Chinese technology companies such as Alibaba, Tencent, and Baidu have long been technically ready for their staff to work outside the office. But, remote working to the majority workforces in China remains new and uncomfortable.

As China continues to fight the coronavirus, remote working is no longer an option but a necessity for many. Communication and collaboration platforms are essential to remote workers; Alibaba’s DingTalk, a.k.a. Dingding in the Chinese version, has seen a spike in demand in China.

It has surpassed social messaging apps in popularity on Apple’s App Store for the first time as companies tell employees to work remotely due to the novel coronavirus epidemic.

DingTalk responded quickly to release free solutions for workers staying home including contacts management, attendance, video conferencing, cloud drive, group streaming, task coordination, and etc. It even offers a beauty touch-up for those who do not have time to dress up before making a video call.

DingTalk has set up a special 24-hour team as the number of users rose to about 200 million, according to Daily Economic News. The interests over both DingTalk and WeChat Work (separate app from Tencent that integrates with consumer app WeChat) have skyrocketed as indicated by the search data from Baidu:

Enterprise version of WeChat, or WeChat Work launched in 2016, has also seen fast growth over the past two weeks. It allows up to 300 people to join video calls while DingTalk allows up to 16 people. Tencent also offers Tencent Docs for online document collaborations while Alibaba offers Yuque (technically by Ant Financial team but used by all Alibaba teams).

Huawei also promoted their teamwork platform WeLink and Kingsoft’s WPS office software suite also has some popularity in China for their collaborative online work. Both provide their services for free. WeLink is more focused on security considering the nature of Huawei’s business.

Feishu, a team collaboration software from ByteDance, is also offering SMEs the business version for free for three years.

NASDAQ listed Zoom Video Communications is benefiting from the coronavirus outbreak. And, it also wants to help Chinese businesses:

But, the dedicated domain doesn’t have a fully localized Chinese page. Even the sign-up page is in English. Nonetheless, Zoom has some level of awareness in China; some MNC and technology companies like ByteDance use Zoom.

Baidu is also offering its solution Baidu Hi; but, it doesn’t seem to be seriously promoted at the moment. DingTalk is a winner; and, WeChat Work and Feiyu both saw some traction.

Continue reading Acquire, convert, and retain customers through WeChat Ads + WeChat Work or check out Rocky’s China Digital Trends podasts via Apple Podcasts, Google Podcasts, Google Play  or Spotify.

In spite of the fact that it’s possible the development rate for Chinese shopper spending will be somewhat lower in 2019 than in 2018, the Chinese keep on expanding their spending by a significant edge and are anxious to pay for things with a solid offer.  McKinsey’s most recent China Consumer Report released this month highlights five trends for 2020:

1. Young, free-spending consumers in lower-tier cities are today’s growth engine.

2. Most Chinese consumers are increasingly discerning, savvy, and frugal about their spending.

3. The health-conscious movement is here to stay.

4. Chinese consumers continue to be more sophisticated travelers.

5. High-end Chinese brands are increasingly appealing.

Download the report here (annual Standard/Premium subscribers).

During the National Day Golden Week (October 1-7) this year, online consumption is showing trends towards refinement, efficiency, and intelligence. Traveling is still the main way people spend their holidays. Overall, both consumption and tourism have shown trends of reshoring from abroad to domestic market and expansion from the first- and second-tier cities to the low-tier cities.

Conspicuous consumption is increasingly popular among Chinese. Data from Tmall shows that from October 1st to 3rd, compared to the same period last year, the sales of aromatic essential oils increased by 239.64%, perfumes by 50.59%, men’s makeup by 69.91%, sunscreens by 79.30% and makeup travel sets increased by 43.49%.

On the eve of the Golden Week, the sales of medical masks for sunburn repair and moisturizing on the Tmall’s healthcare platform showed a 510% increase compared to last year.

Foods and drinks is an ever-lasting theme for holidays in China. Consumers want to eat fresh food conveniently. In the first three days of the Golden Week, the sales of steaks increased by 60%, low-temperature milk by 191.39%, instant food and instant rice by 40.69% and 54.78% respectively, compared to the same period last year.

Tmall Supermarket’s data shows that from October 1st to 3rd, the number of people participated in the flash sale of Maotai (arguably the most famous Chinese liquor) reached 3 million. The sales of liquor increased by 12 times compared to last year. The total turnover of Tmall Supermarket increased by 40% compared to last year.

Hema, the new benchmark for retail, has opened 171 stores in 22 cities across the country. In the first three days of the Golden Week, the average daily sales of Hema stores across the country increased by 22% compared to normal days. In Beijing, Shanghai, Guangzhou, and Shenzhou, the increase was 17.5%; and in second- and third-tier cities, the increase was close to 30%.

Many people who do not want to travel and see crowds of people have chosen to spend their time shopping and eating in Hema stores. According to data from Hema, in-store consumption in the first three days of the Golden Week increased by nearly 30%. The top ten best-selling products were all seafood. The sales of king crabs increased by 3,000%, compared to the same period last year, and over 40,000 Yangcheng Lake hairy crabs were sold.

Home living has become increasingly intelligent. From October 1st to 3rd, on Tmall, the sales of indoor fresh air systems increased by 111%, electric curtains by 168%, home security cameras by 84%, robot cleaners by 17 times and electric mops and brooms by 23 times, compared to the same period last year.

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New energy vehicle is the hottest theme of this year’s Beijing Auto Show. Kantar TNS Auto expert summarizes major trends in this sector.

China is the world’s largest auto market. Its annual auto show, which is held in Shanghai and Beijing in turns, has become one of the most important events for the world’s auto industry. This year’s show is being held in Beijing’s China International Exhibition Centre, New Venue from April 25 till May 4.

Given that new energy vehicle is increasingly becoming mainstream in China, I noticed some major trends in this sector during my trip to the mega exhibition.

Many traditional automakers launched new plug-in hybrid electric vehicle (PHEV) models for today’s China market. Apparently, PHEV has become the main route towards the next phase of the new energy revolution in China.

Ford, for example, launched its first new energy vehicle for the Chinese market: Plug-in hybrid version New Mondeo. Chinese car maker Geely also unveiled plug-in hybrid sedan Borui GE, which is due to hit the market within this year. Compared with previous hybrid cars using gasoline engines to recharge batteries or to power the electric drive motors, plug-in hybrid vehicle represents a step towards a pure electricity driven car era.

Compared with plug-in hybrid electric vehicles, pure electric vehicles have made more noteworthy progress in designing. Previously, automakers have kept the external designs of new energy vehicles similar to gasoline versions – in some cases even exactly the same.

Now, pure electric vehicles, regardless from traditional car makers or disruptive newcomers, have more distinct exterior designs compared with fossil fuel-based vehicles.

The body design and interior styling of electric cars distinctively emphasize on simplicity, streamlining and futuristic design, as well as fully loaded technology features, such as intelligent user-interface, connectivity, and self-driving features. Car makers wish to impress car buyers to provide them with easier, simpler, smarter but at the same time more customized services.

BYTON, one of the high-profile disruptive car makers and founded by a team led by former BMW senior executives, unveiled its CONCEPT car and became one of the most attractive new launches during the show.

In fact, traditional car makers are also rolling out sexy concept cars, such as ICON from Geely:

Pure electric vehicles have become more personalized: automakers are not rolling out just one or two models, but various models designed for very specific car buyer segments. BAIC, for example, displayed its two-seat pure electric LITE in 12 colors for 12 zodiac signs. It will also roll out models with different driving ranges to cater for the needs of different buyers, such as single buyers, the family of two or family with a small child.

Many businesses in China are expanding outside of their “native” industry, automakers are no exception. I have seen many automakers promoting their vehicles’ connectivity with “smart home” devices, as showcasing the benefits of automobiles connected with Internet of Things.

Dongfeng Motor displayed their vehicles’ ability to turn on air conditioners and water heaters at home within a certain pre-set distance. Geely displayed apps that could be installed on their in-car operating system and control devices at home and other locations. The examples demonstrated these automakers’ vision as how a connected car-home ecosystem can enhance life quality.

Many companies also displayed their solutions to tackle the biggest bottleneck preventing electric cars from taking off in China: power charging.

