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Consumer Profile
The Chinese population is estimated at 1.43 billion in 2022 according to UN data, with a relatively small share of young people under 25 due to the one-child policy (1.702 fertility rate in 2022). China has an average population density of 153 inhabitants / km2, with population growth of around 0.4% per year. The ratio of men to women is broadly balanced with the 15-64 age group accounting for 70% of the total population in 2022. The base of Chinese consumers is made up of relatively young people (between 20 and 35 years old): generally educated, they tend to save less spend more on leisure than their parents make increasing purchases online, prioritise more quality over low prices. The areas of higher consumption are concentrated in major cities such as Beijing, Shanghai, Shenzhen and other Chinese urban areas with high per capita income and high purchasing power. According to the latest data, the employment rate of the 2021 Chinese college graduates remained stable at 84,8%, with the private sector being the biggest recruiter for graduates. China’s People’s Daily newspaper reports that there are more than 8.34 million people who graduated from a higher education or university, up from 8.2 million in 2018. The agricultural sector employs about 24.7% of the labour force while the industrial sectors employs 28.2% of the population. Finally, the tertiary sector is the most represented category and employs 47% of the workforce in China.
Purchasing Power
The Gross Domestic Product per capita in China was recorded at $18,210 in 2022, when adjusted by purchasing power parity (PPP). The Chinese market is varied in its composition. Some parts of the country have experienced increases in confidence and spending (particularly in coastal areas such as Shanghai), while others have experienced lower growth or even negative growth. Regional differences are the result of increased demand for labour in China's coastal cities, which has disproportionately pushed the urbanization of the eastern provinces. China’s coastal provinces often boast higher per capita income levels than inland provinces even after taking into account the rural-urban income gap. The middle class represents about 400 million people in 2022, that is, 30% of the total population. According to the National Bureau of Statistics, a middle class household in China earns a monthly income of RMB 2,000 (US$295) to RMB 5,000 (US$740). According to McKinsey, 76% of China’s urban population will enter the middle income bracket by 2022. However, there is a net difference between lower-middle class and upper-middle class. In China, 75% of the middle class falls into the low-income category, earning $10 to $20 a day, while the upper-middle class can rely on $20 to $50 a day.
Today, almost 60% of Chinese people live on 2-10 dollars a day and more than 82 million Chinese still live on less than 1 dollar a day. The Gini coefficient, which measures the level of inequality, decreased slightly in 2019 vs 2018 to 46.5. Gender income inequality was 20.8% lower for women of equal work, placing China in the 103rd place (out of 149 countries) - ILO.
Consumer Behaviour
China is going through a consumption revolution: whereas in the past function and price were important factors in the buying decision buying behaviour has become more complex and Chinese consumers are taking increasing criteria into account when making a purchase. Brand awareness is becoming increasingly important and marketing is starting to play a key role in attracting Chinese consumers with advertising and research techniques. Chinese consumers believe that price is an indicator of the quality of a product, with price and sales services second. Certain aspects such as reimbursement guarantees of a product are less important. In general, the Chinese inquires a lot before purchasing, the main source of information being word of mouth. Chinese consumers are curious about what is on offer, especially with respect to foreign products.

With the improvement of living standards people are increasingly focusing on high quality products (luxury goods manufacturers and service providers are experiencing significant growth in China), making China the largest market for luxury brands. Despite mounting global social and economic challenges, China’s luxury goods market finished 2021 with strong double-digit growth overall, with some brands exceeding a 70% increase. Chinese consumers have continued to shop mostly in the mainland, given limited international travel options. This has led to a 48% increase of China’s domestic sales of personal luxury goods in 2020, and another 36% in 2021 totalling nearly RMB 471 billion, a near doubling in just 2 years (Bain & Company’s annual China Luxury Report 2021). Despite the Covid-19 crisis, consumer confidence is recovering and demand for luxury products from Chinese buyers is expected to increase by as much as 30% in 2021.

The collective feeling is important in Chinese society the group taking precedence over the individual. Thus, the standards, preferences and norms of the group to which an individual belongs have a huge influence on buying habits. For this reason, advertising is often directed towards group recruitment rather than individuals. Today, the elite of the one-child generation aspire to a pleasant life and are not reserved in their spending - including education, luxury goods, travel, leisure and consumer goods - especially in big cities. For more and more Chinese consumption is often targeted at high-end products of major brands, as shown by the strong growth in sales of luxury cars. Similarly, once a product is adopted by the reference group, the craze it generates spreads rapidly and widely. Nevertheless, there is a development of independence and individuality in consumer behaviour in China. In 2022 there is around 983 million social media users in China (DataReportal, 2022). The same year, online retail should generate 1.5 trillion USD, representing a quarter of China’s total retail sales volume, and more than the retail sales of the ten next largest markets in the world combined. Dematerialised and online payments are set to grow. Collaborative platforms like Tujia, Xiaozhu and AirBnb are present and used in China.
Consumers Associations
Association of Chinese Consumers
Main Advertising Agencies
Wieden+Kennedy
Techworks Asia
Dentsu
Saatchi&Saatchi

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Actualitzacions: June 2022

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