Online Collectivism.

I recently heard of a new development in China: Tuan gou (团购)which means “Group Shopping”. This is when a large group of people interested in making the same purchase gets together through an online chat group and decides to meet at a specific market, at a specific time, to collectively negotiate a group discount for an item. They all want the same item.

The example on national public radio was a group of new homeowners shopping for some kind of light fixture. About 70 people arrived as a group at a large store that sold furniture and fixtures, and the woman who organized the trip got on a microphone and began negotiating with the seller. They were driving a hard bargain, because they knew they had a lot of people that could demand a discount based on the volume of the sale. The seller continually gave concessions and price reductions. It was only when the group threatened to leave that the seller finallly caved and offered what equated to a 30% discount. Throughout the negotiations, the buyer on the microphone would turn to the collective and ask “do we think this deal is okay??!” to which the response would be “NO!!”

When the 30% discount was reached, the group agreed to buy.

The announcer on the radio seemed to think this tactic might someday be used in the states. I remain doubtful. The announcer also said the reason for the Chinese developing this tactic prior to us involves the way they use the internet as opposed to the way we use it. I am suspicious of this conclusion as well.

The phenomenon of Tuan Gou is inherently Chinese and directly tied to their culture and history. In the states, college kids have been assembling online in chat rooms and agreeing to all meet at the same park at 2:30pm with Santa costumes in July to run through a crowd of picnicers. But where are we, as a society of individualists, going to find a hundred new homeowners who want to buy the same light?

Online collectivism, and the way the Chinese use the internet in general, is just another example of how and why their culture differs from ours. The Chinese tend to follow fads. If a group of peers begins to take an interest in something, it will grow quickly because nobody wants to be the only family whose one child doesn’t own a hula hoop. Self expression is more reserved. Leaders aren’t born out of a desire to be original but a desire to bring people together as a group. Chat rooms and blogging are huge in China. Information can travel quickly not just electronically but by word of mouth. Outside of Shanghai and Beijing, where the majority of China lives, there are fewer people who own computers. Instead, they go to internet bars (Wang Ba in Chinese, which literally means “net bar”). Internet bars are rooms filled with computers. In the fall of 2008 I went to Chongqing. I didn’t have a laptop with me because I knew about internet bars. They had been hard to find in the bigger coastal cities, but when I stepped out of the hotel in Freedom Square downtown, I asked the first woman I saw at a little refreshment stand where the nearest internet bar was located. It was one block away. For the next week, I asked regularly in different parts of the city where I could find a wang ba, and the answer was always “very close”.

I went into four different bars over those six days. In all of them, at different times of the day, there were a lot of people. Most of the time I either had to wait in line for a few minutes or had to go find a computer in the very back or very front of the room. Space was limited. Each of these bars had at least a hundred computers in them.

Privacy is less respected in China when it comes to dissemination of information. As I would sit and blog, people would occasionally stop behind me and watch me type. There wasn’t much conversation going on, but if somebody noticed something interesting on another person’s screen, they’d ask about it. Because of this, word spreads quickly.

In a society where bartering remains a part of everyday life and consumer credit doesn’t yet prevail over cash, online shopping hasn’t taken hold as strongly as in the States. However, the company that ignores the internet as a marketing tool loses out on free advertising. Finding a following online can trigger a fad, because Chinese who are popular in chat rooms or have blogs about fashion or the newest product can set off a buying frenzy. In fact, when a company enters a new Chinese market it’s most imperative method of selling a consumer product should be the internet.

Let’s take as an example Jones Soda. They make uniquely colored and flavored sodas in the US. Their headquarters are based in Seattle. Were Jones Soda to enter the China market, a cheap way to sell their product in, say, Shanghai, would be to find the biggest online food critics, bloggers, and just young people who regularly post things online and have a huge following. If Jones Soda contacts someone on renren.com who has a few thousand friends and offers to pay them to represent Jones Soda in China as a promoter, the company could get a jumpstart on selling a product that would immediately spread like wildfire through the online community in Shanghai. Finding the right spokesperson at the right store could be enough to create an immediate following. Within weeks Shanghai could have a huge market for this botique item.

Basically, China’s culture is one of groups. Collectivism rules over individuality. There are leaders and followers just like in any other culture, but their approach to leadership differs from the west. They stand as a representative of the collective, rather than its only leader. They don’t have the same level of control and decision making. The leader of the tuan gou didn’t get to decide when the price was low enough. She could influence the result, but not dictate it. It’s just this type of online collectivism, however, that can spark a market across cities, provinces, and the whole country.

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