During the last three decades, china’s booming economy offered to many companies biggest opportunities. But, these companies must be more creative, because Chinese consumer became more to more sophisticated and strongly consider the factors like quality, brand and the value attached to the products they are buying
Chinese aged 18 to 35 are poised to overtake those born in the 1950s, 1960s, and 1970s as the dominant force in the consumer market. They became more confident about their ability to get a better paying job. In fact, there are some great forces are ushering in this transformation: the rise of upper-middle-class and affluent households as the major drivers of consumption growth; a new generation of free-spending, sophisticated consumers; and the increasingly powerful role of e-commerce. The behavior of China’s consumer have also changed, the demand for premium goods and services that enhance a personal sense of well-being such as healthy foods, education, and travel, rather than daily necessities is accelerated. “E-commerce is transforming China’s marketplace. Our research found that e-commerce actually stimulates new demand in China by filling many needs that aren’t being met by brick-and-mortar stores,” said Hongbing Gao, director of AliResearch.
Trends in consumer spending
The young up-and-coming Chinese’s consumers were reared while China was experiencing expanding wealth in its transition to a market-based economy. On average, 60 percent of them agree with the sentiment “It’s just like every year there are more things that I want to buy, and some products are just too important to me to scrimp on”. They are also, kind of people who will drive consumption growth are those who can already afford basic necessities and are finding themselves with some spare cash. Some Chinese’s consumer is likely online, where they can have access to more information and exposure to a variety of ways to spend. Demographic factors also influence Chinese consumer behavior, as young people account for a particularly large share of consumer spending in fast-growing services such as travel and education. They’re more likely to be well-educated and living in urban areas, and when they can afford to, choose better quality goods. By 2025, the consumption is estimated to account for nearly 42% of total GDP, up from the current 37%. Another component of consumption, educational services, is also growing rapidly. Chinese families now are spending more resources on their child’s education both inside and outside the classroom. Chinese families are increasingly paying for tutoring and other educational supplements for their children.
Chinese’s consumer will change the global economy
The rapid rise in middle classes in China is a new force that should be considered independently from China’s general economic ascendance. China contributes more than any other country to the global consumer expenditure growth from now until 2030. China is one of the biggest export markets for 43 countries; for comparison, the United States is the biggest for only 32 countries. However, China’s consumer landscape is quickly changing as consumers get richer. Chinese’s consumer has turned away from great “value,” where price is the most important purchasing decision factor. According a recent report, China will have 345 million people over the age of 60 by 2030, an increase of over 80 percent since 2013. With an aging population, the demand for healthcare services will increase. The health goods and medical services will see more inflation than any other consumer sector from 2015 to 2030. Tourism and education sector will also be affected. China’s outbound travel market will be twice as large as that of the United States in 2025. Western universities are already gaining handsomely from rising Chinese incomes, because almost the third of international students are the Chinese students. China’s economy appears very important and indispensable to many companies and countries around the world, and Chinese as a foreign language is becoming so popular. China’s enormous consumer market means that the country will be able to set the terms of trade deals to its advantage.
The modern Chinese consumer
China’s consumers are shifting statuses, upper middle class households are increasing, middle class and affluent consumers in small cities are on the rise and a new generation of younger, freer-spending consumers is coming to market. China’s ‘young generation’ is growing quickly in the same time with the numbers and income. Chinese’s consumers are generally becoming more selective about their spending and they are spending more of their income to experiences and lifestyle services. They also spend more on entertainment and leisure. For comparison, spending on food and beverages for home consumption is stagnating. Chinese consumers like the best and most expensive offering, a significant increase over previous years. They are now more evolving, gone are the time of discriminate on products. The priority is shifting to prioritizing premium products and living a more family-centric life, balanced and healthy.