Modern Chinese Consumers. A Handy Guide for Marketers 2019

With more than 600 million online shoppers, modern Chinese consumers are the most desired consumer group by brands. Every day there are hundreds of brands trying to enter this unique market full of opportunities. Brands which are already in China are trying to launch successful marketing campaigns in order to make Chinese consumers their raving fans. I’ve created a dedicated mini book on Modern Chinese consumers to help big companies to answer following questions: Who should you target and how can you sell products to them?  

Consumption in China is expected to grow to 6.1 trillion USD in 2021. In order to serve consumers, brands need to know the difference between China’s major consumers groups. 

Below are 5 of 10 portraits of major groups of modern Chinese consumers. 

1.The New Middle Class 

China’s new middle class is driving consumer spending growth and is expected to reshape China’s consumption. Due to China’s plans to achieve an urbanization rate of over 65% by 2030, the number of middle class families will rise. 

The vast majority of middle class consumers are urbanites, who have enough leisure time and spending power to be able to seriously consider lifestyle choices. 

They have the means to take vacations, collectively spending $261 billion in 2016 according to the United Nations World Tourism Organization. Goldman Sachs predicts they will be spending $450 billion vacationing overseas by 2025.

They generally spend less than 50% of their income on necessities, and are willing to spend more on life experiences, fine dining, wellness, lifestyle products and affordable luxury products. Products that go on the body or in the body are a focus of intense spending.

Another driving force of consumption by this group is the implementation of the two-child policy that replaced the one-child policy in 2016 to help balance the working age population in the long run. 

2. Wealthy Tuhao 

Tuhao roughly translates as “new rich,” and is seen as mildly unflattering. Tuhao includes the people, usually men and usually outside top tier cities, who made vast amounts of money in the early days of opening up in the 1980s and 90s. This was a time when entrepreneurship was new, risky, largely unregulated and still frowned upon by many. The term has also grown to include purchasing behaviour by ordinary people that is seen as spontaneous.  

Since many tuhao are from poor or working class backgrounds and suddenly became wealthy, they feel a need to broadcast their new status with ostentatious displays that are often seen as tawdry or lacking in sophistication by other elites and younger generations who have grown up with different ideas about fashion and taste. They want the world to see how “luxurious” their lives are. As such, their consumption habits are often criticised or made fun of.

However, because of them, China is second only to the US in terms of retail space dedicated to luxury products and, in 2016, China accounted for one third of the world’s luxury spending.

This group has also started donating its money and time to good causes. For a nation not known for its charity, this may indicate those that have come from humble roots may not have forgotten them and want to put their money to practical use.

3. Maturing Millennials

Chinese Millennials, born in the 80s and 90s and now between 20 and 39 years old, are hitting prime consumption age. Described as educated, open-minded and tech-savvy, they make up 31% of China’s total population, representing 415 million consumers. They are gaining in purchasing power and will gradually become the main consumers of products and services.

Chinese Millennials grew up during China’s economic reforms and the digital revolution, they’re far more educated and globally aware than their parents. They love to show their close connection to the rest of the world by buying standout and niche foreign brands. This also demonstrates their one-of-a- kind tastes and distinguishes them from the crowd.

Chinese Millennials highly cherish individuality and originality and never hesitate to spend more to get the products and services they want. They are health, wellness and fitness conscious, brand sophisticated and are trading up to premium, luxury, and foreign products in the cosmetics and body care categories.

As they grew up with the internet, they are accustomed to both the real world and virtual worlds. They’re far more advanced at e-commerce participation and at integrating tech into everyday life than their Western counterparts. Exploring, purchasing and interacting online are their daily routines. Therefore, it’s no surprise that they’re savvy online, active social media users and relentless mobile shoppers.

4. Gen Z 

China’s Gen Z live very different lives from their parents and are caught between saving for large purchases or enjoying life and spending now. According to a recent Tencent survey, 84% of Post-00s respondents say they wouldn’t spend more than they’re able to.

This young generation is more brand conscious, more likely to have engaged in overseas travel and grew up with digital consumption. Alibaba and JD.com have a 75% market share in e-commerce with niche players taking up the rest and those under 28 make up 40% of shoppers on Alibaba’s Taobao. They are well-versed in getting discounts and deals and flock to apps and sites that specialize in group buying and other discounts.

This generation is savvy about online influencers and they feel that they can categorize them into trusted sources that they can rely on and those who are just out to make money. They’re more likely to respect influencers who demonstrate knowledge and expertise, have a background or qualifications related to their online activities or have a primary income source from another profession.

When it comes to the choice between domestic and foreign products, it’s worth noting that over 50% of respondents don’t consider foreign products better choices. They think domestic products are as good as foreign ones.

5. Single Young People 

Young people in China are increasingly choosing to postpone marriage and childbearing. In 2017, about 15% of China’s population were single adults with almost half of them between the ages of 20 and 29. Due to high property prices and the increasing costs of raising a family, many young people are avoiding settling down.

With more disposable income on hand and fewer responsibilities, this group prefers quality products and treating themselves. They spend more money on entertainment and recreation (including e-sports, animation, comics and videos), tourism, personal products, cosmetics, small household appliances and vocational training.

Social media influencers and key opinion leaders (KOLs) are important to this group. They want to look good on the outside and be good on the inside. This is driving growth in the fitness and athleisure markets. Some in this market estimate that between 30% and 40% of their customer base is single.

This group’s companionship needs are expected to boost the pet industry and industries associated with socializing, such as catering and board games. 

If you want to know more about 5 other consumers groups -young men, white-collar women, young urban couples, young mothers and senior citizens - check out my mini book. 

To request your full copy of the mini book Modern Chinese Consumers. A Handy Guide for Marketers in 2019, just drop an email to [email protected] and [email protected]

If you are wondering how to get into the China market, and have questions about your digital media presence in China, contact us to schedule a consultation.