Environmental business

Green China: Chinese consumers demand green products | Daxue Consulting

China’s accelerated economic expansion coupled with lax environmental oversight has led to a number of ecological problems within the country. Thus, the impacts of the lack of environmental protection have become a personal problem in the eyes of many Chinese consumers primarily in regards to health and safety; in light of growing public concerns and blatant environmental effects, the Chinese government has issued an era of environmental protection to push for a greener China.

At the same time, a shift in the Chinese consumption trend can also be identified as growing awareness which has increased consumer purchase of green products, such as organic foods, energy efficient appliances, products free of ozone-depleting chemicals, biodegradable or recycled products, etc. The increase in green spending puts China at the top for leading markets in the green economy industry.

Stringent government environmental protection policies

The concept of green development was first proposed by the Chinese government in 2011 as the 12th Fifth Year Plan. Enforcement of new environmental protection provisions took place in January 2015. These new provisions claim enforcement of strict penalties for failure to abide by environmental laws, and local governments are not exempt from such disciplinary actions. In 2017, the government issued the “Green Development Index,” a new measurement of regional economic growth based on 55 environmental indicators.  Some indicators include carbon emissions, energy consumption efficiency, air-quality, per-capita disposable income, in addition to research and development spending. In 2016, Beijing, Fujian, and Zhejiang were ranked the top 3. China’s central push for better ecological development demonstrates a new era of economic development in addition to environmental, as the focus shifts from a high-growth to a high-quality approach to development. This shift in focus is also reflected in the public awareness, as more efforts are being made towards sustainable living, such as making greener purchases.

JD.com predicts green spending in China will continue growing

Although companies are the main targets for these policies, the desire for a more environmentally friendly China is evidently trickling down. Chinese consumer behaviors demonstrate a trend toward a greener lifestyle. According to a 2017 report by the Hong Kong Trade Development Council, 71% of consumers have increased spending on green products in the last year. In households with an income above 20,000RMB, that proportion increases to 76%.

Green China

Reports from leading Chinese e-commerce retailer JD also revealed that Chinese consumers are increasingly turning towards sustainable goods. JD’s Trends in Green Consumption Development report examined the results of its active introduction of more green products on their platform. They found that the total volume of green purchases made increased by 71%, contributing to a 15% increase in total sales during that period. Millennials accounted for 51.8% of the total green sales purchase volume. Male consumers seemed to be most willing to buy green products, accounting for 70% of the demographic. Female consumers are least sensitive to price when it comes to beauty and childcare products as they are willing to spend more on greener ingredients. JD states that these trends are likely to grow as awareness of environmental issues becomes more ingrained in the public consciousness, and more companies learn to accommodate the increasing demand for green development.

Health concerns and environmental awareness are driving consumption

Following the trend of living a healthier lifestyle with more exercise and healthier food choices, the growing preference for a more balanced living in many aspects of their lives drives the Chinese demand for use of greener purchase choices. The Chinese are also becoming increasingly selective about their spending. As disposable income continues to grow and varieties of products entering the market daily, Chinese are more inclined to spend extra on what they believe are the most premium products. Green products are often seen as a premium product as they are not only come with health benefits but also promote environmental protection for a more sustainable living.

Author: Julia Qi

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