China´s reform and open up policy initiated in 1978 has contributed to expanding its economy. From 1989 until 2013, China GDP Annual Growth Rate averaged 9.2%. While Europe and the US are facing a decrease of their inhabitant’s ´purchasing power, China´s growth has led to the apparition of a significant middle class which is getting richer and buys more than its elders. China represents a huge potential for multinationals companies that have been trying to break into this market. Thus, understanding Chinese consumer´s behaviours has become essential to the establishment of a successful marketing strategy.
However, China as a country is also very diverse. A simple look at the administrative organization of the mainland part divided into five levels (municipalities, provincial capitals, prefectures, counties and county cities) reveals a significant segmentation which is even broader as soon as you leave the cost to go through the lands. What retail markets and channels should companies choose in order to target those markets?
Besides, as China had to face significant economic and political changes over the past few years, Chinese consumers´ shopping habits have been evolving dramatically. As a result, categorizing Chinese consumers can be very challenging since several factors such as age, localisation (rural/town) or revenue influence greatly Chinese’s consumers habits. In this essay, we will choose to distinguish Chinese consumers revenue wise: affluent, mainstream/aspirants, value, poor according to the categories that have been mentioned in McKinsey Study “Meet the Chinese consumer of 2020”.
What will China consumers buy next?
First, we will analyze the global trends of an evolving Chinese market. Secondly, we will explain why companies‘retail strategies should adapt to regional differences within the country (City/Rural towns, Cost/Inside, Different provinces).Thirdly, we will try to understand better Chinese consumer’s mindset by categorizing relevant consumers groups. Also, we will focus on Chinese consumer´s specificities compared to their westernized counterparts in terms of brand loyalty and perception.
Table of Contents
Introduction
I/ Global trends of the Chinese Market
II/ Retail markets and regionalisation
III/ Different type of consumers
Conclusion
Objectives and Research Themes
This essay explores the evolving landscape of the Chinese consumer market, identifying key drivers of change and analyzing how demographic shifts and regional segmentation influence purchasing behavior. The central goal is to determine how multinational companies can adapt their marketing and retail strategies to effectively target diverse consumer segments in China's rapidly developing economy.
- Analysis of macroeconomic trends shaping the Chinese market.
- Evaluation of regional retail disparities and urban versus rural market dynamics.
- Categorization of Chinese consumers based on age, income levels, and lifestyle.
- Assessment of brand perception, loyalty, and the influence of cultural factors like "Guo Qing".
- Examination of the shift toward e-commerce and mobile shopping habits.
Excerpt from the Book
III/ Different type of consumers
We have seen through the two first parts of our survey that the Chinese market is far from being homogenous. As a consequence, different groups of consumers can be pointed out. In every country, diverse factors such as age, localisation, education, marital status or revenue partly explain some specific trends in regards to their habits of consumption. However, in China, some factors such as age or location are dramatically important since the country has faced significant political and economical changes over the past thirties years. For instance, old people born before 1960 experimented the Cultural Revolution and had to face tough living and economic conditions can barely related to the Fu Er Dai or second generation of new young riches.
In China Business Review Article: “Understanding Chinese Consumers”, Yujun Qiu is trying to draw categories of Chinese consumers based on their age and level of richness. He consecutively distinguished the retired frugal, retired wealthy retired from the wealthy forties, frugal forties and the thirties, twenties and the new generation. The main difference between the retired frugal and the retired wealthy is the workplace : retired frugals used to work in state owned companies when retired wealthy would work for government owned companies that would give them a better salary, same goes for wealthy forties and frugal forties. Regarding the habits patterns of the different consumers, the retired group will be very price sensitive even though the wealthy part will be a little bit more quality oriented. The forties years group born during the Cultural Revolution would save a good amount of their money to take care of their families while the wealthier part will acquire premium goods and consume more. Then, the mindset of the thirties and twenties year’s old group is drastically different from the parent´s one: well educated and more technology sensitive, they often shop online and dedicated a more important part of their budgets to entertainment and discretionary goods. The twenties years old crowd can also be eager to impulsive purchases. The new generation pursues the trend, thirties and twenties years group have initiative: almost no savings, immediate consumption. They are also very influenced by social media and online communication.
Chapter Summary
Introduction: Provides an overview of China's economic growth since 1978 and introduces the methodology for categorizing consumers based on the McKinsey study.
I/ Global trends of the Chinese Market: Discusses demographic shifts, female purchasing power, and the rising trend of discretionary spending and senior market growth.
II/ Retail markets and regionalisation: Examines the segmentation of China into four city tiers and the crucial differences between urban and rural market development.
III/ Different type of consumers: Details consumer behavior segments based on age, wealth, and social influences such as "Guo Qing" and brand perception.
Conclusion: Synthesizes the main findings, highlighting the necessity for companies to adapt to diverse consumer mindsets and the growing importance of digital retail channels.
Keywords
Chinese market, consumer behavior, retail strategy, regionalization, city tiers, discretionary spending, middle class, branding, e-commerce, mobile shopping, Guo Qing, demographics, consumer segmentation, urbanization, purchasing power.
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines the rapidly changing Chinese consumer market and provides insights into the behavior and habits of different consumer segments to guide corporate strategy.
What are the central themes addressed in this work?
The work covers macroeconomic market trends, regional retail differences, consumer segmentation, the impact of digital channels, and the role of brand perception in China.
What is the main research objective?
The goal is to understand how multinational companies can navigate the diversity of the Chinese market to establish successful and sustainable marketing and retail strategies.
Which scientific methods are utilized?
The author utilizes an analytical approach, synthesizing data from reputable sources such as McKinsey, Deloitte, Nielsen, and various academic articles to categorize consumers and retail trends.
What topics are covered in the main body?
The main body focuses on global trends (industrialization, demographics), regional and urban/rural retail strategies, and a detailed classification of consumers based on age, income, and lifestyle.
Which keywords best characterize this work?
The work is best characterized by terms such as Chinese consumer behavior, retail strategy, market segmentation, and digital transformation in the Chinese economy.
How does the "city tier" system impact retail strategy?
The city tier system helps companies understand the vast differences in logistics, infrastructure, and consumer purchasing power between major hubs like Shanghai and lower-tier county cities.
What significance does the term "Guo Qing" have for retailers?
Guo Qing refers to national characteristics specific to China; understanding these cultural nuances is vital for avoiding marketing mistakes, such as misinterpreting the shopping habits of the local population.
Why is the senior demographic becoming increasingly relevant?
With an aging population due to demographic shifts, senior citizens and the family members who care for them represent a growing market segment for health and specialized products.
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- Lisa Bouam (Autor:in), 2011, Chinese consumers´s behaviours. The Chinese market, retail strategies and consumer groups, München, GRIN Verlag, https://www.grin.com/document/274963
