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The Dynamics of Chinese Consumers

Xiaoyong Zhang

To cite this article: Xiaoyong Zhang (2003) The Dynamics of Chinese Consumers, Journal of
International Food & Agribusiness Marketing, 14:1, 47-66, DOI: 10.1300/J047v14n01_04

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 The Dynamics of Chinese Consumers:
A Case of Shanghai Food Consumption
Xiaoyong Zhang

ABSTRACT. Chinese consumers have been the most dynamic driving

forces during China’s two decades of reforms. The purpose of this re-
search is to get insight into the Shanghai consumers’ consumption, per-
ceptions, and uses with regard to food products. It provides detailed
information about consumers’ consumption habits, market outlet choices
and consumption trends. Furthermore, this paper identifies the most im-
portant variables which influence the frequency of consumers’ con-
sumption of selected food products. [Article copies available for a fee from
The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail address:
<docdelivery@haworthpress.com> Website: <http://www.HaworthPress. com>
© 2002 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS. Shanghai, consumer behavior, food consumption, variety-

seeking, agribusiness

INTRODUCTION
During the transitional period of the last two decades, substantial re-
search was carried out on various issues of the Chinese economy. In the

Xiaoyong Zhang is Marketing Researcher, Agricultural Economics Research Insti-

tute (LEI), Wageningen University and Research Center, P. O. Box 29703 2502 LS,
The Hague, The Netherlands (E-mail: x.zhang@lei.dlo.nl).
The author wishes to thank Jaap Post, Weimin Li and Jintian Gan for their help with
data collection. The author is warmly grateful for the time reviewers spent on the arti-
cle and for sharing their knowledge.
This paper is part of the research results of a project titled “The Experience of Dutch
Agricultural Development and its Importance to China,” financed by Asia Facility,
Senter, in the Netherlands.
Journal of International Food & Agribusiness Marketing, Vol. 14(1) 2002
http://www.haworthpress.com/store/product.asp?sku=J047
 2002 by The Haworth Press, Inc. All rights reserved.
10.1300/J047v14n01_04 47
48 Journal of International Food & Agribusiness Marketing

initial stage, most studies focused on the impacts of institutional reforms,

decollectivisation, which was started in the late 1970s. Later, research
topics focused on more diversified subjects, such as market development,
food demands and environmental problems. Marketing reforms and de-
velopment have been studied from the perspective of institutional inno-
vation (Sinclair et al. 1998), market integration (Rozelle et al. 1997), and
household consumption behavior (Fan et al. 1995; and Gao et al. 1996).
China’s national food security has been a hot topic in both politics and
academies since the wake-up call from Brown (1995). More information
on this research topic can be found in Huang et al. (1999).
Besides the agricultural economic approach, substantial research has
also been carried out in the marketing domain related to consumer be-
havior. During the central planning period, ensuring sufficient supplies
for consumers was the government’s priority given its shortage econ-
omy. Consequently, little attention was paid to consumers’ wishes and
desires. However, after two decades of economic expansion a surplus
supply is coming into view in China and standards of living are rising,
making the consumer’s role and position increasingly important. Con-
sumer research topics related to China include analyses of consumers’
purchasing behavior (Samuel et al. 1996), segmentation of consumers’
food consumption pattern (Veeck et al. 2000), consumers’ dietary pat-
tern and its cultural issues (Shono et al. 2000, Swanson 1996), etc.

RESEARCH QUESTIONS

This paper intended to study Shanghai consumers in order to get a

good picture of their consumption, uses and perceptions with regard to
food products. Shanghai is the “Dragon head” of the Chinese economy,
handles 20% of China’s trade and accounts for 5% of the national GDP.
The results of the Shanghai consumer study do not only provide insight
into the dynamic market for international investors and marketers, but
also reflect development trends of other large Chinese cities using
Shanghai as their target model. Specific research questions in this study
could be formulated as: (a) What are the Shanghai consumers’ con-
sumption pattern and market outlet choices related to selected food
products? (b) What are the consumers’ perceptions and preferences re-
lated to these product attributes? (c) How does consumption behavior
associate with consumers’ demographic variables? (d) What are the
most important factors influencing product consumption?
 Xiaoyong Zhang 49

However, before we focus on the Shanghai region, it would be use-

ful to provide an overview of general food consumption trends in
China as a whole. Traditional Chinese diets are dominated by starch-
based cereal grains. Nevertheless, the Chinese menu has gradually
been changing due to a rise in disposable incomes and a change in di-
etary habits during the last two decades. Consumers’ demands for
high-valued animal products have been continuously rising. The aver-
age level of caloric and protein intake from animal products has sub-
stantially increased in China. Table 1 shows that both egg and meat
consumption are higher than the world’s average level with poultry
meat following closely. The only commodity with which China is far
behind compared to the rest of the world is milk, coming to only one-
sixth of the world’s average level.