BAIC displayed a model “battery station” solution which can swap a used battery pack for a fully charged one within 2’30”. This echoes the direction of start-up Chinese pure electric maker NIO is taking. According to this model, electric car buyers won’t be buying battery packs. Instead, they pay for the usage of these batteries or rent it. It is possible that people will be charged at “battery stations” based on how much power they’ve used or distance they’ve driven on the battery packs being taken down.

For the pure electric vehicle, the latest models now can be charged up to 80% within 30 to 40 minutes in quick charging mode and fully charged to 100% within 6 – 8 hours in slow charging mode. Both modes are considerably shorter, especially quick charging mode, which used to take 1 to 2 hours. At the same time, most newly launched pure electric vehicles will have at least 500 kilometers of driving range.

At every major auto show in China, we can see many cool and sexy concept cars. But after quite a few “PPT auto start-up” busts here, which refers to start-ups trying to win investment and early buyers with nothing other than a nice presentation deck, we need to be more cautious. Let’s take a step back and think twice before being carried away.

It is true that China has gone a long way in new energy vehicle development, with traditional and disruptive automakers launching new concepts, new ecosystems or new theories one after another. But we also need to check how many of these fancy models eventually hit the streets.

A newcomer announced a pure electric SUV for 300,000 yuan. Another one promises to start to sell a pure electric racing car at 600,000 yuan to 1 million yuan range this June. We have to be patient and scrutinize which ones of these big promises are in the end delivered.

It doesn’t matter whether this automaker is new or long-existing, what matters is if this company can produce safe and efficient new energy cars that brings value to Chinese consumers. They are the true “new energy” to bring Chinese auto market forward.

This post was originally published on Kantar.com.

Evolving cultural values and how brands can use them to switch on growth.

Trend 1: Time lost and gained

Cultural observation

The last couple of decades have been defined by a sudden increase of the social and personal pace of life: from society passing to modernity, to early loss of carefree childhood and rise of hectic everyday routines. This begins to be realized now and results in the idea of time being more consciously acknowledged and increasingly valued.

Many new films and songs are about time passing by quickly and nostalgia for when protagonists were younger.

Cultural example 1:

Film “Youth” (《芳华》) Directed by Feng Xiaogang (冯小刚) and written by Yan Geling (严歌苓), released on December 15, 2017.

Cultural example 2:

Song “Waiting For You” (《等你下课》) by Jay Chou (周杰伦), released on January 18, 2018.

Branding implication

A brand that enables time saving and appreciating; either through functional benefits such as simplification of processes and efficiency of services, or through emotional ones by facilitating or re-enacting precious moments, or even curating laziness.

Brand example 1:

The speedy courier service provider Shansong (闪送) which emphasizes its quick responses and speed by designate individual courier to each package they deliver. On average, a parcel within 5 kilometers will be delivered within 23 minutes. They are also available 24 hours a day.

Brand example 2：

Pay-by-use mini KTV booths in public places satisfying consumers’ need for fast and easily accessible visits. Paid sessions can be as short as 15 minutes and could be paid through mobile phones right away.

Brand example 3:

Laziness becomes an increasingly important value counteracting periods of time with frantic pace, and enabling consumers to “own” time instead of the other way round. Branded festival of laziness where people win by doing nothing better than others.

Inewsweek.cn, the website under China Newsweek affiliated to China News Service (中国新闻社), in September 2016 held a “dazing competition” in Beijing. Participants were required to daze for up to 2 hours without doing anything – no talk, no music, no mobile phone. Those whose heartrates were among lowest became winners.

Trend 2: Multiplicity

Cultural observation

China is moving from a firm allocation of roles to a loosening of social hierarchies and strictness to meet the increasing complexity of Chinese modernity. As a result, people are embracing multiple interests, identities and roles to fit different occasions (at work, alone, with family, with friends, with strangers and so on).

Cultural example 1:

“Slash youth” became a popular buzzword in 2017 about living with multiple identities/roles, with many publications and events promoting it.

Cultural example 2:

Chinese web TV series “A Seven Faced Me” (《柒个我》), which is a remake of South Korea television series “Kill Me, Heal Me”. It featured popular star Zhang Yishan (张一山), whose character has seven personalities.

Branding implication:

A brand that understands and serves multifaceted personalities promotes multiplicity, rather than speaking in generalizations and addressing stereotypes. Facilitating diversity and offering tailor-made products or services that enable an effortless switch from one personality trait and occasion to another.

Brand example 1:

Brands are celebrating multiple identities by using spokespersons with diverse personality traits.

Huang Xiaoming (黄晓明) appeared with triple roles (actor/singer/environment protector) while featuring in Rémy Martin’s One Life/Live Theme posters/videos.

Brand example 1.5:

He also appeared with four personalities in the poster of ZWILLING J.A. HENCKELS.

Brand example 2：

The brand product that enables consumers’ transformation based on their different moods and occasions.

Schwarzkopf’s Fresh Light Hair Blush products allow consumers to add a few streaks of various colors to several strands of their hair quickly. And they can wash them off with normal hair washing.

Brand example 3:

In April 2017, CHANEL opened a pop-up cafe in Shanghai. Unlike previous pop-up cafes in Tokyo, Toronto, and Singapore, the Shanghai cafe really offers coffee and deserts to visitors. It is a museum of CHANEL brand, and also a place for fans to see latest CHANEL products. After trying out new CHANEL products on display, visitors were invited to take photos against a CHANEL product wall to earn free coffee coupons. The shop became a multi-functioning retail space for CHANEL brand and it did go viral on social media.

Trend 3: Playful technology

Cultural observation

Chinese have been historically fascinated by technological progress associating it with social and national prosperity. Technologically enabled unmanned services are penetrating more areas of life and are not only embraced – as opposed to the West where they are met with skepticism – but also turned into a source of unexpected fun and joyfully entertaining experience.

Cultural example 1:

From ordering and paying to assist with public order and information, technology is starting to penetrate all aspects of life creating playful and fun interactions.

Xian’er (贤二) is a robotic monk that Beijing Longquan Temple created together with AI experts. The 60-centimeter tall robot can answer simple questions, chant Buddhist sutras and play Buddhist music.

Note: Master Xuecheng is the Abbot of Longquan Temple.

Branding implication

A brand that is all about technical proficiency can add a twist of playfulness to its personality. By disguising mechanisms and interfaces in cute animation or entertaining processes, it humanizes technology while at the same time turns initial feelings of coldness and alienation into an intimate and inviting experience. In such a way, a brand can express technological expertise without losing warmth and approachability.

Brand example 1:

Samsung launched a campaign to highlight its AI assistant Bixby in smartphones. The scenarios featured in the creatives consisted of dialogues between the user and AI, with AI providing humorous answers.

Trend 4: Pragmatic honesty

Cultural observation

Hectic and vastly changing lifestyles, fierce competition and lonesomeness are creating an even stronger sense of anxiety, stress, and depression. Instead of the traditional stance of keeping these feelings suppressed in order to “save face”, we observe a massive shift towards acknowledging them: treating them with honesty and sometimes self-irony, as well as celebrating a state of imperfection.

Cultural example 1:

On China’s popular question-and-answer platform Zhihu (知乎), the topic of “how to overcome anxiety” was viewed by more than 1.6 million times and followed by 18,000+ users.

Branding implication

Brand should not promise a utopian – and in essence hypocritical – transformation, but speak with a pragmatic and sympathetic tone of the voice recognizing rough conditions, promoting realistic authenticity and motivating consumers to embrace their imperfection.

Brand example 1:

The fast-rising Chongqing liquor brand Jiangxiaobai (江小白) targets young consumers and positions itself as a social tool during team building activities in companies. In this poster, the text is similar to a seasoned colleague’s encouragement for a hard-working younger peer.

The text said:

“Toast to yourself.

You’ve eaten the first buns at 5 am,

You always turn off office lights because you’re the last one leaving.

Let’s seal the past in the liquor!

Then, when you recall old days, you have good stories to tell,

Those must be fxxking awesome days.”

Brand example 2:

In terms of graphic design trends, this is expressed by imperfect (glitch art) style – with out of focus, blurry and pixelated visuals – creating an aesthetically stylish execution of a non-perfect world.

Lenovo Wifi router poster on JD.com

Brand example 2:

Didi’s “Go when you want to go” series.

Trend 5: Spontaneity

Cultural observation

Spontaneity has to do with instant, unexpected and experiential gratification; its defining characteristic is that it happens so fast that catches people off guard resulting in a brief but high dosages of excitement. In China, it is very freshly relevant as it results inauthentic and more real reactions without people having time to rationally process it through traditional behavior and social conventions such as “public face”.

