In recent years, there has been a notable increase in discussions about the concept of consumer spending, especially on consumption downgrade. Chinese consumers, impacted by the prolonged pandemic, are increasingly inclined to save more and spend less.
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Social media poll reveals mixed responses to consumption downgrade
On Weibo, the hashtag #A 5.9 yuan (US$0.81) foundation liquid with daily sales of 50,000 units has skyrocketed 100 times# (5.9元粉底液日销5万单暴涨100倍) started trending in the last week of October, garnered over 140 million views. Shocked by its exceptionally low price, many netizens have raised questions about the legitimacy of the product. However, according to Bevol (美丽修行), a Chinese skincare ingredient checker app, this domestic foundation liquid not only has “all green” ingredients but also includes over ten skincare components.
Social media poll reveals mixed responses on consumption downgrade
Another hashtag trending simultaneously is #Eyebrow pencils consumption downgrade# (眉笔 消费降级). The discussion surrounding whether eyebrow pencils are overpriced first began due to an incident in China’s beauty influencer Li Jiaqi’s livestream, during which he questioned a netizen if she had worked hard enough to afford a $11 Florasis (花西子) eyebrow pencil, leading to a strong backlash.
According to a poll under the hashtag #Do you feel like you have downgraded your spending# (你感觉自己消费降级了吗), half of the respondents revealed they had reduced their consumption, whereas another half said they had maintained the same level as before?
Key implications for businesses in China
Emphasizing value is paramount as consumers increasingly seek it in their purchases. Businesses can underscore the value proposition of their products by showcasing quality, functionality, and cost-effectiveness. They may employ strategies such as bundling products or implementing loyalty programs to incentivize repeat purchases. Moreover, customer engagement and loyalty are equally crucial, achieved through personalized marketing, exceptional customer service, and loyalty initiatives. Cultivating loyalty ensures that customers continue to invest in a brand, even amidst economic uncertainties and changing consumption patterns.
Changing dynamics in Chinese consumer spending
- Some Chinese consumers are saving more and spending less due to the prolonged pandemic. There is a particularly low anticipation of the upcoming Double 11 shopping festival.
- Low-cost beauty products, such as a 5.9 yuan foundation, have gained attention on social media, sparking discussions about the legitimacy and affordability of such products.
- There is a trend of consumption downgrade in China, with discussions around the affordability of items like eyebrow pencils. To adapt to changing consumer behavior, businesses should focus on value, emphasizing quality, functionality, and cost-effectiveness, while also fostering customer engagement and loyalty through personalized marketing and exceptional service.
