China is one of the most interesting markets in the world with an incredible array of opportunities for foreign companies. It reminds us of the 90s in Japan but on another scale. It is a dynamic economy that boasts a growing middle class ready to spend and purchase goods.
1) English Online Teaching
Along with China’s economic development, mastering English has become a near necessity for the younger Chinese generation. English is now compulsory in all Chinese schools starting in primary schools. This has resulted in the flourishing of the English industry booming all over 1st tiers Chinese cities and now 2nd and 3rd tier cities.
Not only do people have more spending power but parents are also ready to spend good money to ensure the success of their children. Parents are also well aware that English compulsory classes are not enough for their kids to become fluent in English leading to the development of more private schools and increasing the demand for native speakers.
Now, a lack of teachers and training centers is encouraging the English online teaching market to continue its growth. Experts expect a growth of 20% per year and a reach of 270 billion yuan of revenue this year.
Not only are online English classes booming but we are also expecting a huge boom in online training ( STEM ) with around 50 million parents paying for their kids to take these courses by 2020. A class usually costs around 200 yuan – (US$30).
2) Online Training
Parents in China are typically very demanding of their kids: join the best school, have the best grades, attend evening classes – these are all expectations that many Chinese parents share. Of course, this is all in an attempt to secure a good future for their kids in a highly competitive country.
The market always has an answer to the demands and in this case, online training courses are the winner. In 2020, the revenue of the online education market in China reached 315 billion Yuan according to Statista.
The 3 major sections are elementary online education, online vocational training, and online higher education with a slight decline for the last one.
3) Imported Food
China’s middle-class standards have evolved not only for education but also for health with an important role in the food that is consumed leading to a rise in imported food consumption. Eating habits are changing as well as shopping habits. After years of food scandals, people are looking for quality food and give great importance to the reputation of the brand they are buying from. They are ready to pay more for better options. For instance, 88% of Chinese consumers in 1st and 2nd tiers cities are against food additives.
We can observe 2 trends in food consumption habits:
- Diet change: Dairy products and snacks are the most commonly imported products purchased.
- Chinese consumers are looking for “healthy food” and imported brand often sounds like a healthier version of the familiar Chinese brand.
The increase in the consumption of imported products was also encouraged by decreased taxes over the years making products more affordable, the reputation of a brand & or country, and always more visibility online. 60% of Chinese consumers who buy imported food buy it online because it is convenient and there are a lot more choices and deals.
Branding and Reputation are valuable in China and the countries that export the most food to China are the USA, Japan, and France which are all known for the quality of their food.
Imported food also plays a social role and is often offered as a gift. Buying imported food can be pricey and not everyone can afford it, it is a way to impress.
It is worth noticing that the Chinese love food and 53% of consumers enjoy trying new types of food.
4) Organic Products
The organic market is another trend. The organic market promises quality ingredients to the customer. Chinese peoples are concerned about their health and the quality of the food they put on their plates. Therefore, they often go for imported products.
According to the 2019 market report, organic products in China reached a value of $3.3 billion and are expected to total $5.5 billion by 2024.
The market specialists are attributing this growth to a more educated population aware and concerned about food safety and a more stable financial situation.
In addition, Chinese consumers have been massively turning to online shopping looking for information about brands and this can be illustrated by the multiplication of online platforms such as fields china delivering in more than 200 Chinese cities.
If China cares more about the food they are eating and the education of their kids, they are also very concerned about baby care. As for food in the Chinese baby care industry, reputation has been damaged by repeated scandals pushing parents to turn to the outside for safer products and services.
Looking at the numbers it is clear that the industry is growing, with a rate of 15% in 2018, and with the 1 child policy disappearing and stable income, it is expected to continue its growth both online and offline. Imported baby-care-related sales online are some of the most popular for Chinese consumers, and online channels now represent 50% of mother and baby retail market value.
The market is extremely competitive among foreign brands with 10 to 20% of the consumer considering the country of origin is a crucial criterion for conversion. Similarly to food, quality and reputation are the most important factor when deciding to make a purchase.
6) Healthcare Products & Services
Did you know? 30% of the total search queries on Baidu are linked to health.
The Chinese healthcare market is a boon for investors. There are opportunities in both the products and the services always encouraged by a better economy and the researches for high-end equipment. It can be challenging because of rapidly changing laws and regulations but definitely worth it.
If most of the medical market in China comes from local manufacturers, Chinese hospitals and healthcare providers prefer imported devices. It is especially true when purchasing innovative and high-tech devices that outperformed middle ranged local products. This trend is fed by an aging population and a government in the pursuit of improving the quality of care.
When it comes to healthcare quality is absolutely key. Chinese consumers are now able to pay more for healthcare with GDP still growing by 7% year on year. This indicates there will be no slow down in this market as the Chinese avidly embrace international health products in new and interesting ways. Indeed Vice Premier Li Keqiang himself said the healthcare industry has now entered “uncharted waters.”
7) Travel Agencies: Providing a unique experience
With a better quality of necessities such as food, health, and education, China’s middle class is looking forward to improving quality time and spending their income. What is better than discovering the world?
The Chinese outbound tourism industry has been greatly impacted by the COVID-19 pandemic but the beginning of a return to normal has already taken place as travel restrictions are less strict. The demand for travel has increased in many demographics due to the inability to travel over the last year or so.
The volume of international travel by Chinese travelers grew from 10 million in 2000 to nearly 100 million in 2013 to 68 million by 2016 and this figure was expected to reach 100 million by 2021.
Chinese tourism has long been dominated by operating tours but the last trend is showing a shift toward individual travel with an increasing number of Chinese traveling to a more exotic destinations such as Thailand, Cambodia, Philippines, Morocco, and Vietnam. Not only do they travel to new destinations but they continue to travel to popular ones such as France, the United States, the U.K., South Korea, and Japan. According to a survey by booking sites Hotels.com and Ipsos, shopping is no longer the major reason for international travel among Chinese tourists. Instead, dining, sightseeing, and exploring the local culture have all become increasingly appealing.
8) Fashion and Clothing
China’s fashion clothing market constitutes a great opportunity for foreign brands because of its size. It is good to keep in mind that the competition is harsh and a well-planned marketing strategy is going to be necessary to succeed.
Market value is expected to reach RMB1,096.1 billion by 2021 plus 6.5% of annual growth for the men.
Demand for limited more unique editions is increasing offering designers and niche brands to expand. We can also see an increasing demand for high-quality garments
Another trend to mention is the demand for casualwear. This market is less saturated and has a lot of possibilities to offers.
Despite the market slowing down, online sales continue their growth. In the B2C online fashion shopping market, Tmall, JD.com, and vip.com are the main platforms. E-commerce is the way to go for any brand for a few reasons: cost savings; easy to track customer consumption habits and finally an easy way to clear inventory.
To sum up
China is full of opportunities for foreign brands, imported products and services are often seen as high-end and quality is decisive for Chinese consumers to purchase. To succeed in China you will not only have to have excellent service but to make yourself a name. There will be enormous branding work to be done but the results will be rewarding.
Are you a company looking to expand your business in China? At GMA we are a team of international specialists in Chinese marketing and could help you with your strategy. Contact us for a free consulting session