CHINESE MARKET OVERWIEW

Understanding the mindset and preferences of Chinese consumers is the key to the China market.

The Chinese market is characterized by the fact of:

  • It is not a single market but made up of different groups and regions with different needs and experiences.
  • Social media mania is everywhere, social media marketing, and mobile payments by using Alipay and Wechat pay are the kings.
  • Purchasing power is affecting the whole country and e-commerce platforms are facilitating consumption.

While old ideas and stereotypes may persist, Chinese consumers are the most sophisticated and spoiled in the world. The China market is currently flooded with a wide variety of domestic and foreign brands offering a vast array of products. However, with increasing purchasing power, there is still an eagerness for novelty and even more quality choices.

Modern Chinese consumers prioritize product quality, they expect high caliber personalized products and services that are reasonably priced.

Having said that, to truly understand the Chinese consumer, one must look at their behavior. Chinese consumer behavior varies across different age groups. This article will identify and explain the differences between these generations.

CHINESE CONSUMERS GROUPS

CHINESE CONSUMER GROUPS IN CHINA

There are different types of consumers and markets in China. Each of these has its own characteristics and preferences.

The new middle class

The vast majority of them are urbanites who live in highrises rather than suburbanites who live in detached houses. They have enough leisure time and spending power to be able to seriously consider lifestyle choices. They generally spend less than 50% of their income on necessities and are willing to spend more on life experiences, fine dining, wellness, lifestyle products, and affordable luxury products.

Tuhao 土豪 roughly translates as “new rich”

Since many tuhao are from poor or working-class backgrounds and became suddenly wealthy, they feel a need to broadcast their new status with ostentatious displays that are often seen as tawdry or lacking in sophistication by younger generations who have grown up with different ideas about fashion and taste.

Maturing millennials

Chinese millennials, between 20 and 39 years old, are hitting prime consumption age. They are more demanding and more willing to spend. They want good products and services and they want them fast. They are eager to lead a quality life, instead of merely satisfying their basic needs.

Chinese millennials grew up during China’s economic reforms and the digital revolution that brought increasing global connectivity. That’s why they are advanced at e-commerce participation and at integrating tech into everyday life.

They are health, wellness and fitness conscious, brand sophisticated, and are trading up to premium, luxury, and foreign products in the cosmetics and body care categories.

 

The Younger Generation: Post-00s / Gen Z

This young generation is more brand conscious, more likely to have engaged in overseas travel and digital consumption. They are well-versed in getting discounts.

About KOLs, they are more likely to respect influencers who demonstrate knowledge and expertise.

 

Single young people

They spend more money on entertainment and recreation (including e-sports, animation, comics, and videos), tourism, personal products, cosmetics, small household appliances, and vocational training.

Social media influencers and Kols are important to this group, so the use of Kols on social media should be the first way to do marketing with this group.

 

Young men

They spend more on haircare, clothing, fitness, and grooming products. They do a lot of their shopping online, so a useful strategy is focused on a strong presence in e-commerce platforms.

 

White-collar women

They are willing to spend on quality makeup and unique yet trendy clothes. They lead workaholic lifestyles and like to dress well.

 

Young urban couples

A favorite pastime for couples with children is finding and investing mostly online, in safe products, educational toys.

Some young couples prefer to spend money on health supplements, fresh fruit, sporting goods, quality skincare, travel opportunities and red wine. They are also strong consumers of service including travel, healthcare, entertainment and personal care.

They are mobile phones addicted.

 

Young mothers

They seek advice in person and online from other mothers who they trust and do a lot of other research before making purchasing decisions. They buy most beauty products and household appliances.

For this group a KOC (KEY OPINION CONSUMERS) strategy could be the best choice. KOCs are consumers like everyone else. They have a few hundred followers and are almost entirely involved in product reviews. They inspire a lot of trust in other users.

 

Senior citizens

They are cultivating their own interest and traveling, meanwhile, health products and medical services are also in strong demand with this group.

 

 

CHINESE CONSUMERS BEHAVIOR

DIFFERENT CHINESE CONSUMER BEHAVIOR

Chinese consumers want products immediately

A Key characteristic of a Chinese consumer is that they want to experience pleasure without delay. Especially the new generation who want delivery within two hours or half a day rather than one day.

Due to the rise of social media as e-commerce platforms where people can buy products by using payment platforms directly on their phones, Chinese consumers don’t even need to leave social media platforms to buy products, because WeChat mini-programs facilitate this need.

Other platforms like XiaoHongShu and Weibo have added these features.

 

Omnichannel Shoppers

These marketing techniques enable the customer to stay interested in the brand and links with their need for instant gratification and constant social media validation.

