Chinese Consumers Want More American Products.

ATLANTA -- The "Chuppies" of China are quite prepared to "Buy American."

A public opinion poll of China's emerging urban middle class found that high-quality personal care toiletries and consumer electronics lead the list of most desired American products. Apparel and fashion accessories and music and videos are close behind.

The items drawing the least interest - American cigarettes and liquor.

"These findings show the urban consumer market in China has a great potential for foreign, and especially American, exporters," said Fei-Ling Wang, International Affairs professor at the Georgia Institute of Technology. "It confirms there is a sizeable group of urban residents in China with considerable disposable income who are developing brand-name consciousness, becoming savvy consumers and acquiring a taste for foreign goods."

The survey, sponsored by UPS and conducted by Research International, involved 1,140 Chinese consumers between the ages of 20 and 59 in six cities. UPS commissioned the research to better understand the Chinese marketplace - to help its customers learn which U.S. products are most in demand, and to stay abreast of consumer trends within China as the company develops its service offerings.

"According to the State Department, U.S. exports to China have grown 80 percent since 2001, but this survey shows the Chinese would like even more quality American items," said Kurt Kuehn, UPS senior vice president, worldwide sales and marketing. "The spending power of this middle class is exploding. Many American companies view China as a threat rather than an opportunity; they run the risk of missing the China potential and being left behind."

Highlights from the survey on the products most in demand include:

--American Toiletries: 53 percent of all respondents would like to see a broader selection of U.S. products, such as shampoo, shower gel and dental care products.

--American Consumer Electronics: 53 percent of those polled want a broader selection of American electronics. The most likely purchases this year are digital cameras, laptop computers and video/digital recording devices.

--Apparel/Fashion Accessories: 52 percent said they want more American fashion, especially athletic shoes, sandals, t-shirts with American logos, sportswear and blue jeans.

--American Books, Music and Videos: 50 percent would like to see a broader product selection of American entertainment. This year's most likely purchases are American videos/DVDs and music compact discs.

--Home Appliances: 45 percent would like to see more U.S. durable products including refrigerators, washers/dryers and microwaves.

There has been much written about the Westernization of young urban Chinese consumers, or "Chuppies," and the UPS study offers additional insights. For example, consumers under 40 are more interested in America's books, music and videos; the younger demographic in the 20-to-29-year-old bracket is most attracted by consumer electronics and American apparel and fashion accessories.

When making purchasing decisions, 60 percent of respondents cited quality as the most important purchase decision factor. That was followed by price/value at 18 percent, which was more important to older respondents than to younger ones. The country of origin and manufacturing location both fell far below quality in importance at 4 percent and 3 percent, respectively.

"The survey indicates that Chinese consumers are more selective and more sophisticated than formerly thought, and I believe that American business needs to be 'smarter' than it has been," said Kevin O'Connell, senior partner of the law firm O'Connell and Co. O'Connell divides his time between the firm's Hong Kong, Washington, D.C., and Annapolis, Md., offices and is involved primarily in foreign direct investment and general business matters in China.

UPS offers a range of services to help U.S. businesses deliver to China, including 18 weekly direct flights between the two nations, and is the first global package delivery company to establish large-scale, wholly-owned operations within China. UPS's logistics arm, UPS Supply Chain Solutions, already operates more than 40 distribution facilities in China and is planning to open another 20 over the next two years. In July, UPS announced plans to offer domestic express service, initially linking 23 major metropolitan areas, and China announced the selection of UPS as the Official Logistics and Express Delivery Sponsor of the Beijing 2008 Olympic Games.

About the survey:

Conducted by Research International, the survey was a quantitative study of 1,140 Chinese consumers in six Chinese cities: Beijing, Shanghai, Guangzhou, Shenyang, Chengdu and Wuhan. Respondents were all between the ages of 20 and 59 and have high household income levels in China (monthly income of RMB 3,000 or above in Beijing, Shanghai and Guangzhou, and RMB 2,000 or above in Shenyang, Chengdu and Wuhan). The survey was conducted as computer-aided telephone interviews between June 2 and 16, 2005.

For survey results and other information about doing business in China, visit www.pressroom.ups.com/chinasurvey.