Chinese Consumers Set New Lifestyle Standards

With around 1.39 billion inhabitants, China is the most populous country in the world and one of the largest consumer markets. The image of China being the workbench of the world, however, where workers produced masses of T-shirts in stuffy factories has been replaced by a continuously consuming nation. This change is, on the one hand, triggered by technical innovations but above all Chinese consumers themselves are driving social change. China has already had the world's largest middle class since 2015 with around 290 million people (source: iResearch) and is set to continue growing. This new middle class has a growing disposable income, is increasingly travelling abroad and interested in international premium products.

In 2009, China already sold the most cars worldwide, and with around 700 million mobile phone users – a figure that is about the entire population of Europe – China is the largest mobile communications market in the world. And it is this mobile growth that has fueled the nature of China’s consumption. In 2016, more than 50 percent of all e-commerce purchases were already made via mobile channels. The Chinese are practically stuck to their mobile phone as most of their online activities, e.g. chatting, shopping, odering food and above all payment, are somehow connected to Tencent’s super App WeChat.

Convenience is key and what WeChat and other players in the market have smartly used to their advantage (and the consumer’s convenience) are QR-Codes. They connect offline-businesses or tools to the consumer’s smartphone in a way that makes multichannel attempts in the Western world look like a kindergarten. Just think about the orange Mobikes, that are flooding our streets. In order to unlock a bike you just need to scan the QR-Code on the bike and you are automatically connected with your app. And this is just one of the many examples on how Chinese companies use QR-codes to make consumer’s lives a lot more convenient.

Changing Consumer Behaviour – Premium Products before Price

Chinese consumers have long been (and still are) known for their price sensitivity. But with society's growing prosperity, consumers' purchasing behaviour has also adapted to this new living standard. ?Consumption upgrade“ is the term used mostl often in this context.

Quality before price counts today. Consumers are increasingly interested in brands - both major brands and niche brands - and are looking specifically for international brands. And they are also prepared to pay more and wait two weeks until the shipment arrives at their doorstep from Germany, for example. Chinese consumer confidence has reached its highest level in ten years. According to a McKinsey report 20 percent of Chinese consumers are willing to buy expensive brands and products, while the number of German consumers is 12 percent, in the USA only 8 percent. (Source: Double-clicking on the Chinese consumer)

Today more than ever, the Chinese travel abroad which is also an effect of the "consumption upgrade". They are thus automatically exposed to brands as well as trends from abroad. Back in China, many consumers no longer want to live without the products they have grown fond of abroad. A great opportunity for international brands.

The New Chinese (Car) Consumer

Young, self-confident and digital native. Considering the above mentioned technical developments and China’s consumption upgrade of the (still) growing middle class, it doesn’t come as a surprise, that the Chinese consumer knows exactly what he wants when looking at buying a car.

Given his new yearning for quality products and well-sought after Western brands, there is one aspect that will in the end define his choice more than anything else: A state-of-the-art technology. Chinese consumers who shop international brands and travel abroad, are well aware of any brand’s appearance, but if they cannot continue their convenience oriented lifestyle while driving about town, they will most likely be dissatisfied. A car needs to be as digitally connected and convenient as possible and it needs to not only drive the owner from place A to B, it needs to provide an extention to his lifestyle.

European consumers are not yet as digitally savvy as Chinese consumers are. I would even say, digital acceptance and development is several years ahead from what we know in Germany for example. Chinese are open to try out new technical gadgets and tools and they somehow put a certain pressure on Tech companies to constantly surprise them with new innovations. Chinese consumers want to be entertained and surprised along the way and this challenges any company that wants to be succesful in the largest consumer market in the world. At the same time it gives space for opportunities and most of all innovation. It is a playground for technology and digital tools – Chinese are more willing to test. And possibly with a few years delay (some of) these innovations can automatically be implemented in Germany as well.