Chinese Consumer Insights
According to the report of the National Bureau of Statistics, in 2022 China's economy saw a dramatic drop in internal consumption rates following the post-pandemic recovery. However, a record deposit worth RMB 17.8 trillion (USD 2.6 trillion) was added to banks later last year following the slowdown in consumption. In fact, greater savings accumulated during the pandemic consequently translates into more spending and, with the excitement of free movement after years of lockdowns, this also leads to greater purchasing power especially among younger generations now willing to invest more in personal care, education, wealth management and upskilling development. The Chinese market sparks great interest abroad, but gaining insights about the business and its trends may require further research, and so, it may be of useful reference to take a look at this article.
Number of Mobile Internet Users in China from 2018 to 2022 with a Forecast until 2027
Interestingly enough it is to notice that in the same year around 70% of China’s population, that is over 1.03 billion people, accessed the internet through their mobile devices. The figure is also projected to reach and surpass the 1.2 billion mark by 2027 (see Figure 1). Obviously, considering such a gigantic user base, it is inevitable that the mobile internet market has plenty of potential to further grow and develop.
INTERNET CONSUMPTION IN CHINA
It is clear that mobile internet in China is a top priority for its consumers especially when it comes to younger generations even if it is now taking over also among older generations with newly emerging trends like metaverse, outdoor consumption, luxury upgrade and petcare. Chinese Millennials (GenY) and Zoomers (Gen Z) make up for almost half of the total. As for the older generations as well, numbers are impressive also considering the unprecedented speed and scale at which the population is ageing. In this scenario, good are the prospects for economic growth, propelled on the one hand by the increased use of the internet and spread of mobile apps, and on the other hand by the tendency of online vs offline consumption.
Internet Users in China, by Generation Group, 2022
Internet Users in China, by Age, 2022
THE SILVER GENERATION
The Silver generation itself, comprising those born before the 1980s, accounts for more than 20% of the world's elderly population, and is now around 267 million people in China alone, with a share of 60% male and 40% female mainly living in lower-tier cities. Silver-haired are increasingly present online and are willing to purchase through the internet more than ever. Purchases usually occur on PinDuoDuo and Taobao, the most popular platforms, and are mainly focused on beauty, kitchen appliances, homecare and packaged goods but also tourism, entertainment and education. However, sectors of interest vary between urban Silver-haired and lower-tier city Silver-haired consumers, with the former more likely to spend on stock trading, local life and carrier services, and the latter more involved in spending on short videos, Wi-Fi and smart-home services.
Meanwhile, as they deepen their use of the online purchasing platforms, they are also exploring new worlds like the one of live streaming on Taobao Live and JD Live and entering online healthcare platforms. In 2053, the Silver-haired generation is forecast to approach 487 million with a spending power of nearly RMB 61 trillion, and this situation is going to represent an issue for the economy if not addressed properly. As a matter of fact, the Chinese government is making great efforts to help these people and is already planning to build 10 high-level silver industrial parks across the country, besides several other projects being implemented.
Millennials (born between 1981 and 1996) in China, a generation group of around 400 million people, currently the largest consumer group in the country, have served as the main driver of Chinese consumption over the last years. It is a consumer group valuing quality over money and attaching greater attention to the pursuit of quality life and memorable experiences. They mainly look for high-value goods and services, healthcare and high-end/luxury products. Among other interests, Metaverse is on the wish-list for this group, now second only to Gen Z. Chinese Millennials are more informed, more quality-oriented and inevitably more selective in what they indulge in: their motto is “pay more for more”. To this end, word of mouth is crucial for them. They need to engage directly with KOLs and KOCs to better understand the pros and cons of goods and services as well as have a clearer picture of what the market looks like. The real objective is all about building wealth in all aspects of life ranging from services to education, car, beauty care, baby care etc. Their online presence and strong consuming activity make this group a powerful leader in the internal market consumption and also a model for others to imitate. Thanks to their propensity to spend, embrace of technology and worldview, Chinese Millennials are likely to have the greatest influence on the world and also set to become the most dominant consumer group in the very next few years.
Post-95s, also known under the name of Zoomers, along with Millennials, account for as many as 700 million people. They are the ones of the generation shaped by 21st century technology and are a truly global group which is expected to grow significantly in size in the future. Despite their young age, they are going to have the lion’s share in the following years and also gaining more purchasing power. A typical Zoomer owns a university degree and possesses an average of 18 jobs across 6 careers. GenZs do a lot of research before every purchase and rely heavily on glowing reviews of products and services. They have turned into very refined, picky and stingy consumers and, if asked about what they care most about, their answer is: “good value for money” and “need in life”. That is why their motivation for shopping is self-catered. Their online presence makes them the most active Internet user group with a total of 342 million active devices and an average of 7 hours per day spent online. For them, the Internet is the most normal way of accessing information and learning things as well as making new friends. Of this group of nearly 250 million people in total, almost 60 million are female users now stepping out of education and entering the workforce. 50% of them are still students, the other half of them can boast a disposable income of more than RMB 3000, meaning a great consumption potential. Gen Z male users have just reached 70 million and are spending more time online than before. Zoomers’ main interest is for mobile and short videos and gaming, and the platforms they use most are RED, TaoBao and Douyin.
