After months of lockdowns in some major cities in China, the government just announced the reopening for some of the low-risk compounds. Admittedly, consumption has varied in the last few months. There was a period when people were mass-buying during the lockdowns and there was a period when people weren’t buying as much. Despite this, however, China’s economy has managed to grow by 4.8% in the first quarter of 2022.
Understanding the most active and eager consumers in the world isn’t simply a lifeline for businesses when other markets are closed or slow. They provide a glimpse into the world’s largest market’s trends. Now, if your company is considering entering the Chinese market, there are four key groups and three well-known ones that, based on my experience in China, I believe are critical to future success. Let’s start with the key groups:
1. Chinese digital consumers: Super parents are on the rise
The replacement of China’s one-child policy with the two-child policy in 2015 has created an organic push for the maternity and baby products market. According to QuestMobile, as of April 2022, the post-80s accounted for 53.9% of the population with children. Post-90s parents increased from 19.1% in April 2018 to 27.8% in April 2022. The sector is expected to maintain an annual growth rate of 20-30% for the next ten years.
Post-90s super mothers account for 70% of related product categories, according to JD platform data. They have become a major market force, preferring trendy products while being less price-sensitive.
Parents aged 25-40 with kids aged 0-12 are one of the biggest groups of online users, with 300 million active online users. Expenditures related to their children account for a huge portion of family spending.
These parents usually purchase children’s products through e-commerce. Word-of-mouth and quality assurances are essential factors in purchasing decisions for children’s products.
2. Young adults in lower-tier cities shine
This group of Chinese digital consumers is less affected by an overall slowdown because consumption in lower-tier cities is accelerating despite what’s happening in top-tier cities. Their income is increasing but their cost of living isn’t.
According to a JD report from this year, the top 5 provinces in terms of the ratio of users buying domestic products to imported products are Shanxi, Gansu, Hebei, Guangxi, and Guizhou.
Chinese tech companies are already profiting handsomely from tapping this market made up mostly of young and single digital consumers they call the Xiachen (下沉 “sunken/down”) market.
The number of rural netizens in China was 284 million in December 2021, accounting for 27.6 percent of total netizens. Up to December 2021, Internet penetration in China’s rural areas was 57.6 percent, up 1.7 percentage points from December 2020.
They’re buying electric appliances, entertainment products, real estate, cars, domestic beauty brands, and products from short-video platforms.
3. Silver surfers ride the digital wave
China has an ageing population so engaging with them is a necessity and an opportunity brands should grasp in 2022.
Since the pandemic began, older consumers have become much more comfortable online and are now firmly a part of China’s e-commerce shopping force. Some market views believe that older consumers may become a new engine for economic growth.
According to iiMedia Research, the market size of China’s elderly care industry will exceed 10 trillion yuan in 2022. This market share is mainly derived from the huge group of elderly people. According to the census, China’s population of people aged 60 and above reached 264 million, accounting for 18.7% of the total population, and it is expected to exceed 300 million in 2025.
This means that creating more products suitable for silver-haired groups with high spending power and brand loyalty is expected to become a new track for improving spending power under the current background.
Apps for the elderly
The vitality of older people’s needs to connect online, browse online, and use the internet has been further stimulated because of the continued advancement of the transformation of online applications for the elderly. As of December 2021, China had 119 million elderly netizens aged 60 and up, with an internet penetration rate of 43.2%. They use social networks like WeChat and QQ, video platforms like iQiyi, and news and information sites and apps.
They’re looking for experiences, social connections, and learning opportunities. In terms of products, they want home appliances, health supplements, travel options, insurance and financial products. China’s elderly social entertainment market was expected to reach 882 billion RMB in 2021.
China’s elderly have no time for brands that talk down to them. Marketing should feature older people who are proud of their age, their achievements and aren’t afraid to show their flair and personality.
4. Women are staking their claim
Women in their 30s and older are undoubtedly one of the most discussed consumer groups in China with many brands making use of the feminism wave. Two shows – Sisters Who Make Waves and Nothing But Thirty – have been instrumental in a different kind of representation for women in pop culture in China – older, strong, empowered and some who are divorced or single mothers.
They’re looking for experiences, adventure, beauty, self-care, health, fashion, and knowledge but they’re not only spending more on themselves. They’re also responsible for three quarters of household purchasing decisions.
Recommendations, promotions, group buying, and live-streaming influence female consumers a lot. This is reflected in their use of WeChat mini-programs, WeChat private groups and shopping recommendation communities like Red. Luxury brands are benefiting most from the 70% of global luxury spending growth thanks to China’s affluent middle class, millennials and female consumers.
Brands should avoid stereotypes in their marketing campaigns for women in this group and pay attention to consumer sentiment on Chinese social media. One thing brands can’t do is ignore this group.
If you want to make smart moves into the Chinese scene, those four emerging groups are a great bet. But in addition to those, there are three familiar groups that continue to play a big role:
1. Chinese digital Gen Z consumers still going on strong
Gen Zs were born after 1995 and are expected to make up 27% of the population by 2025. They’re digital natives who spend an average of 4.7 hours a day on their phones.
Data shows that post-95s are the major consumers of cosmetics and skincare products in China. Anti-aging concepts are popular these days, and there’s growing demand from post-95s for anti-aging skincare products.
Because of the pandemic, they’ve adjusted their priorities. More than 70% are now buying for their families instead of just themselves.
2. Middle-aged men are managing their image
In the 30-49-year-old age group, there are 11 million more men than women. For luxury and grooming products, they’re a large potential consumer group.
Male Chinese digital consumers have varied and detailed consumption preferences that change with age. In fact, Chinese men have started to care about their appearance. This trend is expected to continue throughout the years. According to China Internet Watch, about 30% of cosmetic medicine consumers in China were male in 2020.
The top three products for men in their 40s are alcohol, 3C (computers, communication, and consumer electronics) products, and watches. They also like home appliances, auto accessories, tobacco, hair loss treatments, grooming products, supplements, vitamins, and — surprise, surprise — skincare items. They’re especially interested in products that help them look younger.
3. Happily single and spending
Singles were already an up-and-coming group but since COVID-19, more have adopted the single life as a health protection strategy. As of June 2021, around 55.6 % of men and about 39% of women are single in China. The number of single people in China is estimated to reach 92 million in 2022. Some part due to the rising divorce rate in China. Single adults in China generally have more disposable income and are spending on shopping, socialising and travelling. They’re seeking experiences, enjoyment, high quality, and convenience.
Hot pot restaurant chain, Haidilao’s strategy for its single customers was to provide them with teddy bears so they didn’t have to eat alone and had a photo op for social media. Over 70% of post-90s who live alone also have pets.
A good relationship between consumers and brands is the basis for people’s brand choices. It is an important driving force for the sustainable growth of brands. The ultimate goal of any company’s brand is to become the number one brand for consumers.
In order to do this, it is important for brands to know which consumers to attract. Whether it’s the Gen Z consumer group, young adults in lower-tier cities or super parents, the key to brand success is building long-term intimacy with users.
Ashley Galina Dudarenok is a China marketing expert and founder of ChoZan & Alarice. In the fifth episode of the NEXT – SHOW series 3, she explored how China is pursuing a decades-long vision of a digitally-enabled nation, and what the rest of the world can learn from it.