What are the 15 ultimate consumption trends you need to watch out for in China 2021
Once a trend moves beyond a smaller base and include more players – consumers, e-commerce giants, government regulators, infrastructure construction – we start to see it as an economy in its own right.
And China is not a single market. It’s made up of many groups and niches that are important to understand. In 2021, these are the economies and consumption trends to watch for.
The night economy
The night economy refers to economic activities that take place in the evening as people finish work or school and begin to eat, drink and engage in entertainment and nightlife. As consumers show patterns of consumption upgrades and diversity in their spending, lots of daytime business activities seep into nighttime. The typical scope of the night economy covers shopping, dining, entertainment, traveling, transportation, tours and accommodation. The night economy has already become the main driver of China’s economic development. For instance, last January to July, Tmall International’s sales of foreign liquor increased 220% year-on-year. Night catering consumption accounts for 20-40% of all-day catering consumption.
Nighttime consumption makes up 60% of total retail sales. Shopping at night becomes netizens’ major way of shopping. From June 10th to July 10th, 2020, 40% of purchases on Tmall and Taobao were made at night, with orders peaking from 10 pm – 12 midnight. The GMV of nighttime livestreaming on Taobao contributed to over 60% of livestreaming sales with 9 – 10pm marking the peak of livestreaming views.
The market size of China’s night economy: 26.43 trillion RMB in 2019, and will reach 42.42 trillion RMB by 2022
The most active night economy consumer groups: 20-40 years old consumers, with 61% of them between 25-35 years old
The fan economy
The fan economy refers to consumption driven by fans and followers of celebrities and influencers. As the digital economy develops, an abundance of KOLs, influencers, livestreaming hosts from multiple sectors and platforms have already risen to exert influence over their followers. Studies show that followers are becoming younger. Only 26.78% of post-90s say that they’re followers of celebrities or influencers, while the numbers are much higher among younger generations – 50.82% of post-95s and over 70% of post-00s.
Celebrity-endorsed FMCG brands tend to drive the highest consumption as the unit price for these products is smaller, making it easier for young fans and followers to support the products endorsed by their favourite stars. In 2020, celebrities drove consumption of instant coffee, personal hygiene products, fashion accessories, skincare, cosmetics and sports accessories. The star effect is not only present among lower-priced items. For instance, a number of automobile brands such as BMW, Audi, Mazda, Lexus, Volkswagen and Hyundai have invited post-95s celebrities as their brand ambassadors to appeal to a younger audience as well.
The market size of China’s fan economy: Over 3.5 trillion RMB in 2019 and it’s expected to surpass 6 trillion RMB by 2023
The most active consumer group of the fan economy: Post-95s and post-00s consumers
The pet economy
After 30 years of development, the status of pets in the hearts of Chinese consumers have evolved from watchdogs to family members. China’s pet economy is still in its early stages but it’s growing rapidly and there’s still lots of untapped potential.
The development of the pet economy rode on consumers’ patterns of delayed marriage or plans to stay single. More and more pet owners now consider pets as their life companions. 41% of Chinese pet owners are singles. Pet ownership in China is still very low compared to other countries. On average, only around 4-5% Chinese families own pet(s), so pet ownership is still expected to increase. Consumers are also increasingly willing to spend on their pets with more sophisticated purchases and personalized consumption.
The market size of China’s pet economy: It’s expected to reach 473.2 billion RMB by 2023
The most active consumer groups: Post-80s and post-90s make up 46.3% and 20.3％ of pet industry consumers respectively
The personal finances and investment economy
Similar to lots of other countries and regions, young Chinese consumers have been increasingly aware and active in managing their personal finances and investments. Last October, China’s stock market was worth more than 10 trillion USD for the first time since 2015. As of last October, the number of Chinese investors surpassed 174.6 million – 14.9 million of which are new investors.
Young consumers show different investment mentalities, patterns and behaviours across different age groups when it comes to finance and investment. Of those who own over 1 million RMB in assets, 56.3% were born between 1985 – 90, 28.1% were born between 1990 – 1995, and 15.6% were born after 1995. Post-85s and post-90s are more mature with their investment strategies and wealth management. Post-90s and post-95s are more active in their nighttime spending while post-95s have a tendency to spend in advance and pay later. Post-95s are also the least experienced in investment as most report having 90% of their assets in the form of savings. They’re in the experimental stages and prefer low-risk investment options such as equity funds while older consumers are more open with diverse options such as stocks, foreign currencies and cryptocurrencies.
