Tapping into the Hot Chinese and South Asian Marketplace

Ethnic marketing has become one of the hottest trends of 2007, and Chinese and South Asian markets are particularly tantalizing.

Canadian businesses are chomping at the bit to break through to Chinese and South Asians. It isn't the first time the business community has shown interest in these groups: coming out of the 1992 recession, a large influx of Hong Kong immigrants arrived in the Lower Mainland and Toronto and persuaded a number of organizations they needed to tap into ethnic marketing. But despite the immigrant segment's size, many organizations were disappointed to find that an immediate ROI wasn't there, and that the disposable incomes of this segment were, at the time, quite a bit lower than those of the mainstream population. Fast forward 10 years: significantly increased immigration levels, substantially higher purchasing power among the new wave of immigrants, and renewed buoyancy and optimism in the Canadian economy has prompted renewed interest in marketing to Chinese and South Asians.

At a recent BCAMA event in Vancouver, I spoke to more than 200 marketers about the latest research and insights from Ipsos Reid and our partner, Channel M, about ethnic marketing; our two organizations have been pursuing ethnic marketing research for several years. In preparation for this presentation, I spoke with senior-level marketing executives from six or seven brand-name organizations in the province. Every one of them indicated that 2007 would be the year their organizations would significantly ramp up ethnic marketing efforts. They commented that they had "dabbled" in the past in this area, but that now was the time to "get serious." There was universal agreement that ethnic marketing represented a huge opportunity, one that needed far more attention than it had received in the past.

The most compelling argument for considering ethnic markets is based on sheer numbers. The upcoming census release (not yet released) is expected to show that the immigrant population in Canada has reached an amazing 5.6 million residents, of which more than one million live in Vancouver. Chinese/South Asian immigrants represent more than half of the total influx. Even more astounding are the projections for the future. Stats Canada anticipates that by the year 2017, there will be 7 to 9.3 million immigrants living in Canada, an increase of 24-65% over existing levels. This means that in 2017, roughly 1 in 5 Canadians will be a member of a visible minority (in British Columbia, that ratio will be more like 1:3). Vancouver and Toronto are major destinations for new immigrants: over two-thirds of new immigrants locate in these cities.

The trend is clear: immigration currently represents roughly 60% of Vancouver and Toronto's population growth, and it will only continue to increase as a factor. Finding out how to reach ethnic markets, particularly Chinese and South Asians, is an urgent concern for Canada's business community.

Over the years, we have conducted dozens and dozens of studies with clients who want to find out more about the Chinese and South Asian market. They want to know how Chinese and South Asians use and consume their products and services (and those of competitors) and how to reach and communicate with them. In response, we have launched several new syndicated studies in the past year, including "New Canadians Report on Financial Services" and "The Canadian Chinese Media Monitor." In the coming months, we will announce an exclusive Chinese and South Asian panel of consumers our clients can access, as well as other new in-house capabilities geared at this market.

From our research, we have drawn several conclusions. First, it's clear that Chinese and South Asians are substantially different from mainstream Canadians, demographically, behaviorally, and attitudinally. By and large, they prefer to be communicated with in-language: 60-70% of them want to see marketing and communications messages delivered in their mother tongue. One survey we did showed that 65% of Chinese Canadians pay more attention to advertising if it is in Chinese rather than English; a further 63% were more likely to deal with businesses that were more involved in their communities.

The purchasing power represented by Chinese and South Asians is also significant. They are generally younger, with 70% under the age of 45. Income comparisons show that 54% of South Asians have household incomes of more than $60K compared to 46% of mainstream Canadians, and that 48% of Chinese Canadians have investible assets of $50K or more compared to only 36% of mainstream Canadians. A comparison of shopping patterns suggests that Chinese and South Asians' brand loyalties are also different from those of mainstream Canadians.

Second, organizations need to have an in-house expert who understands how to target this market. This expert must know the market, have contacts in it, and be able to get things done. Without this expert, a lot of time and effort will be wasted. Third, a sustained effort is critical. Results will not be achieved overnight; a long-term, multifaceted effort is necessary for an organization to establish a presence in the market. Community-based and sponsorship initiatives are important, as are forming connections with opinion leaders who can provide advice and influence. Most marketers will not forge a quick or direct path to market success, and will have to be patient to recognize meaningful ROIs.

Despite the challenges of penetrating a new and unfamiliar segment, there's little doubt that marketing to ethnic groups like Chinese and South Asians is a must. In fact, I believe it will be a competitive disadvantage to ignore marketing to these groups in the coming years. Unlike the level of interest we saw in this concept in the mid-nineties, the interest now shows every sign of being sustainable. We will see more and more Canadian organizations looking at the big picture and accepting the need to deploy resources that will eventually pay significant dividends. Those that don't will be losing out on a segment that is larger than Toronto itself.