China’s completion of its most recent 7th National Population Census has offered new insights into the daily lives of the average Chinese citizen, revealing unique and interesting data points across its entire demographic. Historically, the data collected by the census has served as one of the cornerstones for future government policies, guiding their long-term economic and social development plans. Incredibly, this decade’s census mobilized more than 7 million officials to conduct door-to-door visits for over 400 million households in just 8 weeks.
Leveraging this wealth of data, the Chinese government set the national and political priorities for the 14th Five-Year Plan (FYP) in March. These policies often influence the values, beliefs, behaviors and conditions of the everyday consumer which can impact the cultural context and language brands and marketers use to communicate with their audience. History has shown that the brands that get ahead of these ‘trends’ are the ones that often gain the most consumer traction in the market.
Here are the top six insights that brands and marketers should be paying attention to when planning their strategies to win in the China market:
1. THE END OF THE SINGLE CHILD ERA
In response to the slowing population growth the government introduced a major policy shift this May,upping the cap of two children per couple to three children per couple. It is predicted that 60% of newborns in 2022 will be the second or third child in their families. This year also marks the first time China will see younger siblings turn 4 and 5 years old, since the launch of one-child policy.
The stress of raising a child has become a challenge that every family is facing, which has fueled hesitation towards the newly launched “third-child policy”. The strong cultural beliefs of “Winning at the starting line” or “A good education can help you do better than the past generation” are not new to most Chinese consumers, but the increased competition for success fueled by China’s economic boom has only intensified these beliefs in recent years. This has been perfectly represented by one of the latest popular TV dramas “A Little Dilemma”. Capturing both the emotional and societal struggles of a typical Chinese family, it has vividly highlighted the growing pressure parents are facing, and sparked a national debate on the sacrifice parents make for their kids and whether the price is worth paying for.
As a result, the strife for betterment has ignited the family and children’s market in recent years, providing strong and stable growth for brands and marketers. A recent report showed that the maternal and education market size in China is estimated to be 6.5 trillion RMB (USD$1 trillion) and growing 12% year on year. The past 12 months has also seen a rapid innovation growth in education formats, technology, and facilities which were greatly welcomed by both educators and students. We expect to see changes in regulations to encourage even more of these innovations in the near future.
2. SOLO IS THE WAY TO GO
The census shows that the average family size in China is now 2.6, down from 3.1 a decade ago. Tension from the rise of solo living is emerging. Whilst the social phenomenon of “little emperor syndrome” continues to have a lingering social impact, it has been compounded by the skyrocketing cost of living in urban cities across the country. Single millennials living in tier-one cities have mushroomed. The “Moonlight Clan” has emerged – 40% of them live paycheck to paycheck with many choosing to enjoy their bachelorship and put off marriage. This has given birth to what is now often referred to by analysts as ‘the Singles economy’: the rise of solo consumption has fueled the evolution of daily necessities from food to electronics – all tailor-made for consumers who prefer to indulge in a hedonistic lifestyle.
With an extravagant demand for convenience and heightened purchasing power, brands must remember to evolve their communication strategy to address the Single consumer’s needs, and must continue to explore creative ways to transform existing channels to ensure they are single’s friendly. For example, solo dining has been one of the new consumer behaviors that has enjoyed mainstream adoption and recognition from the F&B industry. The popular hotpot chain Haidilao now places giant teddy bears in empty chairs to keep solo diners company, while Chinese food influencer Tsai Yani created a 10-episode video documentary series “Eating For One”. Built solely based on this concept of solo dining, she has acquired more than 810,000 Weibo fans since the series’ debut.
3. Augmented shopping is a reality
According to the latest census data, an overwhelming 64% of China’s entire population now reside in cities, a 14% increase from 2010, largely due to the frantic pace of urbanization in China. Based on the China Government Work Report 2020, new infrastructure development has been confirmed to be the next focus –investment in new technology is one of the key priorities for the government with sectors such as 5G, artificial intelligence, quantum technology identified as key areas for China’s future economic development. With steady increase in domestic demand, new technology will empower consumption via a wide range of consumption channels and occasions. In the past 18 months, livestreaming has emerged as a key weapon for e-commerce platforms (estimated to be worth US$60 billion annually) as they strive to keep up with consumers’ appetite for the latest goods, from luxury handbags to running trainers.
