China is a huge market full of potential, but it’s also a complicated and constantly changing landscape that experiences frequent shifts in national policy. It’s hard to tell what the market will be like in five or 10 years’ time, but the below consumption and marketing trends will have a significant impact in the coming decade no matter how regulations, policies, and approaches change.
The population will continue to grow but is forecast to plateau around 2028 and will see significant changes in its structure. According to the national population development plan for 2016 to 2030 released by the State Council, those over 60 years old will make up 25% of the population by 2030. This aging population will increase demands for health-related products and services like supplements and medical care.
Meanwhile, the younger demographic, or those born after 1990, are gradually replacing their parents’ generation as the biggest consumption force. Compared with previous generations, they’re more educated, open-minded, and tech-savvy. They also cherish individuality, so are more willing to purchase premium and customized products and services.
Increasing urbanization and rapid development are contributing to the rising middle class. According to research conducted by The Economist Intelligence Unit, around 35% of the population, or 480 million people, are expected to move into the middle class by 2030. With increasing purchasing power, they’re more willing to spend on life experiences, fine dining, wellness and lifestyle products, and even affordable high-end and luxury products.
“While major social media platforms are developing their ecommerce functions, ecommerce platforms are also starting to integrate social features.”
There is also a variety of developing consumer groups that brands and vendors shouldn’t overlook. For example, more single young people are postponing marriage and children due to the high costs of housing and child-rearing. This singles economy will undoubtedly create more business opportunities for the entertainment, pet, and travel industries, just to name a few.
New Retail and Smart Retail
Alibaba introduced the concept of New Retail while Suning proposed Smart Retail. They’re mostly the same strategy, where the goal is to redefine commerce by enabling seamless integration between the online and offline worlds.
The aim is to use technology to create a consumer-centered market that streamlines the retail process, which means the supply chain, from manufacturing through to delivery, is reconfigured to be interconnected. Data from smartphones, computers, and brick-and-mortar stores are collected to provide insights for brands, merchants, and manufacturers, while consumers enjoy increasingly customized shopping experiences and have more options in terms of when and where to shop and how their purchased items are delivered.
New Retail is already gradually changing the online and offline retail ecosystem in China will soon impact the global retail industry.
China is expected to become the next leader in deep tech and has already accomplished some remarkable technological achievements in recent years. These innovations not only contribute to the economy but also fuel the transformation of many traditional industries.
As mentioned above, New Retail and Smart Retail are driven by deep tech innovations and big data. Advances in artificial intelligence, machine learning, and facial recognition are being employed in unstaffed stores and other retail environments. Augmented reality technology offers new interactive shopping experiences and other advanced technologies like blockchain solutions, smart contracts, and RFID tags are also being used in retail.
As for telecommunications, China is also leading in its 5G development. 5G networks can provide much higher data speeds and massive device connectivity. Given 5G’s progress, Tencent Founder and CEO Pony Ma said that they might develop a new version of WeChat that can be used on VR devices in the near future.
The Social+ strategy
While major social media platforms are developing their ecommerce functions, ecommerce platforms are also starting to integrate social features. Xiaohongshu is the most well-known social commerce platform in China. Users are encouraged to write comments, product reviews, or shopping tips and upload photos of the products they’ve bought or tried. They can also tag the product or brand on the platform so other interested users can easily find the items.
Ecommerce platforms are not the only ones to adopt this Social+ model. Even vertical platforms, such as Keep and iQiyi, have integrated social functions. For example, the primary users of the fitness platform Keep are bodybuilders, personal trainers and fitness enthusiasts. The platform has a community feature for users to update training statuses, exchange ideas, and even recommend products sold on the platform. Keep has become a major fitness platform in China with over 100 million users.
Netizens like expressing their opinions online, so a significant advantage of a Social+ model is the increase in traffic and enhancement of user engagement and retention. Thus, brands and merchants should take a Social+ approach when it comes to their marketing strategy where possible.
In the coming decade, demographic changes imply that the country’s economy is more likely to be driven by increased consumption. Technological innovations will continue to contribute to economic development as well as revolutionize and reshape traditional industries.
This article <Major Consumption and Marketing Trends for China’s Next Decade> was originally published in Jumpstart Magazine, written by Ashley Galina Dudarenok.