RESEARCH METHOD

Prior to this consumers’ survey, the author, together with a research

team, carried out several sectoral studies on dairy and livestock in the
Shanghai region during a two-year period. These field trips enabled us
to start discussions with consumers, traders and officers about various
issues related to certain products. This pilot exploratory approach, plus
the author’s intuition as a native Chinese, greatly helped to set up a for-
mal questionnaire.
The questionnaire was first designed in English and discussed inten-
sively with different sector experts and consumer researchers. It was
then translated into Chinese. More than 10 agricultural products were
included in the questionnaire. This paper is limited to food products

TABLE 1. Nutrition Data on Selected Countries, kg per Capita Consumption

(1998)

Countries Eggs Poultry meat Meat Milk

World 7.8 10.1 45.8 37.3
China 14.5 9.0 46.5 6.4
Japan 19.4 14.5 41.9 45.7
India 1.5 0.5 4.6 45.3
Netherlands 18.1 17.5 101.4 133.0

Source: FAOSTAT, at http://faostat.fao.org, last updated June 1, 2000.

50 Journal of International Food & Agribusiness Marketing

only, consisting of pork, beef, chicken, fresh milk, milk powder, yogurt,
eggs, and vegetables. The questionnaire contains questions on the fre-
quency of consumption with respect to these products, their market out-
lets, purchase behavior, consumption trends, product perceptions regard-
ing different attributes, etc.
The translated questionnaires were pre-tested. Four consumers from
different ages, sex and income level were asked to answer the questions
and then give their comments on the content and design of the question-
naire. The main comments were the length of the questionnaire and its
user-unfriendly structure. After deleting trivial products (lamb, duck)
and restructuring, the questionnaire was finalized for field interviews.
A stratified data sampling method was applied to draw samples. A
sample of 300 is sufficient to ensure this kind of exploratory study. The
total Shanghai urban population is administratively divided into 12 dis-
tricts. These mutually exclusive districts formed our sample sub-popu-
lation, also called “stratum” in sampling. The total sample of 300
people were allocated to 12 districts in proportion to its size sub-popula-
tion. The sample size of each district varied from 21 to 30. During the
second stage, we used a detailed Shanghai city map to choose streets
within a district as the 12 districts are clearly identified by colors. The
streets were selected at random but ensured a geographically even dis-
tribution. In the end, around 70 streets were selected with 4-7 streets per
district. We do not claim our sample to represent all Shanghai consum-
ers, but we did our best to get as close as possible.
Thirty graduate students from four universities in Shanghai were se-
lected and trained as field interviewers. Several of them already had
previous interview experiences. The interview was carried out at an
in-home, face-to-face basis. Students were assigned to the selected
streets in 12 districts. Four or five households had to be interviewed per
street. The interviewers were free to choose a starting point along the
street and would systematically select an interviewee from every other
fifth household. The person in charge of the housekeeping was asked to
do the interview and was given a small gift at the end. Feedback from
the respondents was that the questionnaire took quite a long time (over
30 minutes). The interviewers were also required to keep records on the
total number of people contacted and on those who refused. Around
30% refused, but students said it had been difficult to gain access to
high income households as most of these flat compounds were guarded.
In the end, 298 valid questionnaires were used in the analysis.
 Xiaoyong Zhang 51

