The Chinese market in China is evolving at a rapid change and it impacts the consumption and consumer’s behavior in China. We will see richer and millennial consumer as the economy in China keeps its growth and People turn more and more to seek a best life. Also, the country is on its way to change from a manufacturing powerhouse to an active leader in digital innovation. If you are doing or you plan to do business in China, you need to take in account these upcoming changes in your strategy.
This article will provide you with an overview of the Chinese market, and different upcoming trends.
China’s booming middle class drives consumption
China’s economy is boosted mostly by the high consumption rate and the country will rely on it to grow in the coming years. Indeed, after an investment-driven model, now it’s the turn for to a consumption and services-driven model. The major consumption force comes from a booming Chinese middle class.
The latest figures show that household consumption will grow by an average 6% per year to reach RMB 56 trillion (US$8.2 trillion) and the middle class will expand to represent an estimated 65% of households. According to Bain & Company’s research, by 2027, household income will have increased by around 6% annually, with a massive number of industrial jobs redeployed to service sector jobs. In fact, along with the expansion of Chinese leading companies such as Tencent or Alibaba, it’s also creating a lot of new employment (such as couriers), allowing a lot of people to earn more than before. That makes the average level of buying power higher.
On the one hand, the government supports this by implementing policies to encourage spending in areas such as health and pensions, discouraging saving. On the other hand, Chinese consumers are confident because statistics show that the increase will continue and this contributes to the quick increase in Chinese consumption. On the business side, this new segment of consumers is an opportunity for your brand.
A shift from a relatively younger to a relatively older population
As mentioned before, China has an aging population. Still according to the research conducted by Bain & Company, by 2027, an estimated 324 million (22% approximately) of the country’s population will be over 60 years of age. The upcoming challenge of the country will be to balance the decreasing percentage of working-age labor with the increasing pressure on social benefits.
On another side, this is opening new opportunities for products and services tailored toward this demographic. A lot of Chinese people are already concerned about health issues and their well-being and the increasing number of elderly consumers will just emphasize this need. They may spend more on insurance and less on clothing for example
China’s one-child policy has changed a lot the relationship between generations. While their predecessors were more able to rely on their children for care, many of the new elderly don’t follow anymore this tradition, making the demand for senior housing stronger. The senior care will be an important sector to dig into as the average young people are less able to provide company to their family.
Chinese Little emperors or the Digital Generation
This is another significant demographic development. Those born after the 1990s and 2000s are quite different from the previous generation. They are more accommodated with technology and digitalization. They are very connected and active in the internet world and know how to leverage it for new uses. They are empowered by new technologies but also depend on them. In fact, they are influenced by this new environment, more open, with more information, so their taste will also differ a lot from their predecessors.
They consume at a higher rate, one of the reasons is that their generation received meaningful financial support from their parents or grandparents. Getting what they want became almost a normal fact since they were children and they are maintaining higher standards for convenience, quality, and variety in their life. This group is also comparatively less price-conscious than the previous generation.
These young people, besides being the center of their families, are also the focus of many brands and companies. They are or will become the next consumption force and they are holding also an important innovative capacity. These consumers are more open to new things and prefer to express their difference in perspectives and share their experiences openly. Following this trend, consumers will become more heterogeneous than they are today.
How to face these changing consumers?
Work with digital in China
Middle-class, elderly population, and young people are all in evolution. In front of these changes, brands need to be continually up-to-date with the market trends and the digital evolutions in China. Consumers will be more and more involved with the country’s technological growth and technology will dramatically reshape many industries in China.
Personalization and innovation
Over the last decade, many industries in China offered personalized content in niche media or personalized marketing. By 2027, the personalization of products and services and the customer journey itself will become the norm, changing not only what people buy but also how they buy.
Chinese people are often known to be attracted by high-priced luxury products, but at the bottom, they are above all seeking exclusivity and want to differ from another. As we mentioned before, they want to express themselves, and working in this way will better ensure your brand’s uniqueness in China.
Build your brand trust
To survive in the competitive Chinese market, increasing your brand’s awareness and trust are very important things to do. People rely a lot on word of mouth from their friends, family, and peers to decide. More and more social media platforms also try to build a community online for sharing and discussion to obtain data from users. In fact, the companies that control data will gain influence and substantial competitive advantage.
You have to bet on high-quality products and services to succeed in China and face more and more demanding Chinese consumers. Manage your online presence and your branding.
As they are very present online, brands have to bring their information through digital platforms in order to catch these consumers. Nowadays, having a Weibo account and WeChat account is almost unavoidable to do business in China.
We are digital specialists in China. Gentlemen Marketing can provide you with solutions to develop your business in China. Do not hesitate to leave a comment or contact our expert for further discussion.
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