People want surprises as urban life becomes busier and social rules are less strict; thus, we see flash mobs, innovative public art events, and reality TV series basing their experience on the element of surprise.

Cultural example 1:

In 2017, one of the classic moments of the phenomenally popular web reality show “The Rap of China” (中国有嘻哈) was Chris Wu (吴亦凡) asking rappers to perform freestyle. In battle sessions, the rappers have also to think of lyrics at the same time as they rap.

Branding implication

Some brands can emphasize that it is all about instant gratification, pleasure and excitement in its most pure, authentic and real. Curating experiences and moments of small yet intense joy as small breaks within mundane routines. This can also be associated with products that stand for real and good taste and ingredients and/or youthful design and energy.

Brand example 1:

Tmall held a “See Now Buy Now” event at Shanghai’s National Convention and Exhibition Center on October 20, showing off branded fashion and apparel that will be available to buy for Alibaba’s 11.11 Global Shopping Festival.

It featured a number of the world’s iconic fashion and apparel brands, including Guerlain, Adidas, Pandora, Ray-Ban, Estee Lauder, Victoria’s Secret, Rimowa, Ralph Lauren, French fashion group SMCP, Italian leather goods brand Furla.

The event was taped live and broadcast on October 31 across seven media platforms, including Tmall and Taobao apps, video website YouKu, news aggregator Toutiao, Weibo, and traditional TV channel. While watching the show, audiences were able to buy what they see, when they see it, on all those platforms. Sites and platforms will offer listings, links or buttons to pre-order the items ahead of 11.11.

Brand example 2:

Pop-up shops and ambient media create a spontaneous feeling of pleasant and instantaneous discovery, associating related emotional values with the brand.

Lipton felt they were struggling with the business environment stereotype image, especially among younger consumers. To tackle the issue, it opened pop-up stores for two consecutive years at Shanghai Fashion Week to emphasize its youth and fashion element. In 2017, its four-day pop-up shop used cherry flower as the theme.

This article was originally published on Kantar.com

The Big Picture of Mobility: 2017 Deloitte China Mobile Consumer Survey is an online survey conducted by Deloitte China TMT industry during the past five years. The survey focuses on consumer behaviors, trends, and opinions regarding a broad range of wireless and mobility products and services.  

Aiming to explore the level of applications, devices and support, this survey covers several recent hot topics such as the content consumption, mobile payment, digital devices, data security, biometrics and internet of things (IoT) in order to reveal the key trends that drive the mobile markets and to provide suggestions for relevant enterprises.

Smartphones will still remain dominant

• The mobile phone has surpassed tablets and other digital devices in ownership rate, and vastly exceeded emerging digital products represented by smartwatch and smart bracelet in this regard.
• The smartphone’s success in the future is likely to be the introduction of an array of innovations that are largely invisible.

Machine Learning (ML) will be fitted as standard in phones

• AI chips will be fitted as standard in smartphones, and the amount of machine learning-based applications is expected to steadily increase.
• With smartphones becoming an increasingly viable deployment option for ML, the spectrum of potential scenarios is expanding.

Fingerprint authentication marks the password-free era

• Fingerprint authentication has become a standard configuration of smartphones, exceeding password as the main way of unblocking smartphones.
• At the moment, nearly seventy percent of smartphones are with fingerprint authentication function. Full coverage will be achieved in the future and more usage scenarios of fingerprint authentication will appear.

Consumers attach more importance to the phone storage space

• The consideration of necessity and storage space will become major factors that affect the number of Apps installed. In view of this, App differentiation is likely to be the new ground for the development of mobile phone applications.

The self-introspection of mobile phone addicts should arouse attention 

• Consumers are trying to limit their phone usage to prevent live and work from being occupied, while smartphones utilization will continue to rise given the increasingly assembled function embedded in smartphones.

Physical stores and online stores will keep the back-and-forth relationship

• The physical stores are showing signs of revival since the consumers focus more on the product experience, brand, and innovation etc.
• Online stores are losing price advantages and will experience a slowing growth in the future.

The outlook of wearable devices and IoT devices are still unclear

• Due to the price issue as well as low intelligence degree, IoT equipment will keep low ownership rate in short time and will mainly focus on entertainment products.

Mobile video will encourage the data traffic consumption

• The video contents are popular and the demand of consumers for data traffic will further increase. Hence the core position of data traffic services in the whole business of operators will be further deepened.

Personal information leakage becomes the new normal 

• Driven by economic interest, enterprises collect and reveal consumer information, which causes the frequent leakage of personal information and arouses consumer attention on such behavior of enterprises.

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Three factors contribute to instant noodles rebound in 2017. But the increasing popularity of food delivery apps might push this category back into decline.

When talking about consumption upgrading in China, people often use the category of instant noodle as a typical victim. As people chose to eat fresher and healthier food, they began to stay away from instant noodles. As a result, since 2013, the sales of instant noodles did enter a downward spiral.

However, instant noodle makers never give up their fight and managed to have a surprising comeback. Kantar Worldpanel data showed that in the 52 weeks ending December 1, 2017, the sales of instant noodles in the urban area increased by 6.2% in value and 4.1% in volume. There are multiple factors contributing to this category’s revival. We can analyze the trends in product, consumer, and channels.

New premium products unlock growth

Following consumers’ desire to switch from “eating enough” to “eating well”, instant noodle manufacturers have launched several premium products to cater to this trend. For example, Master Kong and President both have introduced instant noodles featuring tasty soups. Kantar Worldpanel data showed that the sales of premium instant noodles achieved double-digit annual growth in 2017. In the 52 weeks ending December 1, 2017, among all urban families, 31% have bought premium instant noodles. About 10.63 million families are new consumers to this category.

Rekindled interest from middle class families

Our data showed that middle-class urban families (household income higher than 9,000 yuan per month) have significantly regained interest in instant noodles: the annual spending from these families increased by 19% from a year ago. Middle-class families contributed 40% of sales value and 37% of sales volume of instant noodles in China. Their support is pivotal to this category’s revival.

Huge room for growth in e-commerce

While hypermarkets, supermarkets, and other offline channels are struggling, online sales of instant noodles have been doing very well: in 2017, the e-commerce sales of instant noodles jumped 28% from a year ago. The average basket size for online purchasing was much bigger: across all channels, the basket size for instant noodles was 5.4 units per purchase, while it was 9.0 units per online purchase.

Compared with the shining data from the current situation, the future of e-commerce is even more appealing. Now only 5.8% of urban Chinese families have bought instant noodles online – a very small number compared with the penetration of offline channels. More than 30% of urban families have bought premium instant noodles through offline channels.

Threat from food delivery apps

Besides abovementioned positive drivers for instant noodle category, there is a fast increasing service that might end its revival: food delivery apps. Since March 2016, Kantar Worldpanel APP Meter has begun tracking mobile app usage behaviour of 32,000 sample consumers across five city tiers in China.

We noticed when consumers get used to ordering food through food delivery apps, they will reduce spending on instant noodles. After a user begins to use a food delivery app, within the first half year, his/her purchasing of instant noodles won’t change much. But it will start to decline gradually if the user continues to rely on food delivery app for meals.

We are not alone in noticing this threat. Instant noodle manufacturers have taken proactive measures to counter these apps’ erosion. They’ve launched DIY noodles, snail noodles, and instant hot-pots to keep attracting new users.

Maybe it’s better to have a bowl of hot noodle that is instantly ready to eat on your desk than wait for a meal that is often late and arrives cold in your hands. Instant noodle manufacturers in China are trying their best to create value and stay relevant in consumers’ fast-changing lives.

Also check out China’s luxury consumption trends here

This article was originally published on Kantar.com

Three major trends are shaping China’s luxury market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

On August 21^st, CBNData and Tmall published a report entitled “Luxury Consumption Trends in the Era of New Retail, 2017”. Using Alibaba’s consumer data to analyze consumption patterns, the report highlights several trends in changing luxury consumer demographics as well as showing the changing ways that luxury brands pursue consumers in China.

Between 2014 and 2016, the number of luxury brands using online sales channels has continuously increased; by 2021, online sales are expected to account for 13% of the luxury goods market.

