We are often told that we are living in the ‘Chinese Century’, but what does this mean? On a recent business trip I was struck by the sophistication with which Chinese consumers browse, shop and sell today. Here are some thoughts on changing consumer trends in China and how they might affect your business.
WeChat on the rise
Chinese consumers now use the messaging service WeChat for all types of payments. From splitting the bar tab with friends to buying a designer handbag, WeChat allows customers to send payments linked to their Chinese bank accounts. The popularity of the messaging service has drawn major retailers away from T-Mall, once thought to be the future of online shopping in China. Coach recently closed its T-Mall store to focus on WeChat, while other brands including Dior, Bulgari, Cartier and Longchamp are embracing the platform for its more personalized, exclusive feel.
CEO of Maison de la Chine, Patricia Tartour, identifies international travel as a key indicator of status in China today, giving those who travel access to the same global knowledge, cultural and culinary experiences sought out by western travelers. In online discussion boards prior to Golden Week this year, South Korea was the most talked about destination, followed by Thailand and Japan. Chinese consumers are traveling more autonomously, in family groups rather than tour groups. They are also becoming more adventurous in their travel destinations, looking further afield than Hong Kong for experiences that combine culture, entertainment, fashion, history and a little shopping.
…as do luxury goods (still)
Luxury shopping continues to be a favorite pastime of Chinese consumers. This year, the brand with the most ‘buzz’ was Louis Vuitton, followed by Chanel and Georgio Armani. Louis Vuitton continued to appeal to younger consumers through its successful collaborations with superstars such as Fan Bingbing and Jing Boran. This year, the luxury products Chinese consumers discussed most online were beauty products, followed by handbags, watches and jewelry.
Where does the money come from?
Every evening in Beijing you will see throngs of well-dressed young people hopping from restaurant to bar, carrying the latest bag or wearing the latest headphones. Helen Wang discusses the two underlying reasons Chinese millennials have high amounts of disposable income. Firstly, they do not graduate with student debt, as their parents save the money to pay for their education. Secondly, most Chinese families own their own houses, allowing their young unmarried children to live with them or in a second property without incurring housing expenses. These two factors, combined with the one-child policy and low savings rates among young people has created a generation of Chinese millennials with high spending power and the desire to exercise it.
We are sure to see new and exciting developments in 2017 as retailers embrace new technologies and platforms in order to keep up with the increasingly sophisticated Chinese consumer.