RESULTS OF THE ANALYSIS

Demographic Information

The average age of the respondents was 39, with the youngest 19 and
the eldest 74, 65% of whom female and 35% male. The fact that 35% of
the respondents were male came as no surprise as it has become more
common that husbands in China share the housekeeping due to the high
percentage of “working wives.” This is even more the case in southern
China. The sample results indicate that 70% of the families consisted of
a 3-person household, a direct result of China’s one-child policy. With
regard to the level of education, the highest level of education enjoyed
within the household was asked for. The result shows that 53% of the
households had members with a high level of education (Junior College
and higher). It can be computed that the high education attainment rate
for an average 3-person household is 18%. According to the 5th Na-
tional Population Census carried out in 2000, the Shanghai education
attainment level at Junior College and higher was 11%. It is clear that
the tertiary education indicator in our sample is somewhat higher than
average. Our sample also shows that 40% of the households’ monthly
incomes vary between 1,500 and 3,000 yuan, followed by 32% over
3,000 to 5,000 yuan. The 2001 China Yearbook contains data from
household surveys showing an annual income of 11,718 yuan per capita
in Shanghai. Therefore, the average monthly income of a 3-person
household should be 2,929 yuan, indicating that our sample data are
quite representative. The final question about demographic variables
was which ethnic group the family belonged to. All but one household
were Han Chinese, accounting for 99.7% of the sample.
The Frequency of Consumption Pattern
The frequency of product consumption was separated into five cate-
gories varying from everyday consumption to no consumption at all.
The result of each product’s consumer consumption is presented in Ta-
ble 2. Of eight products, vegetables were the most frequently consumed
products. Ninety-nine percent of Shanghai consumers have vegetables
everyday. Fresh milk ranked second. Around 70% of Shanghai con-
sumers drink fresh milk everyday with only 14% not or seldom drinking
it. Eggs and pork were also among the most popular products, followed
by yogurt and chicken. Another dairy product, milk powder, is becom-
ing less attractive for Shanghai consumers, but a niche market can still
be found. Like in Shanghai, consumers in the rest of China will show
52 Journal of International Food & Agribusiness Marketing

TABLE 2. Frequency of Consumers’ Product Consumption (%)

Products Every day Once or twice Once or twice Several times Seldom
a week a month a year or never
Pork 52.3 39.9 5.7 0.0 2.0
Beef 1.0 24.6 45.5 16.2 12.8
Chicken 3.7 49.3 43.0 2.3 1.7
Fresh milk 69.9 10.5 3.7 2.0 13.9
Milk powder 10.2 6.3 7.7 14.0 61.8
Yogurt 14.7 34.6 12.0 7.9 30.8
Egg 63.0 34.7 1.0 0.3 1.0
Vegetable 99.0 0.3 0.3 0.3 0.0

similar patterns of vegetable consumption. This trend may also be con-

sistent for the consumption of eggs, pork and chicken. However, a big
gap exists between dairy product consumption in Shanghai and the rest
of China. The Shanghai Bureau of Animal Husbandry estimated a con-
sumption of 28kg of liquid milk per capita in Shanghai in 2000, com-
pared to the national’s average of 7kg per capita.
Market Outlet Choice
Consumers were asked to recall how often they purchased each prod-
uct in previous month in different market outlets. Five market outlets
were presented: a supermarket, an open market (or wet market), a
wholesale market, a department store and a grocery shop. Table 3 pre-
sents the average visits of consumers to different outlets during the pre-
vious month. It shows that supermarkets are the major market outlet for
fresh milk. For the remaining products open markets are the main place
of distribution, except for milk powder and eggs which are mainly
bought in grocery shops. The data also indicate the high shopping fre-
quency of consumers, particularly for fresh products such as vegetables
(almost every day). This outcome is consistent with research results
from other developed Asian regions (Lau & Lee, 1988), which discov-
ered consumers’ daily shopping for fresh food at open markets, given
the convenient access to modern supermarkets.
Consumption Trend
Consumers were asked to recall/forecast their consumption changes of
each product during the past five years and the five years ahead. Table 4
summarizes the changes during the past five years (1995-2000). It shows that
 Xiaoyong Zhang 53

TABLE 3. Consumers’ Purchasing Times for Different Products in Each Market

Outlet During the Previous Month

Products Super Open Wholesale Department Grocery

market market market store shops
Pork 4.2 7.1 5.5 0 0
Beef 1.8 2.3 2 1.3 2
Chicken 2.3 2.8 4.6 0 4
Fresh milk 11 6 0 3 5
Milk powder 1.3 0 1.5 1.5 1.6
Yogurt 5.5 9.2 0 1 1
Egg 4.8 6.3 3.3 0 9
Vegetable 16 23 2 0 0

