30 Sept 2009
Middle-class Consumers in China
Middle-class families in China have a high disposable income and strong purchasing power. As Chinese people generally believe that an ideal life is built on material comforts, the middle class hence aim to provide a comfortable and affluent way of living for themselves and their families. Such a lifestyle does not only enhance their success status, but also serves as a reward for their everyday toil in earning a living. To understand the lifestyle and spending characteristics of the mainland middle class, the Hong Kong Trade Development Council (HKTDC) surveyed 1,050 mainland middle-class consumers in June 2009, which found that a great number of them own an apartment and a car, go after international brandnames in buying mobile phones, handbags and watches, and travel overseas for family vacations.
Self-confident and pleasure seeking
Young mainland consumers spend extravagantly on trendy products, dining and entertainment. Growing up at a time of the country’s rapid economic development and being the single child in the family, they are accustomed to enjoying material comforts and make purchases with little concern about price. Among respondents aged 20-24 and 25-44 who do not have a family to shoulder, 34% and 32% respectively do not have a habit of saving. Although they are spending more cautiously in the wake of the global financial crisis in 2008, they have not changed much in terms of basic habits and attitudes of consumption, with the only change being the realisation of the need to make long-term financial planning for their future.
As a matter of fact, the mainland middle class are fully confident of their own accomplishments and capability. Over 80% of the respondents reckon career and wealth can boost their self-confidence. To increase wealth, 85% of the respondents will proactively seek out investment opportunities, while 84% will work hard to build a career. To scale new heights in career, 78% of the respondents express the wish to start their own business, while 75% say they will undertake further studies and strive to obtain some professional qualifications.
Avid followers of trends
In addition to building career and wealth, the mainland middle class also seek to be individuals with a pleasant outward appearance and good mannerism, an international outlook and fine taste. Among the respondents, 67% like to try out new things and acquire trendy and innovative products, and 63% like to share the latest fads and life experiences with friends. These characteristics are not unique among the young consumers. In fact, the percentage of those aged 45-54 with such traits is just slightly below those of the 20-24 and 25-44 age groups, reflecting that the chase after trends is a common feature.
A majority of respondents chasing after the latest trends believe that they themselves are the trendsetters ahead of others in their thinking and taste, and they are also very concerned about whether their outfits are fashionable, with Shanghai and Dalian having the largest proportion of respondents with such views. The channels through which these trendsetters obtain information about the newest fads are the internet and magazines on the subject, including Hong Kong magazines on trends.
Hong Kong as trendsetter
As the most sophisticated cosmopolitan city in Asia, Hong Kong is ahead of the mainland in trends, embracing the most trendy products from overseas. Hong Kong’s popular culture incorporates the essence of international trends and is more readily accepted by mainland consumers than that of Europe, the US, Japan or South Korea. Many mainland middle-class consumers like getting in touch with Hong Kong’s popular culture from which they can keep up with international trends and get inspirations for personal dress code and tasteful living. In the survey, 87% of the respondents express interest in Hong Kong’s latest trends, as they are attracted to the city’s popular culture and admire its people’s life enjoyment. In addition, 75% of the respondents think highly of the image of Hong Kong’s management and professional personnel. 70% regard Hong Kong’s celebrities and entertainment artists as their role models because they display good taste in the way they dress, have good sense of fashion and are sophisticated.
Among respondents who are interested in Hong Kong trends, 71% learn about the latest products and fads in the international market through Hong Kong, and 49% say that the way they dress, their lifestyle and pastimes are affected by what is popular in the city. They do not only hope to visit Hong Kong frequently to shop for fashionable products that are offered only in the city, but 79% of the respondents also express the wish that Hong Kong’s products, entertainment and other services can be made available on the mainland.
Hong Kong’s advantages and opportunities
Hong Kong’s strongest niche lies in its level of internationalisation. Hong Kong companies are known for their flexibility in adapting fashionable features on the international market to the design of their products and services to meet the needs and tastes of consumers in the east. In the eyes of the mainland middle class, Hong Kong companies offer quality assurance and deliver first-rate services of international standard. In the survey, 64% of the respondents reckon that even if Hong Kong branded products are manufactured on the mainland, their quality is still relatively better, while 65% say they have more confidence in brands marketed by Hong Kong companies. Generally, they have a good impression of Hong Kong products and services.
The global financial crisis has raised the sense of crisis among the mainland middle class, who now realise that they should make long-term financial planning for themselves and their families. In the survey, 85% of the respondents say they will proactively look out for investment opportunities to increase their wealth, offering good market potential for Hong Kong’s financial services providers. Furthermore, 75% of the respondents hope to further their studies and obtain professional qualifications to advance their career. The many Hong Kong study programmes and education institutions which have gained international accreditation should prove attractive to the mainland middle class.
Although Hong Kong products and services enjoy advantages on the mainland, to break into the mainland middle class market, Hong Kong companies should position and promote their products by targeting at the specific preferences and habits of this group. For instance, the number of internet users is rising rapidly on the mainland, and the middle-class consumers often go online to look for information and to shop. In the survey, 29% of the respondents say they frequently visit Hong Kong websites, and 28% often shop online. To expand into the mainland market, Hong Kong companies can make greater use of the internet as a platform to promote their products and services. In addition, 63% of the respondents like to share the latest fads and life experiences with friends, and “word-of-mouth” is hence an important channel for consumers to gain product and market information. To foster good “word-of-mouth”, products and services must have their own unique characteristics, come in good quality and can make an impression on consumers in the sale process.
The mainland middle class favour Hong Kong’s international outlook and east-meets-west culture. They also appreciate how Hong Kong people enjoy life, display fine taste and value quality. Generally, they show great confidence in Hong Kong’s products and services which they believe embody the latest trends, fashionable designs and innovative concepts. Despite the global financial crisis, the mainland consumer market is still registering steady growth. Hong Kong companies are recommended to leverage the good impression of Hong Kong brands among the mainland middle class to expedite their entry into this market.