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3 Important Consumer Trends
- 1. 3 important consumer trends Westernbrands need to know about China July 2020
- 2. 76 percent ofChina’s urban population will enter the middle- income bracket by 2022. The magnitude of China’s middle- class growth is transforming the nation. As recently as 2000, only 4% of urban households in China was middle class. By 2012, that share had soared to 68%. By 2022, China’s middle class is expected to become 630 million – that is, 76% of the urban Chinese households and 45% of the entire population. 2
- 3. China is expectedto surpass the US as the world's largest consumer market this year 3 Mercury is the closest planet to the Sun and the smallest one in the Solar System— it’s only a bit larger than our Moon. The planet’s name has nothing to do with the liquid metal since it was named after the Roman messenger god, Mercury In 2020, China’s per capita GDP will exceed $10,000, and its middle class will become the main force behind consumption. In 2019, consumer retail spending increased 8 percent YoY, counting $5.3 trillion in total. Despite decline in 2020 caused by Covid19, China will still become the world’s largest retail market this year. 5315 5465 4894 5330 5549 5743 5940 4896 5283 5072 5249 5533 5862 6123 $ 4.800 $ 5.000 $ 5.200 $ 5.400 $ 5.600 $ 5.800 $ 6.000 $ 6.200 2018 2019 2020 2021 2022 2023 2024 Total retail sales in China and the US, 2018A – 2024F China US Source: Emarketer
- 4. China’s retail ecommercesales grew 27.3% YoY in 2019 China’s retail ecommerce sales in 2019 grew much faster than total retail, increasing 27.3% year over year to $1.9 trillion. By 2023, retail ecommerce sales will represent 63.9% of total retail sales. Consumers will spend $2.090 trillion (RMB14.440 trillion) on retail ecommerce this year, an increase of 16.0%. That is 7.7 percentage points less than our pre- pandemic forecast but still hundreds of billions of dollars in additional spending compared with 2019.
- 5. A big stepforwards in online shopping habits In the first four months of this year, China’s total retail sales of consumer goods amounted to RMB10.68 trillion ($1.5 trillion), a decrease of 16.2% compared with the same period last year, while sales of online retail reached RMB2.56 trillion ($360 billion), an increase of 8.6%.
- 6. Chinese consumers are changingshopping habits in response to COVID-19 China is ahead of the curve in its recovery from the recent COVID-19 outbreak, with many provinces slowly returning to normal levels of activity. Factories are restarting production and consumers are beginning to spend again. However, the crisis has had a dramatic and lingering impact on the nation’s shopping habits, with implications for brands in China and globally.
- 7. STRONG RECOVERY OFCONSUMER CONFIDENCE It could be the part of the presentation where you can introduce yourself, write your email… 7 A RECORD-BREAKING YEAR FOR JD.COM: 618 revenues grow 33% in the post-COVID era 618 Grand Promotion is the biggest mid-year shopping festival, and the second biggest shopping festival in China after Single’s Day 11/11
- 8. 8 Livestream buying Young consumersbuy necessities for the whole family Higher responsibilities big step forwards in online shopping and entertaining habits The rise of Consumer-to-manufacturer (C2M) products Value for money 1 2 3 3 IMPORTANT CONSUMER TRENDS WESTERN BRANDS NEED TO KNOW
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- 10. While overall retailconsumption was down 16.2% in the first quarter of 2020, ecommerce sales increased by 8.6% compared to the same period in 2019. Online food sales jumped 32.7% from January to March this year. 10 —National Bureau of Statistics of China
- 11. This shift fromoffline to online is significant and has continued after the lockdown, leading customer’s online shopping habits to leapfrog at least one or two years, especially in the grocery category. 11 If you want to modify this graph, click on it, follow the link, change the data and replace it
- 12. Livestreaming e-commerce has takenthe lead Louis Vuitton debuts livestreaming on Little Red Book. Source: iResearch Chinese people’s attention is more than ever focused on the digital world with an ever-growing internet user base. With the rise of KOLs, it was only a questions of time before live-streaming become the norm when marketing in China. The total scale of China’s live streaming e-commerce industry reached RMB 433.8 billion in 2019 and is expected to double by the end of 2020.
- 13. Brick and mortarshopping malls, along with other sectors, are being rescued by livestreaming e-commerce During the epidemic, with 5G developing, livestreaming has shown even more possibilities. 5G capabilities have made a big difference, as signals are more stable and pictures are clearer. In addition to retail, livestreaming has really stood out in education, entertainment, and tourism. Douyin offers livestream education.
- 14. 2 million userswatching livestreamed real estate events on Taobao Live During the epidemic, more and more industries turned to livestreaming e-commerce and it moved beyond the standard products. People were even selling houses. On April 24, Evergrande Group, one of China’s biggest real estate companies, had over 3.8 million viewers for its livestream and it racked up 7.12 million likes. During the broadcast, 38 discounted apartments sold out in one second. Real Estate agent shows properties to his fanbase via livestreaming
- 15. Live-streaming helped China’s farmerssurvive the pandemic. It’s here to stay. Local villagers in Xiping County of central China's Henan Province are relying on live streaming as a new marketing tool to sell clothes amid the COVID-19 epidemic. The apparel industry creates a significant amount of jobs in China, especially in rural areas. Since March, the monthly registration of livestreaming enterprises has reached a record high. In May, the number hit 2,877 – 684 percent higher than the same period in 2019. D Live's top influencers Xu Fei who helped Ao and Li promote their flowers. Broadcasts typically last one to two hours. At its peak, this one surpassed 1 million viewers.
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- 17. Young people arethe main driver of lockdown shopping, as they are savvier about using online shopping apps. Data indicates that since the beginning of this year, more than 70% of consumers born after 1995 have shifted from "buying only for themselves" to “buying necessities for the whole family” 17
- 18. Furthermore, when many youngpeople returned from major cities to their homes in China's lower- tier cities, they helped their family members to engage with online shopping - and to some extent they have driven the penetration of brand, quality and authentic products into lower-tier city markets. 18 More farmers are now selling fresh produce on live streams in China
- 19. Millenials and GenZhave created more awareness of the need to protect the family Data shows a 34-fold increase in transaction volumes of disposable cleaning products and a 340% increase in purchases of sterilization products year-on-year. Young consumers become more mature
- 20. 3. Value formoney
- 21. Consumer-to-manufacturer (C2M) products As consumersbecome more cautious in making purchase decisions in the face of ongoing pandemic uncertainty, sales of customized products that are more directly tailored to consumers' needs are rising. Consumer-to-manufacturer (C2M) products, which are designed based on big data analysis of direct customer feedback, are increasingly popular, satisfying consumer demand and providing good value for money are increasing popular. These products are designed based on insights gleaned from data generated by targeted consumers and are thus able to provide more customized functions at reasonable cost, resulting in better value for money.
- 22. China’s affluent youngergeneration had never experienced a domestic economic downturn prior to COVID-19. The virus has forced them to think harder about spending, saving, and trade-offs in purchasing behavior. Consumers are seeking better quality and healthier options: more than 70 percent of respondents in McKinsey & Company’s COVID-19 consumer survey will continue to spend more time and money purchasing safe and eco-friendly products, while three-quarters want to eat more healthily after the crisis. Health and fitness is here to stay
- 23. Chat to Westmeets East to develop your China market strategy [email protected] +49 176 80864477 https://www.westmeetseast.de 23 Thanks!