TABLE 4. Percentage of Consumption Changes of Different Products in the

Past Five Years

Trend Pork Beef Chicken Fresh Milk Yogurt Egg

milk powder
No 27.9 49.7 30.0 19.8 62.6 34.9 20.1
change
Increase 36.9 33.1 42.1 27.2 18.3 31.1 36.9
ⱖ 25%
Increase 13.4 9.5 16.8 30.9 6.9 15.6 26.8
ⱖ 50%
Increase 2.7 1.7 2.0 18.5 4.5 15.2 8.4
ⱖ 75%
Decrease 13.4 5.4 7.7 2.0 5.9 2.4 4.7
ⱕ 25%
Decrease 5.0 0.7 0.3 1.7 1.4 0.0 2.3
ⱕ 50%
Decrease 0.7 0.0 1.0 0.0 0.3 0.7 0.7
ⱕ 75%

consumption of fresh milk increased most. Almost 80% of the respondents in-
dicated that their fresh milk consumption had increased during this period,
ranging from 25% to 75%. Given the Chinese government’s heavy promotion
on milk production and consumption and the National Student Milk Program
announced in 2002, it is most likely that other parts of China, particularly big
cities, will follow the Shanghai trend and increase their milk consumption in
the next few years. The consumption of milk powder, also a dairy product, in-
creased the least. Only 30% of the respondents replied that their consumption
of milk powder had increased. More than 60% indicated a significant increase
in egg, yogurt and chicken consumption. The changes in beef consumption
remain moderate, whereas a large proportion (20%) admitted to a declining
54 Journal of International Food & Agribusiness Marketing

consumption in pork. Other big cities may soon follow the trend in dropping
pork consumption, given the saturated pork markets and the consumers’
shifting to more varieties. All other increasing trends in product consump-
tion were shared with the rest of China during the past five years.
Table 5 predicts consumption changes for the next five years. The
most promising markets are most likely to be fresh milk and yogurt,
since more than half the consumers (58.2% and 54.9% respectively)
will increase their consumption of these products in somewhat different
degrees. Beef and egg consumption will increase considerably whereas
chicken and milk powder consumption will not change very much. The
largest decline will be in pork consumption as 24% of the consumers re-
ported a shrinking trend in the next five years. One should bear in mind
that this is the future consumption trend in urban Shanghai, and partly
the future for some other hyper cities. Many of China’s rural markets
may present a different future picture. First of all, fresh milk consump-
tion in rural China will not take off soon, due to logistic restrictions
(transportation and storage). However, rural consumption of pork and
other animal products will increase at a much higher rate than in the cit-
ies because of the lower consumption level in rural areas.

Importance of Meat Attributes

Eight meat attributes were presented to consumers, such as freshness,

hygiene, nutrition, product origin, quality, price, convenience and green

TABLE 5. Percentage of Consumption Changes of Different Products in Future

Five Years

Trend Pork Beef Chicken Fresh Milk Yogurt Egg

milk powder
No 53.7 46.8 57.6 38.5 69.4 42.0 52.7
change
Increase 18.8 39.9 26.6 33.8 19.8 37.2 29.5
ⱖ 25%
Increase 3.0 8.2 5.1 16.8 1.7 13.9 10.7
ⱖ 50%
Increase 0.7 1.7 1.3 7.8 0.7 3.8 3.0
ⱖ 75%
Decrease 19.8 3.4 8.4 2.4 5.2 1.7 3.4
ⱕ 25%
Decrease 2.3 0.0 0.3 1.0 1.7 1.4 0.7
ⱕ 50%
Decrease 1.7 0.0 0.7 0.0 1.4 0.0 0.0
ⱕ 75%
 Xiaoyong Zhang 55

food label. Consumers were asked to rank only the first five most im-
portant attributes from “1” to “5,” with “1” indicating the most impor-
tant and “5” the fifth most important. Table 6 presents the consumers’
frequency reports on eight meat attributes based on their importance of
perception. The table shows that most consumers rank “Freshness” as
the far most important attribute for meat products, followed by hygiene.
The least important attributes are “Kitchen convenience,” “Product ori-
gin” and “Green Label.” Generally speaking, Chinese consumers, partic-
ularly in the south, prefer fresh, even live products, and do not care much
about the time they have to spend on food preparation. Of course, we do
realize that busier life styles and rising incomes will generate a segment
market for convenient foods, as studied by Veeck (2000) on food pur-
chase patterns in Nanjin, China. This trend, however, is still in an early
development stage and the traditional food culture will not die out soon.
The Chinese will continue to spend a relatively large amount of time pre-
paring their meals. Several studies have shown that Chinese consumers
do rely on country-of-origin (COO) information on the product evalua-
tion (Zhang, 1996, Ahmed et al. 1999), although non-food products were
used in the research design, such as automobiles, VCRs and TVs. How-
ever, consumers in our sample indicated a low reorganization in product
origin. Here we have to take two facts into consideration. First of all, the
product origin for meat most likely refers to the origins of other prov-
inces rather than other countries, given the limited meat import. Sec-
ondly, most meat is sold in China without product origin information,
so that consumers were not able to recall this sort of information. A
“Green Food” label is issued by the Chinese Ministry of Agriculture in
collaboration with other legal institutes. The survey shows that consum-
ers are not very much aware of it yet, at least not in the meat sector. We
believe this issue to become more important in the near future as con-

