''Made in America'' is Hot with China's ''Chuppies''; UPS Survey Reveals Insights On Marketing to Chinese Consumers

The second annual UPS survey of Chinese urban consumers - oftenreferred to as "Chuppies" - reaffirms their demand for high-qualityU.S. products and unearths more detailed insight into their buyingpreferences and demographic differences. UPS, which flies to morepoints in China than any other U.S. airline, commissioned the surveyto help its customers do business in the world's fastest-growingmarket.

"The survey highlights the need for small-to-mid-sized businessesto be prepared and focused on exactly what it is they want toaccomplish by entering China," said Kevin M. O'Connell, senior partnerof the law firm O'Connell and Co., which handles foreign directinvestment and general business matters in China. "They need to setthemselves apart from their competition and from the largemulti-nationals and market to a very specific niche."

The most sought-after products in this year's survey were Americanvideos/DVDs, music or books and consumer electronics - which also werethe top categories in the 2005 survey. For those Chinese consumersinterested in purchasing products in the following categories, somespecific findings include:

-- More than three-quarters (76%) of urban Chinese consumers say that they would like to buy American DVDs in the coming year (up from 71% in 2005), and 60% say they would like to buy American CDs (up from 51%).

-- Moisturizer is the most attractive American beauty product to Chinese consumers, with 73% saying that they are likely to purchase it in the coming year.

-- More than 70% of consumers say they want to buy American athletic shoes and 64% say they want to buy blue jeans, up substantially from 2005 numbers.

-- The most desired American home appliance is a washer-dryer, with almost one-third of consumers saying that they were most likely to purchase one in the coming year.

When considering imported products, 85% of Chinese consumers saythat quality is a critical factor in their purchasing decision. "Ithink quality is very important," said Jennifer Cheng, 33, of Beijing."It is especially important for high-tech products such as laptops ormobile phones."

Not a mass market

Much like the United States, China is a melting pot of demographicdistinctions and the survey reveals varying purchasing preferences byage group, gender and location. For example, younger consumers aremore open to buying U.S. products in general than their oldercounterparts. Younger consumers also say that they buy importedproducts to enhance their image and status, with laptop computers,video/digital recording systems and coffee makers among the mostattractive American products to them.

"Older consumers grew up during much harder times and their lifeexperience is analogous to the Great Depression generation in theUnited States," said Sam Flemming, CEO and founder of CIC Data, aChina-based Internet market intelligence service. "Younger consumershave grown up with more money and are used to being bombarded withmarketing messages. This means they are less inclined to 'pennypinch,' have more disposable income and are more informed aboutproducts and services."

Thinking inside the box

Some interesting information emerges from the survey to helpbusinesses market to Chinese consumers. For example, more consumers(56%) want to hear messages about quality ingredients or workmanshipin advertising about American products. This number increases to 65%when it comes to advertising fashion and apparel. Young consumersprefer celebrity endorsements in advertising, whereas older consumerswould rather see professional endorsements.

In terms of packaging, the survey found that younger, high-incomeconsumers prefer American or Western-style packaging, especially forbeauty products. And 37 percent of consumers say that they prefer bluepackaging for American products - nearly double the next color choice(white at 19%).

More opportunities to reach Chinese consumers likely will emergeas their use of credit cards and frequency of online shoppingincreases. The survey reveals that more than half of urban Chineseconsumers use credit or debit cards for shopping, and 84% of thosewith credit cards expect their usage to increase or remain the same inthe coming year.

"China presents tremendous opportunity for U.S. businesses, andnot just as a manufacturing base," said David Abney, president, UPSInternational. "China is one of the fastest growing markets for U.S.exports. Our hope is that the survey findings will help U.S.businesses consider what opportunities may exist for their products inChina."

UPS offers a range of services to help businesses deliver toChina. Last year, the company became the first carrier in the industryto acquire direct control of its operations in China. This year, thecompany expanded its international express service to 22 more businesslocations in China, bringing total number of cities served in thecountry to 330. Those cities account for roughly 85% of China'sinternational trade. Most recently, UPS opened two retail centers inShanghai, giving customers there greater shipping convenience.

For full survey results and other information about doing businessin China, log onto www.pressroom.ups.com/chinasurvey.

UPS is the world's largest package delivery company and a globalleader in supply chain services, offering an extensive range ofoptions for synchronizing the movement of goods, information andfunds. Headquartered in Atlanta, Ga., UPS serves more than 200countries and territories worldwide. UPS's stock trades on the NewYork Stock Exchange (UPS) and the company can be found on the Web atUPS.com.

About the survey

Conducted by Research International, the survey was a quantitativestudy of 1,200 Chinese consumers in six Chinese cities: Beijing,Shanghai, Guangzhou, Shenyang, Chengdu and Wuhan. Respondents were allbetween the ages of 20 and 59 and have high household income levels inChina (monthly income of RMB 3,000 or above in Beijing, Shanghai andGuangzhou, and RMB 2,000 or above in Shenyang, Chengdu and Wuhan). Thesurvey was conducted as computer-aided telephone interviews betweenJune 2 and 20, 2006.