Mark Tanner
Mark Tanner
28 May 2014 0 Comments

There’s a lot of talk about Chinese consumers buying things just to project their status.  Whilst this is an important factor for many shopping decisions, Chinese consumers are increasingly making discretionary purchases that few people will see.

One example of this is the 47% of urban Chinese who spent more on food consumed at home this year according to Mintel, even though they are dining at restaurants more often. This reflects a number of evolving traits of maturing Chinese consumers.

The first trait is the health factor.  Chinese are becoming more aware of their health and poor environment, and are less likely to skimp on purchases that they perceive will make up for this.  They are spending more on expensive Western food and beverages which they consider to be safer and healthier.

Secondly, although many Chinese may still share their home-cooked delights on social media, they’re consuming more premium food and beverages because they enjoy them, and less because they want everyone to see them indulging.  This is also similar across many categories from the experiences Chinese want when they travel, to the types of luxury goods and services they buy.

Thirdly, how Chinese see their ‘shoe box’ apartments is slowly changing.  For a start, those ‘shoe boxes’ have ballooned, with the average Chinese person living in a housing area of 32 square metres, more than triple the 9 metres they lived in 35 years ago.  Homes are becoming less of a functional place to live, and more of a space to enjoy, entertain and express themselves.  They’re spending more decorating their homes, as growth in stores like Ikea show.

Lastly, Chinese are becoming more affluent overall and are using their extra income to indulge in the finer things in life – especially the younger consumers.

While there will long be examples of consumption just for show in China, there are more and more examples of those that aren’t.  That bodes well for many foreign wares. We hope you enjoy this week’s Skinny.

Consumers, Chinese Consumers

Pre-95s: A New Breed of Chinese Consumers: Chinese consumers born between 1990-1994 don’t readily agree with “saving money for future” or “I don’t need to buy new things as long as old items haven’t broken down.” This segment spend 28% of their incomes on main personal items such as apparel, shoes, telecom, cosmetics and Internet, compared to 19% for those born in the 80s and 17% for the 70s kids.

Search, Shop, Spend: Unleashing the Chinese Digital Consumer: 1 hour vid: Chinese diners spend 35% less time eating meals than they did ten years ago, and are seven times more likely to visit a restaurant. Chinese consumers have much more of an emotional connection with the Internet than the functional users in the West. Online transactions and social media are like comfort food, especially for the ‘lonely’ one-child generation – only viewable outside China.

How Small U.S. Businesses Can Court Customers in China: “You need to find the best way of making a Chinese customer in front of a computer comfortable with the fact that you really have a brick-and-mortar company on American soil.”

USA Exports to China Reach $120 Billion in 2013: 32 states exported more than $1 billion worth of manufactured products, chemicals, electronics, machinery, and agricultural goods to China. USA exports to China have grown faster than any other trading partner, growing 255% in the past decade, with 47 states experiencing at least triple digit growth.

Chinese Consumers Avid Viewers of Adverts: 78% of Chinese consumers are willing to view ads if they’re relevant to them, chiefly because of the time they spend on smartphones. 33% of consumers are willing in the UK and 29% in the US. Mobile advertising in China is expected to grow 27% yearly through to 2017 to ¥165 billion (US$26.5 billion).

Premium Food & Beverage

Consumers’ Maturing Tastes Present Huge Opportunities in Food and Food Service Sectors: 47% of urban Chinese consumers report spending more on food to be consumed at home this year. Western foods grew the fastest, rising 20% a year between 2008-2013. Bread, sweet bakery, cheese, and pasta have grown at a rate of over 30% annually over the five years. The highest growth for premium food and beverage products is expected to come from lower-tier cities in the coming years. Consumers are also drinking more spirits at home, pointing to more entertaining there.

How “Six Walnut” Grabbed Attention of Chinese Consumers: A clever name, selling in restaurants and promoting Six Walnut as good for brain nutrition has helped the beverage sales double every year since launching in 2005, and is expected to break the ¥10 billion ($1.6 billion) sales mark this year.

Online: Internet, Mobile, Social Media & eCommerce

Xiaomi Breaks Into Global Top 10 for Smartphone Shipments, Kicks Out HTC: Of the 279.4 million smartphones shipped globally in Q1 2014, China accounted for 97.5 million of them. Xiaomi, which ships 97% of its devices in China, joins five other Chinese brands in the global top-10. In a move which will create more sales, Xiaomi has unveiled its first tablet, the MiPad, with prices starting at ¥1,499 ($240).

China’s Online Retailers Gain From Gender Gap: A third of Chinese online consumers shopped more than 40 times in 2013, and 59% of those frequent shoppers were women. Although Chinese women’s incomes are lower, they are more likely to spend on themselves than Chinese men. If they found themselves with extra money, Chinese women say they would spend on clothing and health products, while also setting some aside as savings. Online sales of apparel and footwear grew 57% in China in 2013.

Alibaba to Promote French Brands in China Under New Deal: French brands can now get express enrolment, brand promotion and marketing support on Tmall.

Wellness, Beauty

Holding a Mirror to China’s Beauty Boom: Chinese consumers perceive beauty purchases as investments in their career, private life and social success. Last year $25.9 billion was spent on beauty products in China, making it the country’s fourth largest sector for discretionary expenditure. White collar women spend 30% of their total income on cosmetic treatments and products. 73% of Chinese men in Tier 1 cities believe that looking good is essential for success with both women and work.

Recreation and Entertainment

Chinese Movie Executives Descend on Cannes: Up to 400 delegates from China’s movie industry were expected to be in Cannes this month – likely to be the forth or fifth most represented country at the festival, up from eighth last year. With China’s box office exceeding $4 billion last year, Cannes has increased its focus on the world’s second largest movie market, providing master classes and workshops for Chinese insiders. China co-hosted the opening night party and director Jia Zhangke is on the jury.

Banking, Property

Housing Misery Maps Going Viral on China’s Weibo: Although China’s house price growth seems to slowing, they are still very pricey versus the average [official] wage. Nine Chinese cities would take 13 years worth of the average wage just for the down payment on a small apartment.

Cars and Auto

Chinese Consumers World’s Most Willing to Buy Cars Online: 97% of Chinese respondents in a global survey said they post, or intend to post, their vehicle experience to social media. 61% of buyers said they’d be likely or very likely to purchase a car online, versus 28% in Britain. Just 14% said that they would only buy from a dealer.

Tesla Motors: Gauging The Chinese Consumers’ Mindset: Electric cars aren’t something many Chinese consumers are considering at present. Their focus is on practicality, “if they think a new technology, no matter how appealing, might expose them to some hang-ups or unresolved issues, they will drop the idea.”

Half of Chinese Consumers Say They Wouldn’t Buy a Japanese Car: 51% of Chinese say they wouldn’t consider buying a Japanese car, with just over half blaming personal anti-Japan feelings. The backlash is the highest in China’s smaller but growing cities such as Changsha, Dongguan and Xian where most of the future growth of car sales is expected. Chinese see Japanese cars as more economical and comfortable than German and American cars, however most Chinese still really want a German car.

That’s The Skinny for the week!  We’d love to discuss how we could help with your marketing, online initiatives or research to take advantage of China’s opportunities.  Just email us at info@chinaskinny.com or call us at +86 21 3221 0273 so we can learn more about your objectives and let you know how we can help.

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