TABLE 6. Frequency of Consumers’ Choices with Respect to Five Most Impor-

tant Meat Attributes

Importance Fresh Hygiene Nutrition Origin Quality Price Kitchen Green

Convenience label
First 178 56 13 3 40 7 1 7
Second 63 115 16 8 64 25 2 6
Third 33 60 52 5 98 32 8 8
Fourth 12 41 61 9 57 75 16 18
Fifth 2 13 59 24 13 91 61 29
Total 288 285 201 49 272 230 88 68
56 Journal of International Food & Agribusiness Marketing

sumers are increasingly becoming aware about food safety. Further-

more, the government launched a program in 2002 called “Pollution
Food Action Plan” in order to promote safer food. In addition, the table
shows that price is a relatively less important attribute among Shanghai
consumers. This is consistent with other research results from Lichten-
stein et al. (1993) and Lysonski and Durvasula (1996).

Purchase Habit of Chicken Consumption

During the interview, we asked Shanghai consumers how often they

purchased frozen, chilled or live chicken respectively, with a total pur-
chase of up to 10 times. The results are presented in Table 7. It shows
that the purchase of live chickens comes up to 6 out of 10, with frozen
chicken only once out of 10 and chilled chicken only 3 out of 10. This
result indicates that Shanghai consumers prefer live chicken and pur-
chase less frozen and chilled chicken. One should not be worried about
cooling facilities in Shanghai households as the rate of refrigerator
owners already came up to 102% per household in 2000. This result
again confirms the importance of freshness of products. Another exam-
ple is fish, the concept of fresh fish in China being that “fish should still
swim.”

Consumption of Dairy Products

Five categories of dairy products were selected when asking families

whether they had ever consumed any of them in the past. The products in-
cluded fresh milk, milk powder, cheese, ice cream and butter. The most
frequently consumed dairy product was fresh milk, as 91% reported, fol-
lowed by 81% of ice cream consumption. The least consumed dairy prod-
ucts were cheese and butter with 85% and 71% consumers admitting to

TABLE 7. Purchase Habit of Chicken Consumption in Shanghai

Purchase frequency Frozen chicken Chilled chicken Live chicken

Zero times 56 27 4
Less than 5 times 42 61 34
More than 5 times 2 12 62
Total 100% 100% 100%
Average 1 3 6
 Xiaoyong Zhang 57

never using cheese or butter respectively. The consumption of milk

powder was almost fifty-fifty.

The Origin of Milk or Milk Powder

Eighty-eight percent of milk or milk powder consumed in Shanghai

is manufactured in Shanghai locally whilst 2% is imported from other
provinces in China. Eight percent of the products are imported from
other countries, referring mainly to milk powder from the Netherlands.

The Reason for Buying Vegetables in Supermarkets

Supermarket markets began to develop in Shanghai in the 1990s

(Sinclair et al. 1998). Up to now, there have been more than two dozen
companies operating supermarket chains in Shanghai, such as Carre-
fours and Metro. Given the increasing availability of supermarket out-
lets, the traditional and still dominating vegetable markets in Shanghai
are the open markets, called “free markets” by the Chinese, as already
shown in Table 3. Our survey indicates that the main reason for buying
vegetables in supermarkets is shopping convenience (51%), followed
by washed vegetables (31%). Only 5% of consumers reported that veg-
etables in the supermarkets were cheaper. Given the early stage of de-
velopment in China, it may take some time for supermarkets to provide
consumers with fresh vegetables, as some of them do not even have per-
ishable produce supplies yet.

