29&utm_content=Google+Reader

“China’s Reverse Price Wars”

“Most marketers realize that in China, people are more price-conscious than their counterparts in poorer developing countries. The Chinese recall product prices with amazing accuracy; constantly comparison shop; and try to buy at the lowest price even if they have to go out of the way to do so, our research shows.

Cutthroat competition keeps prices low in China even though the sales tax is often higher than it is in the United States. A can of Coke retails for around 35 cents (RMB 2.25) in a Chinese convenience store versus $1 in the United States; Tide detergent sells for around 10 cents (RMB 0.6) per laundry load compared to between 25 and 30 cents in the United States; and McDonald’s charges $2 (RMB 13) for a Big Mac Value Meal in China while Americans pay $4 for it.

That doesn’t mean reducing price is the only way to crack open the Chinese market. In some cases, consumers are willing to pay more than even their counterparts do in the developed world — for three reasons.”

Check it out. I think this is probably the most interesting/surreal part of the post, though:

“Some multinationals have succeeded in charging higher prices in China by addressing one of the factors we mentioned earlier. For instance, a 900 gm can of Wyeth Gold S26 infant formula costs as much as $27 (RMB 160–200) in China compared to $22 in the United States; a tall Starbucks latte sells for $4.50 (RMB 30) versus $3.50 in the United States; and a pint of Haagen Dazs ice cream retails for a whopping $11 (RMB 75) in a Chinese supermarket as against $4 in a U.S. supermarket. In the Chinese market, for every rule, there are exceptions. “

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