Changing consumer demographics…

It considers young consumers, consumers from small cities, and cost-conscious consumers to be the up and coming forces driving growth in luxury consumption.

The generations known in China as the “post-90’s” and “post-95’s” are now a major market for luxury goods, and increasingly the primary targets of marketing campaigns by major players. There has been steady growth in the numbers and purchasing power of the post-90 generation since 2013, and the past few years have seen a rapid expansion of the post-95’s online presence.

Residents in the increasingly prosperous smaller cities, with lower costs of living and fewer pressures to save, are entering the market en masse, making up an ever-larger portion of consumers. Online sales of luxury goods have driven their penetration into second- and third-tier cities and rural markets where few have an offline presence.

In 2015, the size of the average luxury purchase by consumers in third- through sixth-tier cities surpassed the average for first- and second-tier cities. At the same time, the ten cities with the highest growth in luxury consumption are almost uniformly third-tier and lower. High-end cosmetics and watches are particularly explosive markets in smaller cities.

Consumers generally fall into three categories: “quality of life” consumers, mass consumption consumers, and price-conscious consumers; price-conscious consumers are coming to the forefront as the generations born after 1970 and 1980 settle into family life and more closely consider how to spend their larger disposable incomes.

In recent years luxury goods brands have effectively pursued the latter two markets, increasing their market share in those demographics. However, marked differences remain between each group’s purchasing habits; cost-conscious luxury consumers embrace brands with an image of utility (ex. Tissot) and up-and-coming brands, while “quality of life” consumers remain focused on household names such as Burberry.

… and new market trends…

At the same time, it shows that three major trends are shaping the market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

Luxury brands have “infiltrated” certain sectors to the point where they account for significant portions of daily spending; from 2013, the share of skincare product sales held by luxury brands has continuously increased, while luxury brands now account for more than 40% of all watches and alcoholic beverages sold. Luxury goods, in these sectors, are no longer conspicuous consumption; they’re just consumption.

“Luxury” is no longer synonymous with “LV, Gucci, and Hermes”; rather, Chinese consumers are increasingly aware of niche brands which more closely match their needs and preferences. When entering the market many brands choose to list on Tmall and other e-commerce platforms to increase visibility and attract younger consumers.

In years prior, Singles’ Day events provided a huge boost to luxury goods sales; in the past two years that effect has become less pronounced, as luxury goods have become a more “normalized” part of people’s everyday consumption patterns

… are changing the luxury goods market

These three trends are improving customer experiences and quality assurance to further drive movement of consumers to e-commerce, making new retail formats the preferred choice for luxury consumption. Luxury brands are working to more finely target smaller markets, with goods that will fill gaps in their everyday lives, through online channels.

Other trends affecting the market include gradual reductions in tariffs for imported luxury goods, relaxation of import regulations, and global pricing strategies on the part of major brands, all reducing the appetite for grey market goods or those purchased while traveling abroad.

One result is that the flow of luxury spending abroad is gradually coming back to China, with part of the 600 billion yuan (US$90.2 billion) currently spent by Chinese abroad on luxury goods shifting to domestic e-commerce platforms.

The Chinese Ministry of Commerce (MOFCOM) views the fast-moving consumer goods (FMCG) market and industry in China with increasing optimism going into the second half of 2017. On the backs of China’s ongoing supply side reforms, MOFCOM sees an upswing in innovation and internal market development. 2016 saw a rapid increase in the number of FMCG enterprises as well as a significant increase in sales figures. New, big-data driven solutions began to enter the market, but major challenges remain for the FMCG industry.

STATE OF THE INDUSTRY

At the end of 2016, there were some 18.1 million businesses within the FMCG sector, an increase of 5.2% from 2015; of these, 2.45 million were corporate entities, which was an increase of 28%, a shift MOFCOM believes reflects increasing sophistication on the part of FMCG enterprises. Total sales of FMCG reached 29.65 trillion yuan (US$ 4.36 trillion), an increase of 10.4% from 2015.

Profits among mid- and large-sized enterprises remained stable, growing 3.8% to reach 165 billion yuan (US$ 24.2 billion). While the ROI for mid- and large-sized enterprises fell slightly to 3.64%, gross profit ratio increased slightly to 9.72%. There may be the beginnings of a reduction in corporate debt in this

Profits among mid- and large-sized enterprises remained stable, growing 3.8% to reach 165 billion yuan (US$ 24.2 billion). While the ROI for mid- and large-sized enterprises fell slightly to 3.64%, gross profit ratio increased slightly to 9.72%. There may be the beginnings of a reduction in corporate debt in this

Profits among mid- and large-sized enterprises remained stable, growing 3.8% to reach 165 billion yuan (US$24.2 billion). While the ROI for mid- and large-sized enterprises fell slightly to 3.64%, gross profit ratio increased slightly to 9.72%. There may be the beginnings of a reduction in corporate debt in this sector, but the evidence is still lacking; at the end of 2016, the debt-to-capital ratio of these mid- and large-sized enterprises fell to 72.3% from 2015’s 72.8%.

Within the FMCG sector, the online retail market remained a bright spot, with consumption rapidly expanding even as quality and safety within the market increases. Online sales hit 5.16 trillion yuan (US$ 759 billion), an increase of 26.2% from 2015; online FMCG sales were 4.19 trillion yuan (US$ 616 billion), an increase of 25.6%.

The market for physical retailers showed some signs of warming up in 2016, especially in convenience and local stores, malls, and supermarkets. However, there were signs of an increasing divergence within the physical retail sector between department and specialty stores (which showed sales growth of 1.3% and 3.1% respectively) and supermarkets and malls (with the growth of 6.7% and 7.4% respectively).

The market for physical retailers showed some signs of warming up in 2016, especially in convenience and local stores, malls, and supermarkets. However, there were signs of an increasing divergence within the physical retail sector between department and specialty stores (which showed sales growth of 1.3% and 3.1% respectively) and supermarkets and malls (with the growth of 6.7% and 7.4% respectively).

The market for physical retailers showed some signs of warming up in 2016, especially in convenience and local stores, malls, and supermarkets. However, there were signs of an increasing divergence within the physical retail sector between department and specialty stores (which showed sales growth of 1.3% and 3.1% respectively) and supermarkets and malls (with the growth of 6.7% and 7.4% respectively).

The market for physical retailers showed some signs of warming up in 2016, especially in convenience and local stores, malls, and supermarkets. However, there were signs of an increasing divergence within the physical retail sector between department and specialty stores (which showed sales growth of 1.3% and 3.1% respectively) and supermarkets and malls (with the growth of 6.7% and 7.4% respectively).

CHALLENGES

There are also major challenges ahead for China’s FMCG industry. Retail floor space in 2015 was 53.8% larger than in 2011 but was concentrated in Eastern China, cities, and department stores and supermarkets. This has led to an “unbalanced network” problem in which Western and rural China are underserved, as well as a “last mile” problem in which there are far fewer local and convenience stores than in the similar Japanese and Taiwanese markets (54 per million people in China vs. 425 in Taiwan).

Additionally, increasing costs have placed pressure on profit margins within the industry. While purchasing costs grew at a rate lower than sales growth (2.0% vs. 2.7%), labor costs grew at 4%, much faster than sales growth. Rent costs, meanwhile, have virtually doubled since 2011. Additional cost pressure comes from logistics, which consumes some 14.9% of GDP and a similar proportion of costs within the FMCG industry.

Rent costs, meanwhile, have virtually doubled since 2011. Additional cost pressure comes from logistics, which consumes some 14.9% of GDP and a similar proportion of costs within the FMCG industry; this figure has fallen recently, but is still approximately twice the ratio found in developed markets (USA, Japan, Germany).

Big data, while offering a way forward for FMCG retailers, is as yet still in its infancy; data gathering is still limited by the lack of POS (card) transaction data and prevalence of a cash economy, though online payment apps promise to change this lack. The use and analysis of existing data are still in its infancy. Quality, safety, and fairness, especially within online markets, is still a point of concern; fraud, false advertising, and lack of accountability are still commonplace.

Consumer association data (which must be regarded as incomplete) shows a 2.3% increase in complaints and a whopping 65.4% increase in complaints directed at online retailers. Similarly, data safety is an issue; some 51% of online accounts have suffered from data links leading to spam and telemarketing, while losses to ID theft and fraud reached 91.5 billion Yuan (US$ 13.5 billion).