95% of Chinese shoppers identify as omnichannel shoppers.

This behavior has seen brands such as Sephora integrate various platforms and marketing strategies to engage with their customer base on a variety of different channels including T-Mall, JD.com, WeChat, and its own website Sephora.cn.

SEPHORA-CHINA-website

 

Chinese Woman as an opportunity for brands

Women have a strong impact on household purchasing decisions in China, with many having complete control over the household’s finances.  Chinese women are becoming more and more independent representing an opportunity for brands across China.

Chinese women are proud of what they have accomplished and want to let it show buying expensive cars or luxury handbags.

For Chinese women, their choice of spending for the coming year can be broken down into four key areas according to Nielsen China:

  1. Vacation/hiking 54%
  2. Children’s education 46%
  3. Recreational activities such as the cinema etc. 44%
  4. Self-improvement 29%

Chinese women have begun to place value on autonomy, ego, and confidence, therefore brands should focus their marketing on these labels in order to successfully captivate them.

 

Being single is becoming the norm

There has been a cultural shift in terms of dating in China. Marriage is being delayed with being single becoming the norm as young Chinese people set their expectations for dating higher and higher.

This shift has created a ripple effect on the types of services and products young Chinese people are purchasing, and it has led to many brands launching campaigns specifically designed to target single Chinese consumers.

The popular hot pot restaurant chain, Haidilao, has begun providing Teddy bears for customers eating alone. This not only helps the restaurant better appeal to single diners but was also great for creating some buzz on Chinese social media.

 

Mobile devices addicted

The number of people accessing the Internet via mobile devices (phones, pads, etc.) in China reached 817 million according to SCMP’s China Internet Report. This method of consuming the internet has altered Chinese consumer behavior to favor convenience and efficiency.

However, the Chinese consumer is far more demanding, requesting more information about products and the company than shoppers anywhere else in the world, due to several scam sites in China.

In addition, with daily phone usage at such a staggeringly high rate, a culture of immediate internet reviews has been fostered. Chinese consumers value brands’ responses to their comments, criticism, and questions on social media. represents a significant opportunity for brands to improve their consumer perception with little investment.

 

“Saving face” or “Mianzi” culture

Face is perhaps one of the most important aspects of Chinese consumer behavior. The term face is often equated to ego, with a bit more nuanced as it is derived from traditional Chinese culture.

Chinese face is a way of receiving immediate recognition from others to maintain and/or enhance one’s status in society.  It is associated with: dignity, honor, and pride with many Chinese willing to pay more for goods and services in order to save face.

Chinese people purchased and used global brands to save face and maintain sound relationships within their social circles. Global, imported brands, in their mind, attract more direct and immediate positive attention – thus enabling them to gain more face.

This aspect of Chinese culture is also shown on their importance and attention of a product’s packaging. Chinese consumers will most likely always favor an item with better packaging, even if the product is of lower quality.

 

The importance of tradition and culture

Chinese consumers, and also the new generation, have a sense of national pride and it would be a mistake for any brand to think they are neglecting previous traditions and cultures.

peppa movie chinese lunar year

In 2019 Peppa Pig release a movie for the years of the Pig. The infomercial was touching and highlighted Chinese family values.

Incorporating Chinese tradition is important, but it’s even more important to do it in the right way. In this case, the choice of an agency with a team also made up of Chinese is the best solution, given the difference and complexity of Chinese culture.

 

THE IMPORTANCE OF SOCIAL MEDIA MARKETING

 

Unlike before where the Chinese looked more at the low cost and usefulness of an object, today they focus on value and quality.

There are many national and international brands and Chinese consumers have great expectations.

Given the sporadic use of social media in China, they are very important marketing strategy and the best way to increase your brand awareness.

What a company should focus on, for a successful marketing strategy, is its target market and from that choose the most suitable social media and e-commerce platforms.

 

SOCIAL MEDIA PLATFORMS TO REACH CHINESE CONSUMERS

As before We talked about Chinese social media platforms like Wechat, Weibo, and Xiaohongshu. It is important to better know what they are.

Wechat

WeChat has grown to become the most popular social and mobile app in China where it has over 1.1 billion registered accounts.  This social media platform allows users to send text and voice messages to each other as well as play video games, watch videos, shop and pay via mobile payments. WeChat  mini programs that essentially operate like a separate mobile app, except that they function within WeChat. WeChat offers a completely seamless, mobile-first consumer experience where brands can increase awareness and loyalty.

Weibo

Sina Weibo (新浪微博) is a Chinese microblogging website similar to Twitter. Launched by Sina Corporation on 14 August 2009, it is one of the biggest social media platforms in China, with over 445 million monthly active users.