Whilst not new to millennials, livestreaming has driven the ‘fear of missing out’ mindset across the entire spectrum of China’s consumers, as they purchase with added value that livestream brings such as special discounts and exclusive offerings. When we apply this development to the context of shopping, we expect augmented experiences to go mainstream as consumers demand more intimate, engaging and personal shopping experiences. Brands can explore opportunities to retain customers by integrating loyalty rewards through brand engagement, innovating the shopping experience on channels to shorten the customer journey, and even leveraging AI to create new, unique cultural moments. For example, Chinese short-video platform Kuaishou collaborated with Boston’s Museum of Fine Arts (MFA) earlier this May, co-launching a shoppable livestream event where viewers could virtually explore MFA’s collection of paintings by Monet. The 4-hour livestream session received nearly 8 million views, and viewers could shop the exclusive art collaborations whilst enjoying and learning more about the artworks.
4. Inclusive health for all
The census shows the 18.7% of China’s population is now over 60 years old, and like most developed countries in Asia, China is faced with an aging population and decreasing labor force. Creating a society that is ready and friendly for the silver market is high in priority for the state, with the country’s 14th FYP reflecting this urgency. Earlier in May, the state announced a few measures in response to the aging population, including establishing a long-term care insurance framework and developing elderly-friendly communities by 2035. Alongside that, elderly service networks will be created in more than 500 counties, coupled with medical services and support to cater for their increasing needs.
There is an opportunity for brands to help facilitate the societal transformation and prep for a more conducive environment for China’s population to grow old and thrive. We are seeing new and emerging products – from smart homes for elderly care to wearable devices that monitor health. COVID-19 has accelerated the telehealth market in China, which is now set to grow to a size of US$50 billion by 2025 with free e-consultations, AI and smart imaging. As a result, insurance providers are racing to form digital ecosystem partnerships to access new customer pools from the data captured by these digital innovations. Brands providing healthcare services and products should explore these partnership opportunities that offer them access to better identify and understand their customers’ needs.
5. Entry ticket to a good future
The census has revealed more than 218 million of China’s population are university graduates, a whopping 84% increase from the last census in 2010. These university graduates have passed the mega challenging ‘gaokao’, the national college entrance examinations in China, and these graduation certificates serve as an “entry ticket” for them to access wider career opportunities and improved living standards. Some of the measures include helping graduates to kickstart their career easier in new tier one cities that are not where their hukou (household registration) is registered to. Parents in lower tier cities are vying for their children to win this “entry ticket” via good education and are doing all they can to allow their kids to access these opportunities. A report by iResearch found that 67% of families in lower tier cities enroll their children in extracurricular classes that would give them a better chance of getting into a good university. Growing up means having to endure the pressure that comes from excelling exams in order to secure a better future.
For brands, it’s important to be seen as providing a positive contribution to children’s development without increasing the stress they may be subjected to. How brands show empathy, offer solutions and innovations towards a child’s development is key to being accepted by both parents and children in China.
6. The ‘Guo Chao’ trend
The generation who was born after 2000 has just turned 21 are locally labelled as the “post-00” generation. This generation has witnessed China’s economic boom, the prestigious 2008 Beijing Olympics, and the birth of homegrown tech giants Tencent, Alibaba and Huawei. In the past couple of years, the “post-00” generation have been at the forefront of propelling a fashion and lifestyle trend known as ‘Guo Chao’. This generation’s rate of consumption for local labels is the highest – at over 50%, according to data from online retailer Tmall.
Previously deemed old-fashioned brands with traditional styles and products have been revamped with fresh, hip design elements and materials, resulting in modern and contemporary products. From beverages to clothing, phones and EVs, even the oldest of brands have managed to expand their appeal – domestic sportswear brand Li-Ning made a huge comeback in 2018 after debuting its collection inspired by traditional Chinese culture elements at the New York Fashion Week; even the iconic White Rabbit candy saw a resurgence after collaborating with Chinese cosmetics brand Maxam on a limited-edition lip balm (which sold out in seconds after launching on Tmall).
How can brands put Chinese culture on a pedestal without dethroning the appeal of international brands? Surprise collaborations, for one, have worked to brands’ favor. Rihanna’s beauty brand, Fenty Beauty, recently collaborated with popular Chinese tea shop HEYTEA to promote its ‘Cheeks Out’ Cream Blush. Instead of a usual product drop, both brands rewarded not-for-sale products and exclusive freebies to dedicated fans via a lottery on Weibo – a savvy move that created buzz and exclusivity to both the event and product.
To make an impact in a market this vast and vibrant over the next decade, brands and marketers will need to be able to mitigate new risks while remaining flexible in adapting to the ever-evolving Chinese consumer landscape.
We believe the brands that react the quickest and demonstrate cultural relevance to these demographic trends are the ones that will see the biggest successes in China.