Quality, safety, and fairness, especially within online markets, is still a point of concern; fraud, false advertising, and lack of accountability are still commonplace. Consumer association data (which must be regarded as incomplete) shows a 2.3% increase in complaints and a whopping 65.4% increase in complaints directed at online retailers. Similarly, data safety is an issue; some 51% of online accounts have suffered from data links leading to spam and telemarketing, while losses to ID theft and fraud reached 91.5 billion yuan (US$ 13.5 billion).

PROSPECTS

Looking towards industry prospects, MOFCOM sees a new round of change in the FMCG sector. In addition to major activity and growth within the online retail markets, there is increasing integration of on- and offline sales and payment methods, and online payment software has increased in efficiency, security, and versatility. These trends have allowed for better integration of sales channels and increasing digitalization on the part of physical retailers.

Big data and cloud computing applications are becoming more commonplace, providing better targeted marketing and more convenient payment. This will, in MOFCOM’s view, make it easier for enterprises to position themselves, their brands, and their products within a competitive market.

Consumer spending habits are undergoing major changes. In addition to the normal slow increase in consumer spending, there have been significant improvements in consumer sentiment surveys from mid-2016 on. Consumer expectations, as regards purchases, have shifted towards health and quality of life rather than fulfilling basic needs. Consumer spending increasingly rewards healthy or green goods, high-quality durables, smart goods, and luxuries, and is increasingly conducted online.

CONCLUSION

Despite the challenges, the advent of big data-driven strategy and planning, the shift to online retail, and the integration of physical retail with “wired” methods of payment and sales channels are driving major changes in business models for FMCG enterprises. These changes, as well as changes in the economic climate, regulatory environment, and environmental sustainability will continue to transform this industry in China.

How to satisfy Chinese consumers’ demand in digital retail era

Sales data from Alibaba’s online retail platforms for 2016 reveals the five key behavioral trends of China’s online shoppers when compared to figures from the previous year.

6 emerging consumer segments you shouldn’t ignore

Chinese consumer demands, lifestyle, and behavior and attitude have changed greatly following the demographic structure and society evolutions as well as the three emerging forces in China’s consumer market, leading to more and more new particular consumer segments in China.

Social changes of national consumption age hasten new consumer segments such as “urban fashion men” and “active senior citizens”. The emerging trend of bachelordom develops new consumer group named as “the urban single tribe” with unique demands which are totally different from other consumers.

Emphasizing on experience and feelings as well as following closely the fashion trend have created “experience first” and “eager to become a master” segments. The age of high connectivity and digitization sees the born of “two-dimensional space” and “virtual social networkers”.

Enterprises shall deeply investigate each particular consumer group, and fully consider their special demands to identify the correct positioning of products and services. Then estimate their growth potential and formulate suitable strategies with diversified pricing, particular scenarios, and different functions.

Urban fashion men

Consumptions across various age groups are increasing in China, not limited to a specific consumer segment, age groups, or gender. China has entered into the “national consumption” age.

Rise of male consumers group in China roots in the accumulation of social wealth; social progress brings about diversified social identities for the individual; and, richer social life makes the male’s desire for non-essential materials become unprecedentedly huge, which is the prime power for the rapid rise of male consumers in China.

The number of male consumers increases dramatically on both offline shopping and online shopping; categories of consumption related to the male become more diversified, and the amount of expenditure is close to the female. Especially for online shopping, no matter they buy something for themselves or for female family members,

Especially for online shopping, the annual expenditure of Chinese male consumers is higher than the annual expenditure of Chinese female consumers, having reached 10,025 yuan.

Taking growth rate in skin care products for instance. Compared with the overall growth rate of 11% in China’s overall skin care market, the growth rate of the skin care products for men is twice faster than the overall growing rate and reaches 24%.

Nowadays, young male consumers who were born in the 1980s and 1990s living in the cities are different from their parents. They read male fashion magazines, pay attention to self-image, enjoy life, and are willing to spend money on their clothes and hair styles.  They on average spend 24 minutes on grooming every day. They also concern about their health; and, they will work out in fitness clubs.

73% male consumers in China’s first-tier cities believe that the personal appearance is important for job hunting and dating; 88% will check information of beauty and fashion on the internet; and, 83% in 18-35 years old age group think it is necessary to use skin care products.

Apart from traditional advertising, the influence of the internet on male consumers shall not be neglected. Many brands start to pay more attention to their exposure rate on the internet. Chinese male consumption market’s demands on fashion and personalization are increasing constantly; different brands could offer more differentiated choices.

Active senior citizens

Other than “the economy of fashionable men”, the Chinese demographic structure becomes increasingly mature. “Silver Economy” market is also becoming more and more competitive. The aging tendency of the Chinese population is an indisputable fact. Official research indicates that the total population of the elderly people is more than 200 million in China. Over the past decade, income levels of elderly people in China have increased significantly. Consumption structures also gradually shifted focus from basic necessities of survival to cultural relaxation activities.

Official research indicates that the total population of the elderly people is more than 200 million in China. Over the past decade, income levels of elderly people in China have increased significantly. Consumption structures also gradually shifted focus from basic necessities of survival to cultural relaxation activities.

In such a general background, lifestyles of elderly people in China are becoming more and more active and diverse. According to BCG research and studies on elderly people around the world, elderly people are keeping a more youthful appearance and “not satisfied with being old”. After retirement, they are no longer content with current lifestyle of staying at home. Besides, elderly people don’t just take care of grandchildren, grow

After retirement, they are no longer satisfied with the current lifestyle of staying at home. Besides, elderly people don’t just take care of grandchildren, grow plants, or read books in their twilight years. When asked about “the ideal state of retirement life” in China, the new generation of elderly people aged from 46 to 55 demonstrated significantly different viewpoints as opposed to the previous generation of those who are above 55 years old.

The new generation of old people is more willing to go out of their houses and pursue colorful retirement lifestyles. In particular, they are actively engaged in traveling, seeking for new hobbies and interests, sports, reemployment, volunteer work after retirement. The ratio is 10% to 20% higher than the previous generation of old people.

In addition, Wang Deshun, who is known as “the coolest grandpa” and the brand ambassador of Reebok, as well as Shao Quanfa, who is a 72-year-old sportsman and completed 70 marathon races, have become extremely popular and inspiring public figures. They made more retired people realize the new possibilities and created new business opportunities.

China’s elderly consumer market is the future of a blue ocean, showing a large scale, more diversified demand, supply shortage, and obvious consumption willingness.

Take tourism industry targeting the elderly for example. According to statistics from China’s National Tourism Administration, the average annual growth of senior citizen tourism market reached 21.5% between 2012 and 2015 which was higher than the overall growth rate of 16.8%. In 2015, it reached 826 billion yuan. And, 35-40 years old and above 65 years old are major consumers for cruise travel.

Under the age of silver economy, economic growth is as important as economic quality. From the perspective of consumption, the growth of some durable consumer goods slows down; organizations’ focus shifts to the elderly led businesses.

It’s imperative for businesses to develop strategies on how to guide the elderly’s consumption to personalized and diversified directions with high quality.

The urban single tribe

The population of bachelordom in China is about 200 million. The proportion of people who live alone has increased from 6% from ten years ago to 16%; the proportion of people who are more than 35 years old and still single reaches 21%, which is four times as much as it was ten years ago. 36% single women said that they are happy without getting married; as high as 80% expressed that they would rather remain single than rush to get married.

There are more and more white-collar workers and highly-skilled workers choose to remain in “the single tribe”. The reasons for keeping single may be different: some don’t want to interrupt the existing state of life; some keep high standards of choosing a spouse; and, some think that the expense of marriage is high that they would rather invest in themselves to improve themselves and pursue individual freedom.

The proportion of urban Chinese women who choose to be the single on their own initiative is high; they are economically independent, do not rely on men, and believe marriage is not a thing that women are forced into as it was before.

The number of Chinese who meet with the above-mentioned characteristics is increasing. Media and the public voice do not treat them with colored spectacles and do not call the single as “leftover women and men”. State of keeping single has become a kind of common phenomenon.

It is noteworthy that trend of bachelordom does not only refer to marital status but also indicates mental attitude change. Married couples also enjoy personal space and happiness belonging to the single when they are not accompanied by their spouse.

As the number of people who choose to become single on their own initiative increases, “the economy of bachelordom” becomes popular. “The economy of the single women” and “the economy of the single” have created a series of business opportunities.

