Three Represents, Four Modernizations, Eight Honors and Eight Shames- China is famous for it’s well numerated yet vaguely defined doctrines, and the effects and meaning that these strange lists have for the nation is always an intriguing parlor game.

In Chapter 2 of The Next Boom, Plunkett creates two lists of his own as guidelines to the demands of the “new global consumer”- Plunkett’s Four Keys to Successful Consumer Products and Plunkett’s Four Keys to Successful Retailing. While they seem like common sense as far as the American market goes, let’s see how they stack up for China.

Four Keys to Successful Consumer Products

High Perceived Value: The product must convincingly offer a high level of durability for the price, and give consumers confidence that their money is wisely and well spent.

To date, durability hasn’t been a concern for Chinese consumers, who generally value appearance over function. The longevity of one’s cell phone isn’t relevant when you’ll just be trading it in for next year’s model, and the same goes double for clothes. The rich don’t need durability- and the poor can’t afford it.

There’s plenty of evidence, however, that this is changing, as the second urban generation since Reform and Opening emerges. The children of middle-class wealth and privilege tend to look askance at the tackiness and ego of the new rich, and tend towards higher quality and smarter spending, so they can afford to save for products and services that serve their self-actualization, from trying to afford a house of their own in the city, to international travel or yoga classes. China’s new middle class has more in common with their counterparts abroad (especially in other major Asian economies) than the last generation. Plunkett’s rule will grow more and more true in the coming decade.

Quality and Utility as well as Fashion: Fashion will remain important, but quality will come first in the minds of many consumers. Products that offer quality, utility AND fashion will have tremendous competitive advantage over products that offer fashion alone.

Following on from the first principle, the buying habits of the new middle class verify this one as well. In Shanghai of 2011, while knockoffs are still widespread, they’re also indicative of tacky “new rich” and wannabe social climbing, not to mention contamination dangers. Among those with the money, real is the only way to go. The tremendous popularity of authentic Apple goods is one of the most obvious- the company is the peak of fashion and quality in the mass market electronics business, and despite the ubiquitous fakes, people still flock to the Apple stores and licensed dealers to purchase the real thing.

High Brand Reputation above Style: The brand must stand for a company that clearly puts customer satisfaction and high value above all else. If the brand also stands for a firm with great styling, high social values, such as eco-consciousness, or other ancillary attributes, that’s even better.

 Here I’m going to have to part ways from Plunkett. While there’s a shift towards quality products, I see no evidence that social values of brands have much impact in the Chinese marketplace, other than among a very slim and internationalized market section in a few top cities. At the same time, there is evidence that even in trend-following China, consumers increasingly value classic styles from reliable brands. See this Harris Interactive poll for more on this.

Cheap Chic still has a Place: If a company wants to win the hearts of fashion-conscious, budget-conscious consumers, it must provide perky style at moderate price- for example, cars like the Mini and the Smart. If an entire business model is based on trendy merchandise with a short useful life, then the company must make it cheaper than ever- for example, the very affordable fashions of such retailers as Sweden’s H&M, Spain’s Inditex and Japan’s Uniqlo- a company that has been so successful at selling bargain fashions that it’s founder is Japan’s wealthiest businessperson.

Until recently China has been a playground of high-end luxury retailers for the upper crust, and knockoffs and off-brands for the masses. Not anymore. While many middle-class western fashion brands have failed to make an impact (for instance, Britain’s Marks & Spencers has had a difficult go of the Chinese market, where anything “middle-class” is generally disdained, as the price point they demand isn’t compatible with local buying power), Uniqlo has seen roaring success (with 1,000 new locations planned for the next ten years), and domestic upstarts like Wenzhou’s Metersbonwe and Shanghai’s Mark Fairwhale have already emerged to serve the country’s mid-range fashion market. Likewise, high-fashion, low-price-point foreign retailers such as IKEA continue their forays into China, where budget style is still an emerging sector.

Next time- we’ll take a look at the four keys to retail.