The market size of China’s personal finances and investment economy: Currently unidentified
The most active consumer groups: Consumers that were born between 1985 and 1995
The ACG economy
China’s ACG (anime, comics and games) industry has been developing rapidly in recent years. With the improved living standards of China’s teens and the widespread ACG culture in China, there were close to 350 million ACG product users in 2018 and on some ACG platforms, more than 80 percent of users are young people born after 1995. This huge user base triggers huge demand for animation and related products. The ACG industry has always been a hot spot for investment, but it’s primarily been dominated by giants like Tencent, iQiyi, NetEase and Bilibili. Among them, Bilibili and Tencent have invested in a number of companies with IP capacity or animation production capabilities.
The ACG subculture has gone increasingly mainstream to become one of the most important channels for reaching millennial and Gen Z consumers with high spending power. ACG has in fact become an important way for brands in areas like consumer technology, food and beverage, and sports to reach young users. For instance, Bilibili users spent an unparalleled average of nearly 110 minutes per day on the platform in the beginning of last year. As of June 2020, the platform had nearly 172 million average monthly active users and 12.9 million paid subscribers. Luxury brands such as Gucci, Chanel and Fendi were all present on Bilibili in various paid ad or content marketing formats to speak directly to these young users.
The market size of China’s ACG industry: It rose from 174.7 billion RMB in 2018 and expecting to reach 375 billion RMB by 2025
The most active consumer groups: Millennials and Gen Z consumers
The sleep economy
The sleep economy covers consumer demands from those who experience difficulties falling asleep or poor quality of sleep. The general public became more aware of sleep issues. The Chinese Sleep Research Society indicates that during the pandemic, people postponed their bedtime by 2-3 hours. The number of people who go to bed past midnight increased from 10% to 50% of the population. Sleep-related problems are also becoming increasingly prominent among post-90s and post-00s consumers.
During Double 11 in 2019, the sales of sleeping aid products skyrocketed by 789.5%. Among consumers who purchase sleeping aid products, the number of post-00s consumers increased by 434%. From 2016 to 2020, over 2,200 sleep-related enterprises or corporations were established. Their product offerings mainly include traditional products such as bedding, mattresses, eye masks, melatonin, as well as new products such as sleep-enhancing smart devices or mobile apps.
The market size of China’s sleep economy: It will exceed 1 trillion RMB by 2030
The most active consumer groups: Post-90s, and post-00s consumers
The lazy economy
The lazy economy simply means more consumers craving convenience or living life in smarter and easier ways. This includes meal delivery services, errand running services, Daigous or actual products that simplify your daily routine. To put it in context, here are some lazy economy stats. The number of Chinese users on meal delivery platforms has surpassed 400 million. The market size for self-heating hotpots is over 6 billion RMB. China is responsible for close to 40% of global instant noodles consumption, meaning each person consumes 27 packets of instant noodles a year on average!
The lazy economy began with the concept of simply relaxing and resting. One iconic product from this early stage were horizontal glasses that allowed users to read or watch television while lying down. Consumers now pursue “laziness” by incorporating smarter solutions or products to make their lives easier so they can spend their time and energy on more important things. Smart home appliances, such as smart wardrobe gadgets and smart mirrors are only becoming more popular among consumers.
The market size of China’s lazy economy: currently unidentified
The most active consumer groups: Those between 18 and 30 years old make up close to 70% of lazy economy consumers
The IP and blind box economy
What are blind boxes? They’re usually sealed boxes of collectible toys that can’t be identified until they’re opened. Unlike in the West, this market mainly targets young adults instead of children. For a lot Chinese consumers, this sense of suspense and the excitement of opening their purchase encourages them to buy more as most of them are looking for the rarest piece in a collection – the probability of getting some of the rarest items can be as low as 1 in 144. These boxes are priced between 49 and 100 RMB, although most consumers buy multiples just to increase their chances of getting a rare item. Just on Tmall alone, close to 200,000 consumers spend around 20,000 RMB to purchase blind boxes each year. Some of the biggest spenders pay as much as 1 million RMB on blind boxes a year.