Correlation of Consumption Frequency and Income Level

Family income is categorized into three levels: 1 (less than 1,500

yuan), 2 (1,500-3,000) and 3 (over 3,000). The percentage of sampled
households falling into these three categories was 15%, 40% and 45%
respectively. We tried to explore how the income level is related to the
frequency of major product consumption as indicated in Table 2. The
Chi-Square used to measure this is presented in Table 8. It shows that
the frequency of yogurt, beef and chicken consumption are significantly
associated with the level of income, whilst eggs, vegetables and fresh
milk consumption do not significantly correlate with income levels.
The correlation with pork is significant only at a 10% level. The results
indicate that consumers with higher incomes more frequently consume
yogurt, beef and chicken in comparison to low income levels. An expla-
nation for the low level of correlation between the consumption of fresh
58 Journal of International Food & Agribusiness Marketing

TABLE 8. Chi-Square Test for Frequency of Product Consumption and Income

Level

Each product Chi-Square value Significance

Pork 10.946 0.09
Beef 25.076 0.002
Chicken 24.656 0.002
Fresh milk 12.641 0.125
Yogurt 33.615 0.000
Egg 8.001 0.433
Vegetable 4.627 0.592

milk, eggs and vegetables and the level of income could be their high
consumption frequency. As was shown in Table 2, more than 60% of
the consumers consume all three products (eggs, vegetables and fresh
milk) on a daily basis, which indicates that these products are part of a
daily diet and that their consumption is not much influenced by levels of
income. We believe that the relationship between income and food con-
sumption in Shanghai is dynamically changing. It is, however, not fully
representative for the rest of China. For more information on changes in
income elasticity in China between 1989 and 1993, we would like to re-
fer to Guo et al. (2000).

Variety-Seeking Behavior

Variety-seeking behavior has been widely studied in consumer be-

havior literature (for a review, see McAlister & Pessemier 1982). Con-
siderable research has contributed to explaining why consumers switch
and what the factors promoting this behavior are (e.g., van Trijp et al.
1996, Ratner et al. 1999). Several scales have been developed to mea-
sure the consumer’s variety-seeking tendency (Van Trijp 1995). We
used the Exploratory Buying Behavior Tendency (EBBT) scale devel-
oped by Baumgartner and Steenkamp (1996) to measure Shanghai con-
sumers’ tendencies in exploratory buying behavior. The EBBT scale
contains 10 items of Exploratory Acquisition of Products and 10 items
of Exploratory Information Seeking. Only the first 10 items of product
acquisition were applied here. The other 10 information seeking items
were not applicable since some items, such as mail advertising, are not
popular with current markets in China.
The distribution of 10 items of the EBBT score is presented in Figure 1.
Since the items are measured on a five-point scale, the theoretical scores
 Xiaoyong Zhang 59

FIGURE 1. Distribution of EBBT Scores

Total EBBT scores

30

20

10
Frequency

0
12.00 16.00 20.00 24.00 28.00 32.00 36.00 40.00
14.00 18.00 22.00 26.00 30.00 34.00 38.00 42.00

total scores Mean = 27.43 Median = 27 Min. = 12 Max. = 50

should be in a range of 10 to 50. The actual mean score is 27.43 with a

minimum 12 and a maximum of 50.
Further testing was carried out in order to check the relationship be-
tween variety-seeking behavior and demographic variables, such as age,
gender, education and income level. One way ANOVA test was ap-
plied, the results of which are presented in Table 9. The table indicates
that three tests (age, education and income) have a significant outcome,
whilst gender has not. This implies that men and women are not signifi-
cantly different in their variety-seeking behavior; consumers with a
high variety-seeking tendency often have a higher education and higher
income and are younger. These results are in line with early findings in
other parts of China (Zhang, 1999).
Furthermore, we wanted to check how the consumers’ variety-seek-
ing tendency was related to their innovative behavior. In the context of
this study, we define consumers’ innovative behavior as trying novel
products, such as cheese and butter as they are new for most Shanghai
consumers. One way ANOVA test was carried out to see how the EBBT
scores correlated with the consumers’ past consumption experiences of
cheese and butter. The results show a significance level of 8% for the
cheese model whilst butter is significant at a level of less than 0.1%. We
60 Journal of International Food & Agribusiness Marketing

