Last night, IPWS hosted an event: ‘The Chinese Consumer: How to Reach a Shifting Market’, because after hearing in late 2015 of a ‘slowing’ doing in the Chinese economy, we wondered where that left the Chinese Consumer in 2016. In the UK, the US and Europe, a ‘slowing’ down can lead to recession… but that’s not the case in China we’ve heard. Brands and marketing in China can be a buzzy topic!
In researching for the event, we found this quote via “Here comes the modern Chinese consumer” by Daniel Zipser, Yougang Chen, and Fang Gong:
“…the days of broad-based market growth are coming to an end. Consumers are becoming more selective about where they spend their money, shifting from products to services and from mass to premium segments. They are seeking a more balanced life where health, family, and experiences take priority.“
So the icon Louis Vitton handbag that had so much social status ten years ago, might now be replaced with the holiday to Paris to the original LV shop…?
And we found these three ‘great forces’ within the WE Forum pages: “…The Chinese consumer market, [….], is in the midst of a transformation that offers tremendous new opportunities. Three great forces are ushering in this transformation: the rise of upper-middle-class and affluent households as the drivers of consumption growth; a new generation of freer-spending, sophisticated consumers; and the increasingly powerful role of e-commerce.”
Our guest speakers for the evening were: Olive Zhang, Managing Director, Morpace, Linna Zhao, Insights Director at MEC, GroupM Agency and Nicolas Zurstrassen, Asia and China Ecommerce and Digital marketing leader, who has worked across many international brands, and most notedly Nike throughout the Beijing Olympics. These outstanding experts joined IPWS at the URBN Hotel in Jing’an and we took notes for you and this is what we’ve learnt:
1. Disposable income defines households included in upper middle class. Unlike in western markets, power of the upper class is growing whereas the spending of the middle class is diminishing due to growing living costs.
2. Word of mouth and social media is very trusted in China, but people wouldn’t trust each other in face to face interactions. Online reviews of products are regarded very highly, as for some reason leaving comments on products & their quality is very popular, and almost every customer leaves products reviews. Some e-commerce networks even reward costumers with extra spending credits for their reviews.
3. Brands are moving from advertising to providing great services and experiences. It’s more than just the product and the ideal lifeastyle the product brings.
4. China is the most advanced market in the world for E-commerce. Less than 50% of space in shopping malls is actual retail stores. 70% of commerce in China is done on mobile, compared to less than 30% in the US.
5. In China generational difference is greater compared to other countries, with younger generation much better off, especially if you’re born post 1990.
6. In first tier cities, men are starting to care more about personal care & appearance, so these traditionally women dominated brands are expanding their product ranges to cater for men.
7. Having a second baby is a “social status thing”. “I can afford to have the second baby” can be very powerful, so you probably won’t see a big rush for second or third children after the government’s policy change. Unless the family has money to spend.
8. Luxury brands are starting to approximate their prices in China to overseas
9. No overseas brand will be able to break into lower middle class market due to cost structure (P&G)
10. Government is encouraging consumers to spend their money in China rather than overseas, with new policy reflecting this. Spending is becoming smarter, although people are willing to spend 1000 RMB a night for a dog hotel with a swimming pool. (!)
Thanks to everyone who attended especially to our newest members! Don’t forget you can always become a member with IPWS via our online membership form.
Did you join us at the Chinese Consumer event? Do feel free to add your thoughts and experiences in the comments below!