China’s Consumer Economy to Add Nearly Two Trillion Dollars By 2021: Report
China’s consumer economy is expected to continue to grow fast and may increase by 1.8 trillion U.S. dollars by 2021, according to a recent report.
Even as overall economic growth eases, China’s consumer economy is benefiting from an emerging upper-middle-class and more affluent households, a younger population that is eager to spend, and e-commerce through digital channels, according to a report by Boston Consulting Group (BCG) and AliResearch, the research arm of Alibaba Group.
“Because of these factors, Chinese consumers on average are spending more, and they’re trading up to higher-quality products,” said Jeff Walters, partner at BCG and co-author of the report.
Chinese are more comfortable buying online than people in other countries, and by 2021, 90 percent of all purchases in China will involve digital technology at some point in the process, whether it be browsing, comparing prices, or making the actual purchase, Walters added.
As China’s economy matures, its consumers are becoming more diverse. Rather than targeting large, homogenous demographic segments, companies need to understand the emerging consumer profiles, along with their distinct preferences and needs, the report pointed out.
Chinese consumers are far more brand-savvy than in the past, and consumption boundaries like age and gender are disappearing. Meanwhile, Chinese are increasingly likely to be single, which means a growing demand for different types of products, such as furniture designed for single person apartments, smaller appliances, and food sold in smaller sizes and more convenient packaging.
Chinese shoppers are also increasingly aware of environmental issues and sustainability, and they want their purchases to be both good for them and for the planet.
AliResearch found that 66 million people, about 16.2 percent of the consumers on Alibaba’s China retail marketplaces, bought five or more green products in 2015, up from just 4 million in 2011, and these consumers were willing to pay higher prices – around one-third more, on average, for sustainable products.
For companies, tapping into these new profiles requires more accurately segmenting consumers, understanding their needs to ensure that new products and services resonate, and seamlessly integrating the shopping experience between digital channels and physical stores, among other priorities, according to the report. (Source: Xinhua)