TABLE 9. Relationship of Variety Seeking Tendency and Demographic Vari-

ables

Demographic EBBT
Variables N scores F-value Significance
Gender
Female 187 27.14 1.32 0.252
Male 102 27.96
Age
Under 30 81 28.91 3.88 0.022
31-45 124 26.67
Over 45 84 27.11
Education
Lower 17 24.82 3.58 0.029
Middle 118 26.75
Higher 154 28.07
Income (yuan)
< 1,500 42 24.69 3.89 0.010
1,501-3,000 112 27.82
3,001-5,000 93 27.78
above 5,000 34 28.38

may therefore conclude that consumers with higher EBBT scores are
more frequent purchasers of novel foods, such as cheese and butter.
Most Important Explanatory Variables in Determining Product
Consumption
In a highly competitive market environment, it is vital to employ an ac-
curate market strategy for selected products. Therefore, it is interesting to
explore what the most crucial variables are in influencing consumers’
product consumption. In other words, we wanted to find out how product
consumption was related to consumers’ product perception, and relevant
demographic variables. Given the limited number of cases and non-met-
ric data, a standard linear regression analysis has its shortcomings in deal-
ing with categorical variables. An alternative approach called categorical
regression with optimal scaling (CATREG) was applied here. CATREG
is one of the five procedures to perform optimal scaling. Others include
Nonlinear Principal Components Analysis (PRINCALS), Nonlinear Ca-
nonical Correlation Analysis (OVERALS), Correspondence Analysis
and Homogeneity Analysis (HOMALS). More details can be found in
different versions of SPSS Categories. Optimal scaling extends tradi-
tional log-linear analyses by incorporating variables at mixed levels.
 Xiaoyong Zhang 61

CATREG is to predict the values of a categorical dependent variable

from a combination of categorical independent variables. This proce-
dure quantifies categorical data by assigning numerical values to the
categories, resulting in an optimal linear regression equation for the
transformed variables. This procedure treats quantified categorical
variables in the same way as numerical variables. The CATREG ap-
proach extends the standard approach by simultaneously scaling nomi-
nal, ordinal and numerical variables and offers more flexibility.
We wanted to examine the influence of several factors on the fre-
quency of consumption of various products. Table 10 displays all vari-
ables used in CATREG, with their scales and labels. The consumption
frequency of four selected products (pork, beef, fresh milk and chicken)
were selected as dependent variables. Their scale measurement is
shown in Table 2. The demographic variables are gender, level of edu-
cation and the variety-seeking scale EBBT. Four perception variables
(price, market availability, taste and smell) were also included. In fact,
more demographic and perception variables were included at the begin-
ning. However, it was found that there was a large correlation between
predictors, which could lead to multicollinearity concerns. Therefore,
several highly correlated variables (such as age, income, product smell)
were omitted from the model.

Model Fit

Regression with optimal scaling yields R2, indicating that the amount
of variance is explained by optimally transformed predictors. Table 11
summarizes the R2 and F values of four CATREG models. The pork

TABLE 10. Variables Used in CATREG with Their Scales and Labels

Variables Scale Value labels

Frequency of differences Ordinal 1, 2, 3, 4, 5
Product consumptiona
Gender Nominal 1, 2
Education level Nominal 1, 2, 3, 4, 5
EBBT scale Ordinal 1, 2, 3
Price Ordinal 1, 2, 3, 4, 5
Taste Ordinal 1, 2, 3, 4, 5
Market Ordinal 1, 2, 3, 4, 5
Smell Ordinal 1, 2, 3, 4, 5
a
Dependent variables, which include pork, beef, fresh milk and chicken, corresponding four regression models.
62 Journal of International Food & Agribusiness Marketing

TABLE 11. Model Fits of CATREG Regression

Models R Square F value P value

Pork 0.190 10.756 0.000
Beef 0.105 5.298 0.000
Fresh milk 0.159 10.402 0.000
Chicken 0.062 2.995 0.008

model yields a highest R2 of 0.19, indicating that almost 20% of the

variance are explained by the regression of optimally transformed pre-
dictors, followed by fresh milk model (0.16), beef model (0.11) and
chicken model (0.6). Given the consumers’ perception-based data,
these R2s are reasonably acceptable in the marketing literature. Further-
more, the F statistics for four models with corresponding p values less
than 0.001 (except for chicken) indicate that these models are perform-
ing quite well.

Relative Importance of Each Factor in Influencing Product

Consumption

CATREG also reports standardized regression coefficients (Beta) and

F value for each variable. However, the regression coefficients cannot
fully describe the impact of the predictors since the original variables
were transformed. For example, a change in the quantification of a pre-
dictor need not correspond directly to a change in the original variable. It
implies that these tests must be interpreted conservatively. Alternative
statistics used to fully explore predictor effects were those of Relative Im-
portance. CATREG reports each predictor’s importance with a sum of
one. A large importance indicates that this predictor is crucial to the re-
gression. Table 12 displays the standardized coefficients and their impor-
tance for each variable for the four models. Every model had slightly
different variables included after considering multicollinearity. Impor-
tance values were calculated for each variable and the first two most im-
portant variables for each product were selected in Table 13. As can be
seen from Table 13, around half the influential factors for pork con-
sumption arise from market availability and the taste of pork. Efforts for
market availability and a sense of well-tasting pork should further im-
prove consumers’ pork consumption. Price and gender account for 80%
of influential factors on beef consumption. A low market price and a
consumer strategy that focuses more on women should accelerate beef
expenditure. Taste dominates fresh milk consumption, which indicates
 Xiaoyong Zhang 63