These toys are highly desirable and can fetch a huge markup in the second-hand market. For instance, the price of the hidden toy from the SATYR RORY collection grew by 39 times and one user made 100,000 RMB by selling these toys on Xianyu, a second hand trading platform. One of the most popular blind box brands in China, Pop Mart, frequently collaborates with famous brands like Fluffy House, Labubu, Satyr Rory and Pucky as well as creating their own characters. 75% of Pop Mart’s blind box consumers are women from 18 to 35 with their peak consumption power at age 26-27.
The market size of China’s blind box economy: 3 billion RMB in 2019, and forecasts to grow to 25 billion RMB in 2025
The most active consumer groups: Post-95s and post-00s
The guochao economy
Guochao literally translates as “national trendy”. Guochao does not simply mean adding Chinese elements to sneakers or doing trendy collaborations with local brands. But rather, there is an ever increasing appreciation and recognition of Chinese culture among Chinese consumers. They also show a higher preference for local brands after the pandemic. 62.0% of survey respondents prefer purchasing guochao products from e-commerce platforms and 55.2% prefer to buy them from official brand websites.
The highly social nature of e-commerce platforms as well as livestreaming features have advanced the promotion of guochao trends. For instance, Alibaba has announced a series of initiatives to support Chinese brands since 2018. The “New National Products” initiative in 2019 was launched to promote the digitization of over 1,000 Chinese business communities and to facilitate over 200 traditional Chinese brands to reach an annual GMV of 100 million RMB. Last April, Alibaba also launched another initiative to help with local brand and product development. With the project in place, they’re aiming to get at least 3 more Chinese brands in each Tmall consumer’s shopping cart.
The market size of China’s guochao economy: currently unidentified
The most active consumer groups: Chinese consumers across generations show an increased sense of appreciation in nationalism and local Chinese brands
The fitness economy
Even before the pandemic, in the Healthy China Initiative (2019-2030) released in 2019, the State Council raised a series of targets, including “encourage people to participate in moderate physical exercise for 3 times per week”, “the proportion of people participating in physical exercise reaches over 40%”, etc. The goal is to build a national fitness effect, developing from Tier 1 cities to Tier 2-3 cities. As of 2019, there were over 3.16 million sports venues across the country where each person has 1.86 square meters of exercise space on average.
After the pandemic, Chinese nationals have become even more keen on fitness as they become more aware of their health. 76% survey respondents are more willing to exercise after the pandemic. However, China’s overall consumer fitness concepts and habits are still being established. It was expected that 435 million Chinese nationals took part in some form of sports and fitness training in 2020 and the sports-related consumption market reached 1.5 trillion RMB last year. The fitness industry is exploring a diverse range of business models. In addition to traditional gyms, consumers are also working out in various locations and different ways, such as boutique gyms, personal training studios or just with mobile phone apps. The monthly active user base of mobile fitness platforms grew 93.3% from 4.62 million in February 2019 to 8.93 million in February 2020.
The market size of China’s fitness economy: It was set to generate 48.5 billion RMB (7.5 billion USD) in 2020, with an annualized 8.6% growth rate over the past five years
The most active consumer group of the fitness economy: About 40.2% of China’s fitness population is 26-30 years old. 21.5% is 21-25 years old
The she economy
Women are becoming an increasingly important consumption force in e-commerce for maternity products, beauty products, fashion pieces, home appliances, you name it. Chinese women on average make 7.2 purchases from e-commerce platforms each month against 5.5 monthly purchases for men. Both the monthly active user base and average time spent on e-commerce platforms for female users have been increasing for the past few years. Female MAUs on e-commerce grew from 341 million in February 2018 to 446 million in February 2020. The average time spent on e-commerce platforms also rose significantly from 257 minutes to 416 minutes. The she economy is on track to welcome more sophisticated, diverse demand as well as a more mature market.
Keep in mind that there are multiple distinct groups of female consumers and their consumption behaviour will vastly differ because of their age, city of residence, education level, disposable income, marital status, etc. Generally speaking though, post-75, post-85 and post-95 women are the major consumption force of the she economy. Post-75s like to shop for fresh food on e-commerce platforms and search for deals. Post-85s tend to share their shopping experiences and compare prices online while post-95s like to shop on cross-border e-commerce platforms.
