The Herman Trend Alert
November 2, 2016
China's Evolving Consumers
As we move into the future, no one would dispute that Chinese consumers will be an increasingly significant group of people---in their size and effect alone. Recently, McKinsey & Company revisited their 2011 and 2013 reports, updating their forecasts.
Developing geographic differences
Not surprisingly, over 50 percent (51.27) of the Chinese population lives in cities. It is interesting to note how the economic slowdown has affected various city clusters. Brand loyalty continues to increase with the Fuzhou-Xiamen city cluster leading the way with a whopping 70 percent. Brand loyalty in Shanghai increased much faster over the last three years than in Beijing or Hangzhou, a 24 percent rise versus 7 and 9 percent respectively. Interestingly, their willingness to pay for better or healthier products also increased.
Increasing discretionary spending
Chinese consumers are following the pattern of general trends economists have found in developing economies among consumers worldwide: the more they earn, the lower percentage of their income they spend on food; they spend a little more on healthcare, and even more on travel, transportation, and recreational activities. Predictably, McKinsey's new survey showed Chinese consumers followed the expected pattern. When asked how they planned to increase spending as their income increased, significantly fewer consumers said they would spend on food (46 percent in the latest survey, compared to the 76 percent who said they would do so three years earlier).
Emerging senior market
In 2015, McKinsey found that the 55 to 65 age group had started to shift even faster than the rest of the population. Moreover, these older consumers enjoyed their indulgences, and were now more likely to have used the Internet to research their purchases.
Value and attitudes
By a wide margin, "family" continued to be the most important value to Chinese consumers. When asked what "being successful" means, 75 percent responded they agreed or strongly agreed "having a happy family" was important versus 52 percent for Òenjoying a better life than others, 48 percent for "being rich", and 47 percent for "having a higher social status".
What this information means to marketers
Wise marketers will take this information and promote and sell more effectively to Chinese consumers. Focusing on the role of products and services in supporting Chinese families will continue to translate into bottom line profits. The Chinese population represents a growing and increasingly loyal market for investment. From travel to healthcare to luxury products, marketers that invest in the Chinese market will reap great rewards.
For more information, visit http://www.mckinsey.com/industries/retail/our-insights/chinese-consumers-revisiting-our-predictions?cid=china-eml-alt-mkq-mck-oth-1610
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