Lower birth rates are connected to another change in Chinese society: the increase in income and living standards.  A richer society with an expanding middle class means more people have more disposable income to spend on new products.  We explore some of the key products, preferences and trends to watch for Millennials in China.

Understanding what’s new and trendy with Millennials in China

An industry sector to watch is “Smart Home” and “Connected Home.”  Innovations in Smart Home are impacting how young people live. Home assistants, smart tech and other innovations are becoming increasingly common for young people.  Particularly with demographic changes and the shortage of affordable skilled labor in Chinese urban areas, “smart” products are ways to adapt to demographic changes. Opportunities exist, and already Chinese companies are trying to develop their own Chinese-speaking versions of smart speaker smartphone and home assistants like the Google Mini and Amazon Echo.  

Milk Powder is an important product to track in China.  Years ago there was a milk powder scandal that raised the issue of quality products for babies. Concerns about drinking water and quality of products remain high.  Baby milk products from Hong Kong and Australia are popular and relevant to the discussion about demographics in China. Some Chinese Consumers travel from the Mainland to Hong Kong to buy baby products and health and nutrition supplements.  

China has leapfrogged into “e-tail.”  Around the year 2000, some people thought that retail would remain important given Chinese consumers’ concerns for price / quality concerns.  Culturally, face-to-face interaction was important, and so the idea of e-tail becoming very popular was uncertain. Concerns over infrastructure and delivery were thought to be barriers to e-tail.  Increasingly, ecommerce and e-tail websites like Tmall, Tao Bao, and Alibaba have helped China leapfrog in tech development and become global leaders in eCommerce. Now people from all generations are buying online.  Products sold on sites like Tmall are ones to watch.

Chinese Millennials and Luxury Products

Luxury products are also products to watch.  European premium chocolates, wines, trips, and luxury apparel are popular.  Foreign wines have only in the past decade gained major popularity versus traditional beer and alcohol.  SIS has conducted research about conspicuous consumption and the importance of foreign brands as means to communicate status and identity, and to build relationships (guanxi).  

Innovative smart tech and apps are important to watch.  Ridesharing, social apps, mobility innovations and smart phones like Xiaomi address important customer pain points.  Our company recently attended the Consumer Electronics Show in Las Vegas. Some of the products seem “space age” but some of the new technologies were developed in China. 

How might these consumption patterns change?

Under the One Child policy, inheritance, attention and resources are focused on one child.  With 4 grand parents, two parents, and one child, China’s single children received significantly more prosperity and opportunity than children in other generations.  Some referred to single children as “Little Emperors”.  There has been some ambiguity about the Two Child Policy.  With an additional child, that would change the social and economic dynamics.  Expectations such as filial piety and parental expectations on getting university degrees may be impacted.

How can companies best respond to today’s consumer dynamics in China?

Keep smart technology, apps, and social marketing in mind.  Focus on the importance of social dynamics and “word of mouth.”  Also, it is helpful to keep in mind social “memes” and social cultural opportunities such as “China’s Single’s Day”.

Changes in an ageing society

Filial piety and caring for ageing parents is critical in China.  Products, apps or services that help young people to care for their parents may be opportunities.   In addition, the medical device market is growing in China amidst an aging population.

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