January 4, 2024
BEIJING – With the post-1990 generation becoming a vibrant force in society and the post-2000 generation gradually entering the workforce, the purchasing power of the new generation of consumers has been steadily growing.
In fact, young people are slowly becoming the main force in the consumer market. Growing up in the internet era, the young consumers generally have higher education levels and a broader global outlook, and come from a relatively strong economic background. As such, their consumption behavior is different from that of the earlier generations.
In terms of consumption pattern, online shopping has become the top choice for young people. Young people not only comprise a comparatively high percentage of internet users but also are more inclined toward and adept at shopping online. They excel in using mobile devices and social media for getting information, making them more susceptible to product promotions and influencer endorsements on social media.
And yet a trend toward rational consumption has been growing. Young consumers no longer blindly chase trendy or luxury items. Instead, they focus more on product quality and functionality. They tend to compare products and services, and do some research before making purchasing decisions, in order to get the best out of their purchase.
According to a study conducted by the Social Survey Center of China Youth Daily, 90.1 percent of the 1,000 young respondents said their consumption decision is based on the “spending where necessary and saving where possible” principle.
As for consumer preferences, self-indulgence and experiential consumption are gaining popularity. Young consumers seek more personalized and diversified products, reflecting their emotional needs and increasing sense of self-worth. They are willing to pay a premium for products with unique features and innovative services. Their inclination toward self-indulgence and experiential consumption has catalyzed the development of products and services such as pets, collectibles, wearable devices, smart home appliances, medical aesthetics, virtual reality experience, performing arts, exhibitions, outdoor activities and immersive theater experiences.
When it comes to brand cognition, young consumers seem to favor domestic products. Thanks to the plethora of information available online, young consumers no longer blindly pursue foreign brands and instead prefer local brands, highlighting their confidence in Chinese-made products. From Li-Ning, Anta and Warrior shoes to White Rabbit and Liushen, domestic brands in various fields are being warmly embraced by young consumers.
With per capita GDP of more than $12,000, China is poised to enter the ranks of middle- to high-income economies, and accordingly, its consumer market is transitioning toward high-quality goods and services. And to promote high-quality consumption, it is essential to adapt to the changing consumer behavior, promote innovation in production and distribution, better meet the diversified and personalized demands of young consumers, and ensure demand drives supply and supply creates demand at a higher level.
First, there is a need to propel the development of the consumer market, so as to cater to new consumer demands, by aligning with the changing trends in consumer behavior and more intensively applying advanced and digital technology, such as 5G, artificial intelligence, and autonomous driving to the consumer sphere, fostering online shopping, education and entertainment, promoting remote working, and tapping into emerging consumption potential. There is also a need to facilitate the integration of online and offline realms, and leverage digital technology to enrich consumer experiences in physical businesses.
Second, it is necessary to boost supply to increase consumption. Maintaining a steady supply of diversified and personalized goods is essential to meeting the demands of different demographic groups based on age, and income and education levels. Also, to improve product quality, production quality standards should be upgraded and supervision tightened.
Third, service-related industries should be further developed to meet the growing demand for service consumption, by strengthening research, finding innovative ways of applying new technologies such as the internet of things and AI to the service industry, facilitating the development of service sectors such as aviation, retail tourism, creative cultural activities, healthcare and sports, improving the quality of services such as housekeeping, eldercare and catering, and introducing high-end services including finance and insurance.
And fourth, domestic brands need to take measures to become more competitive by enhancing their product value, fostering innovative development, expanding their product range, strengthening their presence in different markets, and promoting special local products to meet consumer demands through branding and differentiation.