The market size of China’s she economy: It was forecasted to exceed 4.8 trillion RMB in 2020
The most active consumer groups: Post-75s, post-85s and post-95s
The singles economy
Statistics showed that China’s single population was 240 million back in 2018. 77 million of them live by themselves. The rest live at home with their parents as this is still a common practice in China. It was predicted that there would be up to 99 million singletons living alone by 2021. This is a key demographic as those who can afford to live by themselves also have a higher disposable income and aspire to live a high-quality life. For singles in Tier 1 cities born between 1985-1995, a larger proportion of them have an average monthly income of 10,000-20,000 RMB. Those outside of this group make an average of 6,000-8,000 RMB per month.
Chinese singles also seem to have a more solid concept of wealth management. 62.4% of them have established investment habits, which is 11.9% more than for non-singles.
Chinese singles can easily afford and are willing to pay for their interests and for the finer things in life. One-person apartments make up 51% of the rental market. More and more consumers are buying small appliances such as mini microwave ovens, mini washing machines and mini induction cookers, etc. With less financial burden on their shoulders, they’re more generous with their spending and more willing to try out new and trendy upscale products. They also tend to pay for services such as meal deliveries and domestic helpers.
The home economy
The home economy in China is a wide range of consumption and commercial activities carried out by people who stayed at home. Since the pandemic outbreak, the home economy covers almost all aspects of daily life such as online shopping, online entertainment, social media, delivery services, online education, online fitness training, telemedicine, and remote work.
China’s wide-scale digitization and wide usage of mobile payments make it possible for people to enjoy many services without ever leaving home. After the pandemic, Chinese consumers have become much more immersed on the internet creating a wider array of online consumption scenarios. For instance, the famous online game Honor of Kings had more than 100 million daily active users as of last June. KEEP, China’s major fitness app, saw a 185% increase in followers.
The medical beauty economy
The size of the medical beauty market grew from 64.8 billion RMB in 2015 to 176.9 billion RMB in 2019, with a compound growth rate of 28.7%. China has become one of the fastest growing medical aesthetic service markets in the world, ranked second after the United States in terms of market size in 2017, and poised to become the world’s largest market in 2021. In China, while aesthetic surgical procedures currently account for a larger share of medical beauty services, the share of non-surgical aesthetic procedures is expected to expand at a faster rate as the range of non-invasive treatments increases.
With rising disposable incomes, more Chinese consumers can afford to and are willing to spend more on medical beauty treatments and surgeries. They also focus more on their personal image and lifestyle; “Beauty is Justice. (颜值即正义)” is their new motto. Back in the day, Chinese people weren’t as open about beauty procedures. The prevailing wisdom was that “man made beauty” went against nature. With strong influences in pop culture and the livestreaming economy though, there’s a growing acceptance of medical beauty surgeries.
In the West, anti-aging treatments for mature consumers are the major services whereas young consumers make up most of the demand in China as they aspire to look even younger and more attractive. Young Chinese consumers believe having a better appearance can also improve their salaries and earning potential.
The market size of China’s medical beauty economy: 176.9 billion RMB in 2019, and forecasts to grow to 311.5 billion RMB in 2023
The most active consumer groups: Female consumers, with almost 60% under the age of 25
The guilt-free economy
The guilt free economy refers to the rise in consumer awareness of “doing good” for the environment, society and themselves to minimize their sense of guilt from spending. This includes buying from more ethical sources, committing to more environmentally-friendly habits, or supporting more responsible brands. Over the past 20 years, Chinese consumers have become much more aware of the impact of their consumption. They’re now seeking a new kind of consumption that will allow them to enjoy buying without worrying, or at least worrying less, about its negative impact.
While they’re trying to become more responsible consumers, this pursuit of guilt-free consumption is still not yet the most important driving force of their purchases. A product’s price and peer recommendations remain the most important determining factors for consumption. For instance, Chinese consumers could easily choose a guilt-free version if the price is the same as its competitors. It would however be less likely for them to pay more money simply to support a responsible product of similar quality.
Nonetheless, this awareness among Chinese consumers is already pushing some changes in their consumption patterns. For instance, the market size for plant-based meat is expected to increase from 78.4 billion RMB (12.1 billion USD) in 2019 to 181.3 billion RMB (28 billion USD) in 2025. Last Double 11, we also saw Cainiao, the logistics subsidiary of Alibaba, implement algorithms to reduce usage for 12 million delivery boxes.
Chinese consumers are made up of many diverse groups. You can’t aim your product at everyone or go into the market without consumer and market knowledge. You need a plan. Strategy is vital.
If you need to understand these and other trends in relation to your business in China, get in touch for a consultation and a tailored strategy for your brand.