Ever since in 1978 when the Chinese Communist Party started to carry out the reform and opening policy, we have witnessed rapid expansion of the Chinese economy.
From that point, foreign entrepreneurs were allowed to enter the Chinese market, and they have taken this opportunity as many international retailers and manufacturers have set foot in the Chinese market. As these growth figures looked like they were not going to end anytime soon, International firms that successfully entered the Chinese market greatly took the advantage by doing so, however, some companies who took the jump into China turned out to be a graveyard of ambition. This article is drawing the Chinese Millennials behavior, a digitally native generation.
Understanding the Chinese Consumers
The underlying reason for these firms to fail in the Chinese market is motivation based but mostly due to the lack of market research and adaptation of product and services. Going to China seemed like the solution to many companies in the last few years, whether their motivation was re-active; moving abroad due to saturation of domestic market or pro-active; the search for higher profit margins. However, it was easily neglected to a real understanding of the market and a solid motivation even though at having was more crucial than before.
When looking at the Chinese market, it is important to note several trends that are shaping the Chinese consumer of today. For instance, the drastically rising income levels that have been changing over the past years contributing to closing the income gap with the United States and forming a middle class making up of 54% of urban households in 2022 compared to 14% in 2012 in smaller cities. Furthermore, trends like the growing influence of digital and social media and the increase of computer and mobile phone usage for online shopping have a tremendous influence on what the Chinese consumer purchases and how they want to do that. In addition, the Chinese government is actively encouraging more consumers to spend as it will amount for 60% of the GDP by 2020 leading to $1trillion of consumer spending.
These trends, and at the same time the availability of unique products have shaped the current Chinese consumer.
In order to carefully address the Chinese consumer, it makes more sense to divide them into consumer groups based on age/generation and background. For this Article Generation Y is examined.
The Chinese Millenials: A Changing Generation
Generation Yconsisting of approximately 200 million of people, having a better school education, being more connected, more environmental oriented and better informed than older generations. It is a generation that truly embraced consumerism as brands play a very significant role in their daily lives. They are faced with more choices and are dealing with the internal struggle of differentiation by self-expression. For companies, it is essential to understand what these millennial need and want and what drives them in their purchase behavior. (See our latest post about Chinese Millenials at Workplace).
This generation embraced shopping as a fun leisure activity but also as a means to an end; to create a feeling of belonging. In Chinese culture, there is great emphasis on the aspect of the face (In Chinese: mianzi 面子) that is linked to social prestige and desired status in the society or relationships. This aspect is influencing the shopping behavior and drives the young consumer to purchase products that are perceived to be prestigious or of high quality, leading to strong brand loyalty as it emphasizes their unique style of belonging.
An example; Gucci’s store in Shanghai sells more sunglasses than they do anywhere in the world. Therefore, it is important for Companies to understand and to what extend their brand is contributing to the social context behind shopping behavior.
The Chinese millennials are very demanding when it comes to having the latest technology, is it like a new “space race” has started in the search for latest technology and innovations.
In today’s world latest product innovations or solutions don’t take years or months to be created but due to fast production and great logistics but also high competitions it has become a matter of days. This has to do with the fact that Innovation isn’t something seen as luxurious but more as an essential need of survival, meaning services and products continuously need improvement and adaptation to stay in the mind of the consumer.It can be said that there is a great need for fast delivery and high quality, as the young consumer isn’t used to waiting anymore as everything is easily accessible on the internet. Their shopping process is as easy as a click of a button on their smartphone or tablet and through means of social media, their prestigious purchase can be shared with all their friends.
To truly be successful with the Chinese Millenial consumer, it requires an understanding of their social needs in terms of self-expression and embracement of the latest technology that adds value to the daily life of the consumer while contributing positively to the world’s environment.
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