Producing customized products and services for the single is becoming a trend of marketing; such customized products and services for the single including solo KTV, solo seat in restaurant, refrigerator with small size, small high-end retail store which provides abundant imported products, solo housing supplied by land agent, and solo dwelling with individualized design.

Acceptability of the society on the single is improved constantly. “One person” brings a new pattern of consumption, and hasten new consumers segment targeting the single. The single has become a key consumer segment which shall not be ignored by the consumer market.

The “healthy green advocates” and “environmental protection” segment

Food is the paramount necessity of the people, and safety is the top issue. In recent years, shocking security incidents of food, drug, haze, and water pollution were reported repeatedly. Food security and health have become a top concern in China.

People care for their own health, extending concerns to the environment and sustainable development. The proportion of consumers who are not satisfied with food security or medical treatment is among the highest which are 57% and 47% of respondents respectively according to BCG.

Report on Chinese Green consumers in 2016 issued by AliResearch indicated that Chinese consumers’ aspiration on green consumption and environmental protection upsurges unprecedentedly; their pursuit of healthy and green lifestyle is not only reflected on the preference on green products selections but also reflected on that they hope their consumption behaviors and patterns of consumption will meet health environmental protection standard.

According to a GFK survey, 73% interviewees expressed that they feel guilty if their lifestyle is harmful to the environment. The proportion ranks the 7th among the 23 countries participated in the survey. Furthermore, as high as 80% respondents think that brands and companies shall be responsible for the environment.

Advocating healthy life, laying emphasis on environmental protection, and the idea of sustainability make “environment-friendly consumers” become a new large Chinese consumer segment which develops rapidly. Environment-friendly consumers pay attention to environmental protection and have purchased more than five kinds of environment-friendly products. They have green consciousness; they have turned or may turn green consciousness into green consuming behaviors; they hope to create active influence on other people and society through their behaviors of buying environment-friendly products.

Environment-friendly consumers pay attention to environmental protection and have purchased more than five categories of environment-friendly products. They are green consciousness and hope to create a positive influence on other people and society through their behaviors of buying environment-friendly products.

The AliResearch report also shows that the internet has become the main battlefield of green consumption. Especially in recent years, the proportion of “environment-friendly consumers” had increased from 3.4% in 2011 to 16.3% or 66 million in 2015. Green and environment-friendly consumption have become the main consumer habit, which also increased the price of environment-friendly products by 33%.

The emergence of environment-friendly consumers is significant for consumer markets in China, forcing businesses to pay attention to sustainable development and green products supply. “Experience suprematism” and “people who yearn for becoming great master” who keep up with the trend become the new consumers groups.

The “experience first” and “eager to become a master” customers

Popularity and accessibility of internet information and booming international tourism enable more and more Chinese consumers in line with global trend; their horizon is more broad, and their ability to accept various emerging things become stronger.

Chinese consumers are increasingly keen to spend longer time researching their own consumption need and acquire purchase information through digital platforms such as the “Little Red Book” to help with their purchase decisions.

Furthermore, experiential consumption has become a kind of trend in China. Consumers are no longer satisfied with visiting familiar cultural and geographical environment and traditional tourist spots; they take delight in tourism which is full of exotic charm and features unconventionality and extreme sports.

According to the report of “high-end tourism in China” issued by Hurun, the popularity to Japan and Korea has declined from 58% to 36% between 2015 and 2017. However, tourism in other foreign lands such as Africa, Antarctica, Arctic, and the Middle East has grown from less than 10% to around 20%. Between 2015 and 2018, the expected growth of participation in rock climbing, motorcycle race and surfing is 124%, 103% and 70% respectively.

Some traditional businesses affected by the internet have identified new opportunities for the “experience first” consumers by crafting the design and sales of customer experiences. A rising group of “experience first” consumers in China is willing to invest in their interests; and, some also expect to achieve a professional level of skills.

In recent years, professional cameras are popular among some photography enthusiasts; mobile applications for fitness and cooking have attracted as many as eight to nine million active users. All of these indicate that more and more Chinese consumers are willing to spend money and time to improve skill levels of their interests.

Experiential consumption such as outbound travel and extreme sports rises quickly; and, these Chinese consumers are willing to invest a lot financially in interests, leading to a rise of “experience first” and “eager to become a master” consumer segments. 00 Yuan each year on hobbies and interests such as oil painting, skiing, watching

Take a 30-year-old white collar living in a tier-1 Chinese city for an instant. The annual spend on the painting, skiing, opera, and pastry material purchase could easily exceed 35,000 yuan.

“Two-dimensional Space” and “virtual social” consumers

“二次元” (Er Ci Yuan) refers to the two-dimensional space, namely the flat space where the early animation and games were composed. And, consumers who are addicted to or fans of those characters in the animations of games are called Er Ci Yuan or “two-dimensional space”.

This consumer segment has an everlasting expectation for skills and experience; they will complete purchase and consumption while studying and creating. Digital times have created “two-dimensional” and “virtual social networking” consumers segments.

Parents who once deemed internet as savage beasts for their children are constantly interacting on WeChat now. Students, white-collar workers, and the elderly all have a smartphone enabling them to 24/7 access to the internet.

PwC data shows that Chinese consumers spend the most time on digital devices in the world; they have extremely high requirements on the convenience of the equipment. The average time a Chinese consumer spends on a smartphone, laptop, and tablets is as high as 170, 161 and 59 minutes respectively, which is far more than the global average time of 147, 108 and 50 minutes. Furthermore, the convenience of online and mobile shopping in China also make consumers willingly to be in the state of 24/7 internet connectivity.

Furthermore, the convenience of online and mobile shopping in China also make consumers willingly to be in the state of 24/7 internet connectivity. There are 62% Chinese consumers believe that online shopping is convenient, 4%-7% higher than the developed markets such as the U.S. and UK.

When encountering with the two-dimension virtual world and three-dimension real world, high connectivity and demands on convenience have made such consumers group feel that the two world has integrated; for them, the boundary between virtual and real world is vague.

For example, in the past, soccer fans of World Cup would only feel satisfied when they go to a bar or restaurant to watch the game with a beer, the crowd, and friends. Now, the “two-dimensional space” and “virtual social networking” consumers move “beer social networking” back home. They buy BBQ and beers on mobile; and, they interact with soccer fans around the world through bullet screen (a function which allows viewers to post on-screen comments in videos) while they watch the live broadcast online.

This brings new consumption pattern and demands. Young people’s entertainment such as the online novel, gaming, animation, and cartoons, which were once deemed as “improper occupation” by most of the adult have now made more and more young consumers realize their value of life, leading to a series of new business opportunities and peripheral products.

Despite the slowdown in economic growth, China will continue to be one of the fastest growing consumer markets in the foreseeable future. Three emerging forces – upper middle class and affluent consumers, the new generation of young consumers, and online shopping will drive China’s consumer market according to a joint report by BCG and Alibaba.

With the rise of these three forces, consumer demand, consumer behavior, and lifestyle have also changed. With the globalization trend and the popularity of media and brand, consumer demand and preferences tend to be more personalized and niche. Therefore, new segments of customers in the Chinese consumer market continues to emerge such as “singles”, “seniors”, etc. These new customers have a very different needs, eager for personalized products and services.

According to the data of the Economist Intelligence Unit (EIU) and the analysis of the Boston Consulting Group (BCG), China’s consumption growth will reach US$1.8 trillion between 2016 and 2021. And, China’s consumer market will expand by almost half to US$6.1 trillion by 2021.

Upper middle class and affluent people boost high-quality consumptions

It is expected that China’s upper middle class and affluent households will drive 75% of consumption growth, and the proportion of young consumer groups in overall growth is 69%. In terms of channels, online and offline integration and digitization will account for 44% of the incremental contribution of private consumption.

Mobile will account for 38% of the growth. Mobile GMV transacted on Alibaba China retail marketplaces accounted for 79% of total GMV in Q1 2017, an increase of 49% year-over-year.

It is expected that by 2021, more than 90% of the purchase path will involve at least one digital touch point. Companies must manage the influence and business coverage of all the channels.

According to BCG’s “China Private Bank 2017” report, the number of households with investable asset values of $1-$5 million and $5-$20 million groups will see the fastest growth to 3.4 million and 0.5 million by 2021 from 2.1 million and 0.3 million in 2017 respectively.

