Relying on Alibaba’s data, Bain identified eight strategic segments of China’s online consumers that collectively account for 80% of FMCG platform users and represent over 90% of gross merchandise volume:

• Rookie White Collars
• Wealthy Middle Class
• Supermoms
• Small-Town Youth
• Gen Z
• Urban Gray Hairs
• Small-Town Mature Crowd
• Urban Blue Collars

Rookie White Collars are educated people in their early 30s who live in tier 1–3 cities. Their careers are advancing. They work in a fast-paced environment and greatly value convenience—hence, they prefer online shopping.

They represent higher per-capita spending on Tmall and Taobao, with annual spending growth of around 20% from 2016 to 2018 according to Bain’s report.

Wealthy Middle Class consists of financially stable consumers, typically in their early 40s in tier 1–3 cities, and primarily work as civil servants or in corporate middle or senior management.

They are less passionate than their younger counterparts when buying the latest new products. They are more rational consumers, they value quality, and a higher proportion of their online purchases are premium products.

Supermoms are women who are pregnant or have children under the age of 12. They live in Tier 1–3cities and are concerned about raising healthy families while taking great care of their own careers—and their own health and beauty.

They are the main shoppers for their families and are willing to pay a premium for convenience. Among all groups, they have the strongest spending power. It is reflected in the number of categories and brands they buy, their shopping frequency and the amount they spend.

Gen Z consists of students or others born after 1995 in tier 1–3 cities. They are digital natives. Unlike their older counterparts, they value trendy items over established brands and are major fans of insurgent brands.

This group represented the fastest per-capita spending growth on Tmall and Taobao FMCG, with per-capita spending growing 30% annually from 2016 to 2018.

Small-Town Youth are consumers in their 20s in tier 4 or smaller cities. They take their cues from big-city youth, eagerly following the latest urban trends. Without the pressure of exorbitant housing prices, they have considerable disposable income at their fingertips.

The slow pace of life also provides them with enough time to enjoy games, video streaming, and other online leisure activities. Their income and free time make them a huge potential force in online shopping.

Urban Gray Hairs are consumers born before 1970 who live in tier 1–3 cities. The majority of them are retired and have substantial pensions. This group could be considered a hidden gold mine for online sellers.

They now spend relatively little online. In fact, their per-capita spending dropped 20%annually from 2016 to 2018.

Small-Town Mature Crowd consumers are older than 35 and live in tier 4 or smaller cities. With their slow pace of life, they typically have an abundance of time to watch videos or news online. They make most of their purchases offline, a preference that allows them to socialize with acquaintances face-to-face.

They registered the lowest per-capita FMCG spending on Tmall and Taobao of any group in 2018.

Urban Blue Collars are less affluent consumers in tier 1–3 cities who are typically engaged in such professions as catering, transportation or retail. They are familiar with the same e-commerce infrastructure and online channels that influence their middle-class counterparts.

Compared with the Rookie White Collars or Wealthy Middle Class groups, they are more concerned about value for their money when shopping online and tend to buy fewer items. Their per-capita spending on Tmall and Taobao is far below that of middle-class shoppers and grew at a relatively slow 5% rate from 2016 to 2018.

Bain also suggested 4 steps on how brands can win:

1. Clearly understand the targeted strategic consumer groups and their preferences in products and content/promotion channels
2. Identify key growth drivers to customize a category- and brand-specific strategy
3. Optimize product portfolios, marketing, and channel strategy—choosing key growth initiatives for reaching and converting targeted consumers
4. Systematically review and continuously improve strategic initiatives

CIW annual subscribers can download the report here.

The number of middle-class households in mainland China has reached 33.2 million as of August 2018, more than half of which are in Beijing (17.54%), Shanghai (17.35%), and Guangdong (15.19%) according to a Hurun report. Ranking by regions, East China retains the highest density with more than 14.84 million middle-house households, accounting for over 40% of the total. Over 10 million out of the 33.2 million households are the new middle-class. 

The annual household income of China’s middle class is at least 300 thousand yuan (US$43.5k) in tier-1 cities or 200 thousand yuan (US$29k) in other cities.

Besides the wealth, the new middle-class is also well educated with steady living status, owning at least a house in habitual residence and a work with a competitive salary. China’s new middle-class is less than 30% of the total middle-class. Post-80s become the main force of the new middle-class, and there are post-70s and post-90s. And, they consider themselves as middle-class.

The average age of the new middle-class group is 35. They have a Bachelor’s degree or higher education level and prefer trending topics such as financial investment and TMT (tech/media/telecom). Normally, they have already made it to management positions or become a professional freelancer.

They are no longer satisfied with just a house, car, or consumption capacity; they pay more attention to improve self-cultivation and life quality. They have been developing the habits of reading, working out, and traveling.

Post-80s, being at an average age of 33 and making advances in their careers,  care about self-investment. They start to bear the responsibility of taking care of both their parents and children. The aging population comes along with the shortfalls in pension provisions. They try to find a balance between work and family.

Nearly half of new middle-class have more than 20 days of paid leave in addition to the public holidays everyone enjoys. The younger post-90s enjoys the longest length of holidays. In contrast, holidays for those living in new tier-1 cities are 2 days less than others.

Traveling (53%) and workout (40%) are the two most popular entertainment activities among China’s new middle-class.

They do care about physical status and are highly enthusiastic about exercising and working out. That has become a major part of their everyday life. Among them, post-90s are the most active group as over half of them do the workout at least four times a week. However, they do not feel more satisfied with their body figure than post-80s and post-70s.

On average, the new middle-class went on 5 private person-trips in the past two years. Post-90s traveled the most, with 17% of them traveling more than 9 times. In terms of themes, 69% of them chose leisure travel and 37% traveled together with parents or children.

75% of the middle-class feel happy. Wealth status is the most influential factor in the sense of well-being compared with household life and work satisfaction. Though women report being happier than men among this group, the difficulty in balancing work and family is the prime reason for a lower satisfaction, especially among the post-80s who are at the peak earning age.

The new middle-class’s feelings of well-being declines across the age group. Post-70s’ the least happy while post-90s’ the happiest. Furthermore, those living in tier-2 and tier-3 cities are happier than others.

Child care and education (45%), as well as financial management (42%), are the two biggest sources of anxiety among China’s middle-class.

The new middle-class in China also have such kind of worry about falling out of the middle-class if they fail to maintain or appreciate the value of their assets. On average, they have 1.08 million yuan (US$156.61k) investable assets. Their problem is how to manage those assets.

74% of them aim to steadily increase the value of assets and 23% just want to maintain the value of assets. Currently, they mainly rely on traditional financial products supplemented by internet finance. They have low intentions for real estate and P2P leading in order to avoid risks.

This article is an excerpt of CIW eBook “Meet China’s New Middle Class“.