CONSUMPTION IN LOWER-TIER CITIES
Among various generation groups, many consumers belong to the lower-tier city subcategory making up for 65% of the Chinese population and with an average age of less than 35. This group comprises mostly young and single consumers who are pretty well aware of the market and all available channels and platforms to use when it comes to shopping online. Following the economic recovery, the majority of them have managed to keep some of their deposits and put them aside and now, with the pandemic almost over, they have less loans, credit card spending, instalments and delayed payments compared to their counterparts in first- and second-tier cities. As a consequence, their spending and purchasing power has rocketed and is outdoing that of primary level markets. People from this group work less hours and obviously have more free time for shopping, socialising and entertainment. Their usual time spent online has increased by 40 minutes per month across mobile apps such as Taobao and PinDuoDuo. Products and services that attract more include cars, digital products, sports-related products, home products and home appliances. Main trends influencing their purchasing behaviour include luxury, GuoChao (National Wave Trend), attention to brands and their value, quality and branding.
MALE AND FEMALE CONSUMERS
In China, male and female consumers' shares are almost balanced. Male users account for around 730 million, whereas female users account for 690 million. Chinese men are unleashing great power and influence on the market and rely more on brand awareness and quality as their spending power has increased and their attention has shifted to beauty and luxury goods, even if sports trends and mobile games are still top priorities. 31- to 50-year-old men concentrate on home appliances and cars, 51+ year-old men seek special satisfactory decorative ornaments, and almost all of them are likely to buy 3C products (Computer, Communication and Consumer electronics), tobacco and alcohol, home appliances, smart devices, skin care and luxury goods; and expenses are made accordingly. Under-30s’ spending power is between RMB 300 to 999, that of 31- to 50-year-olds is above RMB 1000 and, and 51+ year-old men are able to make large spending without problems. Chinese women now represent the world’s largest consumer group, equal to Germany, France and the UK combined, with a number of users still on the rise coming from both major and minor cities. Like other subcategories, this of women is particularly apt to spend more after the pandemic and the range of products of their choice includes more scientific and efficient health and wellness products, skin care products and education courses. As for expenses, GenZ women spend on average RMB 300 to 500 per month for cosmetics, RMB 5000 for aesthetics and are very careful about their wellness and physical health.
CHINESE FAMILY CONSUMPTION
Across all generations, mainly the younger ones, many are the new families and obviously many are the new consumers, namely Chinese mothers and fathers. Although the Chinese birth rate has decreased sharply since the pandemic outbreak back in 2020, now things are changing with the three-child policy and the child and maternal care market still keeps a considerably meaningful share. Nonetheless, a visible gap can be noticed between major cities and minor cities’ birth rates, with the latter being higher. In this group, parents aged 25 to 40 with kids from 0 to 12 years old fall into the category of the biggest internet users accounting for around 300 million. Thanks to the rising per capita disposable income, market forecasts suggest a size growth worth RMB 5 trillion by 2025. At present, most families’ spending ranges between RMB 1000 to 5000 per month per child on education and daily necessities through ecommerce. Large investments usually occur in children’s clothing, food supplements, educational products, high-tech wearable devices and fitness-related products, more specifically apparel for 26% and milk powder for 22.7% and diapers for 12.1%, and great importance is also attached to supplemental food for as much as 9.3% of all food purchased for infants and young. As a result, it is quite likely that from now onwards the majority of kids are going to be as spoiled as ever and the market will inevitably grow at speed.
Between Millennials and GenZs, data show that around 260 million people are single users. Singles are equally distributed between men and women, but with a majority for male users. These netizens, who are singles for so many different reasons, have greater purchasing power compared to other peer groups since they have a higher disposable income and do not have to share expenses with partners or family members accordingly. Their tendency is concentrated around spending more on shopping and socialising as a way to get rid of being single. In fact, greater expenses are often recorded in dating, social memberships and dating skill courses, and reasons why many people of this generation find themselves in unpleasant and uncomfortable situations apparently lie in overworking and lack of time. In the pursuit stage, 50% of them are willing to spend up to RMB 1000, 22% between 1000 to 3000 and 13% do not want to spend at all. On average both male and female users spend a total of around 174 hours per month online.
Another cross-category group is that of pet owners, quite a popular group of people among youngsters also thanks to a change in demographics and lifestyle. Pets are being regarded more as family members rather than just animals inside a house, and particular and renovated attention towards them has stimulated a stronger and faster market expansion within the industry. In fact, more pet food companies and veterinary clinics are spreading across the country, mostly serving canine and feline owners. In 2018, the yearly expense on food per dog was nearly RMB 2000 on average, and that is also explained by the fact that most pet owners are mainly singles, DINK families (Double Income No Kids) or empty nest family members with high disposable income. As of 2021, of all pet owners, the majority were dog owners, followed by cat owners and other animals’ owners. In 2023 the number of cat owners is expected to rise, and the same will happen for the market for which forecasts predict a worth of around RMB 445.6 billion (USD 66 billion). As for consumption, owners place health and hygiene and quality as a top priority and endorse local markets with a preference for online purchases.
The Chinese market is undoubtedly one of the largest and fastest growing worldwide and this can only translate into China being an increasingly effective driving force. It still remains a leader and can only strengthen its position, and it is going to be extremely hard for others to stand the competition. Getting to know more closely how the market operates and how consumers are being affected by ongoing trends is a must for anyone willing to approach China and start operations successfully.
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Report, Ecommerce, Marketing and Digital Space 2023 by ALARICE and CHOZAN, HK, 2023