The number of China’s upper middle class (monthly disposable income of 12,000-22,000 yuan) and wealthy families (monthly disposable income of more than 22,000 yuan) will double and reach more than 100 million from 2016 through 2021, driving 75% of consumption growth.

More affluent and increasingly mature consumers in China’s rapid growth have a higher demand for custom and personalized consumption. They favor high-end products and lifestyle products and services, which has brought unprecedented opportunities and challenges to local enterprises and foreign-funded enterprises in China.

With the rapid increase in household disposable monthly income, the upper middle class and the affluent population show a very different consumer demand and priority consumer goods categories.

While middle-class consumers’ main consumption demand is on FMCG products such as packaged food, personal care, the affluent and upper middle class begin the pursuit of green and healthy food and lifestyle. At the same time, wealthy people are not only keen on wine and luxury consumption but also automobile as well as more frequent and higher quality travel experiences.

New generation of young consumers will release huge spending potential

As demographic structure becomes mature in China, young consumers who were born after 1980 have become the potential driving factor for the growth of Chinese economy. At present, new mature consumers generation (18 – 35 years old) occupy 40% of the population with 15 -70 years old in cities and towns in China, and such proportion will exceed 46% in 2021 according to Boston Consulting Group.

In 2016, urban expenditure of new generation was US$1.5 trillion, which was US$400 billion lower than the former generation. However, by 2021, the new generation will exceed the former generation with expected urban expenditure increased to US$2.6 trillion, US$200 billion higher than the former generation.

Between 2016 – 2021, compound growth rate on the year-on-year basis of consumption ability of the new generation will be 11%, which is more than twice of the growth rate of the former generation. In the corresponding period, the contribution rate of growth of consumption in the new generation will reach 69%, however, the contribution rate of the former generation is only 31%.

New generation consumers are the focus that future enterprises shall pay attention to; compared with the elder generation, they are born in the age with abundant material conditions that they are affected and edified by international famous brands since childhood, so their demands on products are diversified.

Online and offline integrated channel is the future retail trend

In recent years, shopping online grows explosively in China; among which, the growth of shopping through the mobile terminal is amazing. The further popularization of smartphone urges the change on the pattern of consumption.

It is expected that the penetration rate of the smartphone in cities will increase from 78% to 95% between 2015 and 2025. The proportion of shopping which involves at least one digital touch point will increase from 70% to more than 90%. Mobile internet will become the important media for consumers to buy products in future; consumers are able to browse what they need on the internet at any time and anywhere, followed by a quick one-click purchase.

Shopping paths featuring high fragmentation and plentiful information sources make consumers spend more and more time on selecting products. Therefore, it is vital for future consumers to well integrate online digitized experience with offline digitized experience. Merchants shall balance different channel strategies based on the online and offline market evolution and adjust tactics according to different categories.

China’s consumer economy is expected to expand by about half, to $6.5 trillion by 2020 according to Boston Consulting Group.

More than 40% of Chinese urban households today are in the middle class and affluent category whose monthly income exceeds RMB 8,000 according to McKinsey.

Also read: Chinese Consumers More Selective on Spending Habits

A recent report from Tencent’s Penguin Intelligence research team shed some lights on China internet users’ behaviors under the impact of new media.

Update: China New Media Trends 2018

Near half of users browse the internet on mobile for 3 hours or longer a day. Only 10.6% users use mobile less than one hour per day.

54.9% users still choose news apps as their first option for news; 17.7% users choose social apps, which has surpassed users who choose PC news websites (16.9%); users who choose video apps to read news (12.0%) are close to those who choose the TV (13.5%).

Nearly one out of every five users read in-depth articles on a daily basis.

In terms of news types, leisure content (26.6%), photo/video news (20.5%), celebrities/entertainment (16.9%) are most popular to 19 years old users and below. Users in 40 years old and above are more likely to read news about current events (44.1%) and living service (41.9%).

19 years old users and below prefer personalized service (22%) and subscriptions (11.6%), while users in 20 to 39 age group prefer news review (35.8%) and custom channels (16.8%). 40 years old users and above prefer posting, searching, and sharing features.

Close to two-thirds of 19 years old users and below tend to use only one news app on their smartphones. About 70% 40 years old users and above use more than one app.

Display ads are more acceptable across all groups of users, 48% on average.

Users are likely to watch long videos on mobile. Funny contents are most popular (85% users would like watching it on mobile), followed by TV series (78%) and cars (76%). 87% users would watch game video on desktops.

Over half of the users take We Media content as important as the original news report.

55.5% users follow celebrities and enterprise accounts to obtain news; and, 10.6% users frequently get information from celebrities and enterprise accounts.

42.5% users prefer the contest for prize activity organized by enterprises on social platforms.

Technology and capital will merge well in the new media age. Apple, Facebook, Google, and Twitter has made their efforts to provide news content for users. China also has the potential market for the merging of technology and capital in this new media age.

43.3% users hope to obtain breaking news on their wearable devices according to the survey.

57.7% users would like to obtain news through smart devices in addition to the smartphones.

47% users think social platforms are important to them.

57.1% users choose WeChat as their top channel to obtain news.

In terms of QQ groups, two popular types are relationships groups and hobbies groups, accounting for 33.6% and 66.4% respectively.

63.8% users join new groups of strangers for new information instead of making new friends (36.2%).

18:00 to 24:00 is the most popular time for users to use mobile devices; 53.6% users would use mobile devices during 21:00 to 24:00 period.

About 60% users read news on their mobile devices during spare time; 43.8% on bed (after getting up or before sleep). For video watching, it is 56.4% (during spare time)and 45.8% (on the bed).

In terms of different areas, reading news on mobile at spare time is the most popular activity by users from all different levels of cities, followed by reading on bed. Over 30% users in municipalities read news in transportation.

Also read: China Social Application Users Insights 2016

Chinese consumers become more selective about where they spend their money, shifting from products to services, and from mass to premium segments; and they seeking a more balanced life, where health, family, and experiences take priority according to a recent McKinsey’s 2016 China consumer report.

55% of Chinese consumers were confident their incomes would increase significantly over the next 5 years, comparing with 32% of Americans and 30% of UK consumers 2011.

Chinese consumers are allocating more of their income to lifestyle services and experiences such as spas,
travel, and entertainment according to McKinsey. More than a quarter are planning to spend more on leisure and entertainment.

Chinese consumers are increasingly focusing their spending on trading up for premium products
over mass products; and, 50% seek the best and most expensive product.

Recommended reading:

• China Consumer Trends 2016
• China Digital Consumer View 2015

In 2015, when the total usage of digital media users outpaced that of traditional media, the social media also showed their own unique development properties and characteristics in China.

Businesses of all sizes and levels in China are committed to test and realize the value of their social media marketing. Entrepreneurs expect to improve their brand awareness, and increase website traffic and audience reach to obtain more customers.

Companies were expected to measure ROI (return on investment), tie social activities to business outcomes, develop social media strategy, which were challenging to achieve through their social media programs.

Influence of social media activity was difficult to quantify. Marketers in China fall easily into simply referring to the number of followers, likes and reposts as the only measurement for the success of their China social media campaigns. Engagement (likes, shares, etc.), audiences (followers, fans, etc.), website traffic, leads and other metrics were several major metrics to measure the success of social media programs.

The average number of tools to analyze and report on social media activities had relations with the scale and years of experience of the companies. Some Chinese companies remained satisfied with the data they collected while many companies were unsatisfied with the lack of useful tools.

Although social media enjoyed a large quantity of daily average users, most social media marketing have not been integrated into the enterprise objective. Among all the respondents surveyed by TrustRadius, only about 50% agreed that social media data and analytics would impact the social media marketing strategy, and even less than 25% respondents agreed that the social media data and analytics would impact the companies’ overall business strategy.

Also read: China Advertising Insights 2015

On August 6th, the Chinese largest shopping website taobao.com’s unit g.taobao.com published a report on its website, revealing the history of Chinese online shopping and preference of Chinese online shoppers through analyzing big data.

According to the Report, online shoppers in China have expanded their foothold to more than 100 countries and regions in the past decade while, in the meantime, the total number of online items has exceeded two million.

In the early years of online shopping overseas, Chinese buyers preferred shopping websites in Hong Kong and Macau. And now they have switched their attention to a wider range of areas, including Japan, South Korea, North America, Europe as well as South Africa.