It is where celebrities, brands share their thoughts and feelings, it is the best source of news and gossip.

KLORANE-WEIBO

 

People post something and others can comment or repost. The posts include images, texts, articles, videos via Miaopai, live streaming via Yizhibo, and external links on e-commerce platforms to buy products such as Taobao and Jumei.

In April 2020, Weibo has also decided to dive into the world of social commerce and launched its Weibo Store. The Weibo window gives you the function of direct sales through the collaboration of e-commerce sites such as Taobao and Tmall through links. This could be a huge opportunity for brands.

Xiaohongshu

The Little Red Book app, known locally as Xiaohongshu, is an app intended for women between the ages of 18 and 35 to share shopping tips and product reviews. In 2014, the platform launched its cross-border e-commerce platform called RED store in response to the high demand for foreign luxury goods. This app allows Chinese consumers to purchase products from abroad directly from the app. RED has many partnerships with international brands, which makes it much easier for customers to receive authentic experiences.

 

 

E-COMMERCE PLATFORMS ARE FACILITATING CONSUMPTION FOR CHINESE CONSUMERS

The choice of a e-commerce platform depends on your target market and your products. Here are the most useful e-commerce platforms.

Pinduoduo

Pinduoduo ( 拼多多)is an e-commerce platform allowing users to participate in group buying deals.

It was founded by Colin Huang as Shanghai Dream Information Technology Co., Ltd. in September 2015.

Pinduoduo has seen explosive growth since its launch in 2015, becoming one of the largest e-commerce apps in China. Although Taobao and JD.com are still the market leaders, Pinduoduo is the app that benefits from the best loyalty rate. And the number of monthly active users is no less interesting: 114 million are those of January 2018.

Overall Pinduoduo boasts a base of 300 million users. 65% come from third-tier cities and beyond, only 7.6% come from first-tier cities

Most of the users of Pinduoduo are female, over the age of 40 and live in the third and fourth-tier cities.

It is a price-sensitive target, which makes frequent purchases and often for the whole family. Users who do not have much experience with e-commerce, but who once known the medium could bring high long-term profits.

Tmall

Tmall.com (天猫) is a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao, operated in China by Alibaba Group. It is a platform for local Chinese and international businesses to sell brand name goods to consumers in mainland China, Hong Kong, Macau and Taiwan.

In November 2010, Taobao Mall launched an independent web domain, Tmall.com, to differentiate listings by its merchants, who are either brand owners or authorized distributors, from Taobao’s C2C merchants.

In general, Tmall also enjoys a reputation for greater reliability in terms of product originality.

A quality that, not only is gaining the consensus of an increasingly large slice of buyers but which also justifies an average higher selling price.

If you are an entrepreneur in charge of a company, and your typical customer is the consumer who is attentive to detail, who often likes luxury or, simply, your product is high-end, Tmall is the channel that I recommend.

JD.com

Jingdong (JD.com) is also known as formerly called 360buy. It was founded by Liu Qiandong in 1998. Jingdong is one of the largest e-commerce platforms by transaction volume and revenue in China, headquartered in Beijing. Jindong is also a member of the Fortune Global 500, additionally, this platform nowadays is a major competitor to Alibaba-run Tmall.

The platform has 266.3 million active users, according to the  JD.com Announces Third Quarter 2017 Results. Moreover, JD.com is the leading company in the world in terms of high tech and AI delivery through drones, robots, and autonomous technologies.

JD.com is an eCommerce platform that boasts an incredibly wide range of products that includes categories such as cosmetics, fresh food, clothing, and much more. The fastest-growing products in terms of sales are cosmetics, food and electronic products. Therefore JD offers incredible opportunities to foreign suppliers.

 

Kaola

Kaola is an e-commerce company part of the NetEase group (group listed on NASDAQ).

The platform provides online sales of various imported products via cross-border e-commerce. The products range from cosmetics, household products, food supplements, to clothing, and accessories.

All foreign products on the platform are managed and purchased directly from local suppliers through various factories around the world. The goods are shipped directly from the country of origin and stored in the customs warehouses in China under the control and surveillance of the customs office and the CIQ (China exit-entry Inspection & Quarantine Bureau) or the office that inspects and monitors the incoming and outgoing products that pass through the Chinese border.

Kaola signed an agreement with the Chinese customs office to implement a traceability system to allow consumers to more easily trace the origin of the product by scanning the QR code.

Kaola also offers various promotions including daily offers, member offers, special coupons and more, which attract many Chinese consumers looking for foreign goods and affordable prices.

 

GMA AGENCY

Do you want to know more about implementing your best digital marketing strategy for Chinese consumers? Contact GMA a digital marketing agency, specialized in the Chinese digital market.

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