BEIJING, Sept 25 China's emerging consumer class
is more emotional than previous generations of shoppers and
firms must shift their marketing strategies to keep pace with
the nation's new standard setters, consultants at McKinsey said
in a new report on Tuesday.
More self-indulgent, individualistic and brand loyal than
before, China's mainstream consumer class will comprise 400
million people with incomes above 106,000 yuan ($16,800) by
2020, polarising the market as they replace a more modestly
monied urban population still focused on buying life's basics.
That wealthier class of consumers, who are more emotionally
driven and brand-conscious than their current mass market
counterparts, will make up 51 percent of city-dwellers by 2020,
up from 6 percent in 2010, McKinsey researchers predict.
"Marketers will have to move fast to cater to consumers with
brands that 'speak directly' to their emotional wants," said the
report, which surveyed 10,000 people in 44 cities.
China's current mass market consumers are defined as having
annual household incomes of between 37,000 yuan and 106,000 yuan
and make up more than four fifths of the population. But by
2010, they will occupy just 36 percent, McKinsey reckons.
That means the speed, scale and simplicity of products that
have been crucial to success for consumer goods firms in China
for the last 15-20 years will be supplanted by strategies built
around emotions, niches and diverse brand portfolios.
McKinsey research suggests China's new consumers are more
than 50 percent more likely than their current mass market
cousins to consider the emotional benefit of products they buy.
These consumers are also more likely to prefer certain
brands, be younger than the overall population and live in the
big cities dotting China's east coast.
The report says younger consumers are more likely to emulate
spending traits of consumers in developed countries - 41 percent
of younger consumers in the new mainstream consumer class are
more likely to say they "always pay premiums for the best
products", compared to 31 percent of older consumers.
Chinese consumers, famous for ferreting income into savings
and shunning credit card debt, are beginning to pay more
attention to foreign and luxury brands.
The share of urban households able to afford cars and little
luxury items will rise six-fold by 2020 to about 57 percent of
the total, the report said.
Higher income consumers also prefer foreign brands of food,
drinks and personal care products in greater numbers.
"The good news for global companies is that the younger and
more affluent consumers are, the more likely they are to favour
foreign brands," the report states.
The more affluent shoppers were also more likely to consider
information gleaned from social media and the internet to help
them make purchasing decisions.
Urban lifestyles and increasingly hectic schedules have
taken their toll on Chinese consumers, McKinsey's survey found.
More than a third said they spent more on mobile phones, as well
as pre-cooked meals and dining out, compared with a year ago.
Setting up domestic consumption as a driver of growth is a
key tenet of the Chinese government's current five-year plan, as
the country looks to reduce its reliance on exports.
A report last year by the Boston Consulting Group predicted
China would become the second-largest consumer market in the
world, behind the United States, by 2015.
(Reporting by Beijing Economics Team; Editing by Nick Edwards &
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