Flash Mobs Against Branding

I read a fascinating article this morning in the Wall Street Journal about the rising popularity of team purchasing in China, known as "tuangou."

Groups of shoppers interested in purchasing the same products meet online to organize buying groups for everything from bathroom fixtures to cars. These groups then gather as "flash mobs" at local merchants to gang up and demand bulk discounts. In cities like Shanghai, where consumers have a larger choice of brand name products than ever before, many sellers are giving in to the demands of team purchasers. In one example, the owner of a kitchen cabinet shop was explaining the high quality materials and craftsmanship of his cabinets when a member of a 12 person buying group demanded, “Forget quality. Let’s talk about price!”

What a challenge for branding! Some segments of Chinese consumers are willing to pay a premium for brands. But the price-fixated, Internet-wielding "tuangou" mobs are going to pose a challenge for brand builders in China.

For those of you with a WSJ Online membership, you can read the full article here.