STEVE INSKEEP, host:
You can't really understand the world economy without understanding what's happening in China.
China's vast market and workforce affect international trade, job outsourcing, oil prices and more. So this week we will look at the perils and the rewards of doing business in China. We'll see how soaring property prices are causing heartache and who's profiting from the trade in fakes, and we'll ask if economic reform is really bringing democracy to China.
We begin today with marketing: how to convince a billion people to buy something new.
RENEE MONTAGNE, host:
In the 1840s, an English author famously wrote that if every person in China lengthened his shirttail by a foot, British cotton mills would work around the clock.
The lure of China's massive untapped market has only increased over time. Today's multinationals are tailoring their products and their strategies to attract China's millions of new customers in new ways, like thousand-year-old beauty potions and tea-flavored toothpaste, as NPR's Louisa Lim reports.
LOUISA LIM reporting:
Just 40 years ago, wearing makeup or using any beauty product was condemned as bourgeois here in China. It's a measure of just how much society has changed that in this swanky shopping mall here, there's even a waiting list to buy Crème de la Masque(ph) skin cream, which retails at almost $300 a pot.
So how are companies like Estee Lauder, which sells the face cream, getting Chinese consumers to part with their money?
Ms. JIN TUNG(ph): Here is our biology research lab.
LIM: Jin Tung manages Estee Lauder's gleaming new multimillion dollar research and development center in Shanghai. It's here that new products are being dreamt up to appeal specifically to Chinese consumers.
Ms. TUNG: One of the missions of our team is to study the traditional Chinese medicine. We call it TCM. These TCM's have either anti-aging or whitening effect.
(Soundbite of women speaking)
LIM: This is where scientists are carrying out clinical trials on the 1,300 year old beauty secrets of China's only empress, Wu Zetian, who used skin potions made of motherwort.
Glass jars of medicinal herbs and roots line the walls. Estee Lauder is eager to tap traditional Chinese medicine to appeal to the country's burgeoning middle class. It's also moved its Asian headquarters to Shanghai in a bid to unlock the key to China's market.
Mr. KEN JAN(ph): China is not one market. It's many, many little markets. And this market is constantly changing. The tastes of the consumer and the buying power of the consumer are also constantly changing.
LIM: Ken Jan could also be known as Mr. Toothpaste. He's the director of the Crest Research Institute, set up in Beijing by Proctor and Gamble. For ten years his company has been trying to pinpoint exactly what Chinese consumers are looking for in their toothpaste, from the millionaire tooth brusher all the way down the average farmer.
Mr. JAN: Whether you're a millionaire, or at least thinking you're more sophisticated, you're looking more of a toothpaste with a science. But if you're a farmer you're more looking for herbal, looking for natural green, or Chinese herbs, some kind of a regimen to help your oral health.
(Soundbite of television commercial)
LIM: As market leader, the Crest strategy has depended heavily on advertising. It's spent more on publicity than any other foreign brand in China. This ad stars the hottest pop idol of the moment, showcasing the latest toothpaste flavors, orange mint and lotus.
They're among a dizzying array of flavors Crest has developed to appeal, it seems, to every one of China's little markets. The best seller is tea flavored - yes, tea flavored - toothpaste.
Mr. JAN: It's not only tea flavor. It's also a signal of the culture behind that. It's a kitchen logic. It's a grandmother's story. So Chinese people think about tea, very often keep your mouth fresh.
LIM: This idea is rooted in the peasant habit of swilling the mouth out with green tea instead of brushing the teeth. This, incidentally, was the practice adopted by Chairman Mao Zedong, whose logic for spurning a toothbrush was that a tiger never brushes his teeth.
And he's not the only one. An official survey three years ago estimated that 57 percent of rural Chinese, or 500 million people, had never brushed their teeth, a figure that spells megabucks to oral healthcare companies.
And in almost every sector, the lure of millions upon millions of potential consumers is leading multinationals to plunge into the stormy seas of Chinese business. Lesson number one, according to Ken Jan, is to know your markets, every one of them. And lesson number two: Western products don't necessarily work in Chinese markets, and vice versa.
This lesson was brought home when Ken and I tested Jasmine tea flavored toothpaste together.
Mr. JAN: Let's process your (unintelligible) with mine.
LIM: It smells really strong, actually.
(Soundbite of tooth brushing)
Mr. JAN: It's really tea.
LIM: I feel like a just inhaled a whole bag of tea leaves.
Mr. JAN: But that's exactly what I mean. It's a different consumer from a different culture background. You feel this is too strong, maybe. I feel it's perfect. Hah! Make me feel good. I'm ready to kiss.
(Soundbite of laughter)
LIM: Louisa Lim, NPR News, Shanghai.
MONTAGNE: When our series on China's economy continues tomorrow, we'll consider buttons. China makes good buttons, billions of buttons, much more cheaply than other countries can.
Unidentified Man: The price, you know, like, gets maybe ten times, maybe more, maybe 15 to 20 times different. And the core idea is (unintelligible) really.
MONTAGNE: Sixty percent of the world's buttons come from one Chinese town, and we'll go there tomorrow on MORNING EDITION.
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