TABLE 12. Standardized Coefficients and Relative Importance of Each Vari-

ables

Predictors Pork Model Beef Model Fresh Milk Model Chicken Model
Beta Imp.* Beta Imp. Beta Imp. Beta Imp.

Gender 0.22 0.21 0.21 0.39 ⫺5.4E-02 0.01 5.2E-02 0.02

Educ. ⫺0.21 0.19 7.2E-02 0.04 ⫺0.14 0.13 ⫺5.6E-02 0.06
EBBT ⫺9.7E-02 0.05 ⫺0.12 0.13 ⫺0.11 0.06 ⫺4.9E-02 0.05
Price ⫺0.13 0.11 ⫺0.21 0.41 9.2E-02 0.03 ⫺6.7E-02 0.09
Market 0.21 0.23 6.1E-02 0.03 0.22 0.78
Taste 0.19 0.22 0.36 0.77 ⫺1.22E-02 0.01
Smell 5.3E-02 0.01

*Imp.: importance scores.

TABLE 13. The Two Most Important Variables for Each Product

Products First Important Variable Second Important Variable

Pork Market (0.23) Taste (0.22)
Beef Price (0.41) Gender (0.39)
Fresh milk Taste (0.77) Education (0.13)
Chicken Market (0.78) Price (0.09)

that a pleasant taste is far more important for milk than other factors
such as price and markets. For chicken consumption the dominant fac-
tor is market availability.

MANAGERIAL IMPLICATIONS AND FURTHER RESEARCH

Several implications arise for readers who are interested in China

markets. As far as specific foods are concerned, dairy is the most prom-
ising industry. According to the China Dairy Industry Association, the
Chinese dairy industry is expected to grow by 15% a year in the next
five years. This provides great opportunities for dairy cattle importation
from Australia and New Zealand because China is reluctant to import
from the EU due to Mad Cow disease effects. Various kinds of dairy
processing equipment from the EU may also find a market. In spite of
the limited consumption of milk powder in Shanghai, companies should
not stop searching for niche markets. The vast rural markets in China
could have potential as the low number of refrigerator owners restrict
64 Journal of International Food & Agribusiness Marketing

them from fresh milk consumption. Furthermore, due to inadequate do-

mestic supplies, a large amount of milk powder is imported for making
infant formula, ice cream and yogurt.
As far as market outlets are concerned, the supermarket is the domi-
nant market outlet for dairy products; other products are mainly pur-
chased in open markets. If supermarkets have to compete with open
markets, great effort should be put into improving their fresh-food im-
age which consumers value most among product attributes.
Our research has also shown that higher variety-seeking consumers tend
to be younger and higher educated with affluent incomes, no matter what
gender. Marketers could exploit this market segment by introducing new
innovative products. Further research on this topic could focus on consum-
ers switching products in a full variety of brands in a product category.
The market strategy for each product should be formulated on the ba-
sis of its most important consumption variables. The most important
factor to stimulate beef consumption is to lower its price. Since most of
China’s high quality beef is imported, this could contribute to a higher
price markets. Due to an increasing domestic demand for high quality
beef, the Chinese government is planning to improve domestic beef
quality by importing good beef cattle for breeding. This could provide
markets for beef cattle export to China or joint ventures for beef produc-
tion in China.
As for further research, there is a need to study the development of
Chinese supermarkets. A lot of research has been carried out in the mod-
ern retail sector in Asia, such as in Thailand (Feeny et al. 1996), Hong
Kong (Kawahara & Speece 1994), Vietnam (Venard 1996). China’s
rapid development in retail industry, particularly supermarkets, deserves
much more attention. Further research could elaborate on the pattern and
determinants of the rise of supermarkets and their impact on the agricul-
tural food system and development policy, as discussed by Reardon and
Berdegue (2002) in their Latin America supermarket studies.

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Submitted: February 2002

First Revision: September 2002
Second Revision: October 2002
Accepted: November 2002