To find out the shoppers favorite shopping areas, Taobao ranked these countries by the total number of transactions. The result shows that among all the regions, Japan, the United States and South Korea are the favorites, followed by Hong Kong, Germany, France, Taiwan, Australia, U.K. and Denmark.

Cross-border online shopping experienced a rapid growth in the year 2015, with new buyers taking up 28% of the overall buyers, which is much higher than the previous years.

The report also shows different preferences among new and experienced buyers. Newcomers prefer cosmetics while experienced shoppers are more of foodies. Among all the buyers, mothers are the most active ones, with baby formulas and baby products accounting for nearly half of the top 10 spots of the hottest items bought overseas online.

Another characteristic of these online shoppers is that they follow popular trends. For instance, the Russia-made cellphone Yota sold well after visiting Russian President Vladimir Putin gave it as a present to his Chinese counterpart Xi Jinping during the APEC meeting in Beijing in 2014.

The report also discovered regional differences among buyers.The data showed that shoppers from Shanghai and Beijing are the most active ones with total number of transactions accounting for 12% and 11% respectively; this followed by Hangzhou, Guangzhou, Shenzhen, Chengdu, Nanjing, Wuhan, Tianjin and Suzhou.

Interestingly, their preferences vary significantly. For example, those from Beijing prefer air purifiers primarily due to the severe pollution, while people in Shenzhen like to buy cookies.

Read more: China Online Shopping Accounted for over 10% of Total Retail in Q1 2015

A new report from research and advisory firm Gartner identifies the top 10 strategic technology trends that CIOs in China should consider in order to pursue business growth and remain competitive throughout the digital era.

The top 10 technology trends highlight the current state of technology adoption in China, as well as the maturity and traction of the technologies. Organizations in China are expected to spend $140.6 billion (RMB 854 billion) on technology products and services in 2014, according to Gartner’s latest forecast.

Gartner defines a strategic technology as one with the potential for significant impact on the enterprise in the next three years. Factors that denote significant impact include a high potential for disruption to IT or the business, the need for a major dollar investment, or the risk of being late to adopt. A strategic technology may be an existing technology that has matured and/or become suitable for a wider range of uses, or an emerging technology that offers an opportunity for strategic business advantage.

China is a large IT market full of potential and competiveness,

said Amy Teng, principal research analyst at Gartner.

China’s technology trends align with other regions worldwide – but with some variations because of unique market conditions. Enterprises in China are in various stages of adoption, with some mature organizations being early adopters of technology and some still in the early stages of evaluation.

“Although the top 10 technologies that Chinese companies should factor into their strategic planning processes are defined here, this does not necessarily mean investment in all of the listed technologies is essential,” said Ms. Teng.

However, companies should look to make deliberate decisions about each of them during the next two years.”

The top ten strategic technology trends for China in 2014 include:

Mobile Device Diversity and Management

The rapid adoption of BYOD makes enterprise mobility strategies more complex and challenging. Through 2018, the growing variety of devices, computing styles, user contexts and interaction paradigms will make managing this diversity a priority strategic initiative for enterprises CIOs. In China, CIOs experience an even more serious situation because the region exhibits a faster device replacement cycle due to the popularity of low-tier smartphones. Another distinct differentiation is created by the culture of Chinese employees, who tend to work longer hours and increasingly mix work with life, a trend that extends to their digital “self.”

Mobile Apps and Applications

Mobile apps and applications will continue to grow in 2014 and there is no sign of that trend slowing down, driven by the strong demand for mobile services that have moved beyond the early stage of enabling information and content access to bringing new capabilities to consumers and businesses. With the popularity of using mobile devices to explore the physical world, Chinese companies are employing new interactive technologies such as quick response (QR) code, audio, augmented reality, gesture and Near Field Communication (NFC) with QR code being the most popular one. Enterprises are gearing up efforts on mobile applications and early adopters, including banks and airlines, have introduced mobile apps for consumers or employees, such as mobile banking, self-check-in services and in-cabin services.

Social Commerce

Social commerce is the use of social networks and social media to support sales transactions. China is well ahead of western counterparts by almost five years in successfully deploying all use cases of social commerce. The most common use case for social commerce in the U.S. and Europe is product reviews with limited success in social shopping and social network commerce. China proves contrary with social network commerce dominating the market. Tencent QQ, Tencent WeChat and Sina Weibo are the three major social networks in China that enterprises leverage to drive social commerce.

Internet of Everything

Gartner forecasts that the Internet of Things (IoT) will include 26 billion units installed by 2020 and related IoT product and service suppliers will generate incremental revenue exceeding $300 billion, mostly in services, in 2020. China’s leaders have provided support and encouragement to bring China to the forefront of IoT development. A number of key policies have been developed to target IoT innovation, with nine areas being identified as the applications areas that the government will invest in. These are: smart industrial, smart logistics, smart agriculture, smart grid, intelligent medical, smart household, intelligent transportation, smart city security and management, and smart environment protection.

Hybrid cloud and IT as a Service Broker

Hybrid IT is the mission and the operational model for IT in a cloud computing world. As more cloud computing services emerge, the value of a trusted broker for the enterprise will increase. This broker will ensure maximum efficiency and effectiveness in provider selection, governance, payment, integration, management, security and compliance. Most Chinese enterprises have started leveraging cloud computing and their users are increasingly accepting the new modes of working. However, for reasons both external and internal, Chinese enterprises are yet to form successful Hybrid IT environments. Nevertheless Gartner expects that the demand for hybrid solutions will intensify over the next three years, forcing companies in China to deploy technologies to secure, manage and govern solutions across a hybrid architecture.

Cloud/Client Architecture

The high growth in smartphone sales and the thriving mobile apps ecosystem coupled with a broad choice of devices and brands have created a seedbed for enterprises to adopt a new cloud/client applications model in China. The availability of 4G telecom services and a few emerging public cloud services will further fuel the development of mobile services and change of client/cloud architecture in imminent future. CIOs and enterprises IT will need to think about how they can provide a unified and seamless integrated users experience across mobile endpoint devices and re-gain the software engineering best practices to balance among monolithic, modular, object- and service-oriented approaches. Fortunately, Chinese enterprises have relatively less legacy to abandon when adopting this new model.

The Era of Personal Cloud

Users in China are increasingly adopting various personal cloud services such as Tudou for streaming video, WeChat for social network, Qzone for cloud storage and data synchronization across devices and platforms. However, the major difference between personal cloud service in China and most other mature markets is the current revenue model. Most of the personal cloud services provided in China are currently free to customers – even the streaming video services. This looks set to change as Chinese businesses look increasingly at how they can develop their services over the personal cloud to their employees, business partners or customers to improve their operations and expand revenue.

Software-Defined Anything

Software-defined anything (SDx) decouples the IT services (such as computing, networking, security, and storage) from the hardware underneath, hence extending the concept of virtualization into a new level in which all data center resources are abstracted, pooled and automatically managed. The core components of SDx in data centers include compute virtualization, software-defined networks (SDNs), and software-defined storage (SDS). In China, SDN is rising very fast in Type A enterprises, as well as in large e-commerce and cloud services providers. Although SDS is at a very early stage, its potential market opportunity has attracted globally established providers such as EMC and HP, while Chinese vendors such as DataCore and global startups such as Nexenta have also introduced relevant solutions.

Web-scale IT

To most of Chinese enterprises, Web-scale IT is a new concept that will be driven by the trend of consumerization. The rise of consumer culture is changing the way enterprises do business. Digital marketing and e-commerce require an efficient and agile IT support and, given the large mobile and Internet population of China, scalability will be a big issue. All these factors challenge the conventional IT approach in terms of scalability, cost, and speed to respond. Web-scale IT focuses not only on potentially being able to scale IT-related facilities and technology, but also the associated operational processes and supporting organizational structure in the context of a more risk-embracing culture.

3D Printing

3D printing is achieved by using an additive process through a device able to create physical objects from digital models. The market is broadly divided into three segments: bioprinting, consumer 3D printing and enterprise 3D printing. The main advantage of 3D printing is to build custom or low-volume items that aren’t being mass manufactured. There are many very real opportunities for 3D printing in China, from product design and manufacture of 3D printers and printing materials, bioprinting to 3D printing services provided as an export.

Reference: Emerging Market Analysis: China’s Top 10 Technology Trends in 2014 (You need sign in to view this report).

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