DALIAN, China, June 27, 2017 (GLOBE NEWSWIRE) — China’s overall GDP growth is slowing, but its consumer economy is still growing by 10% a year, faster than that of any other country on the planet. By 2021, China will add $1.8 trillion in new consumption. That is roughly the size of Germany’s consumer economy today, and more than one-fourth of all consumption growth in major economies. Those are among the key findings of a new report by The Boston Consulting Group (BCG) and AliResearch, the research arm of Alibaba Group. The report, titled Five Profiles that Explain China’s Consumer Economy, is being released today.
Underlying macroeconomic factors are leading to strong growth in the consumer economy. Even as overall economic growth eases, China’s consumer economy is benefiting from an emerging upper-middle-class and affluent households, a younger population that is eager to spend, and e-commerce through digital channels.
“Because of these factors, Chinese consumers in the aggregate are spending more, and they’re trading up to higher-quality products,” says Jeff Walters, a partner at BCG and coauthor of the report. “Digital technology is one of the underlying drivers that will continue to spur purchases. The Chinese population is more connected than people in other countries, and by 2021, 90% of all purchases in China will involve digital at some point in the process—browsing, comparing prices, or making the actual purchase.”
“The consumer economy in China is one of the most digitized in the world. The popularity of the internet is influencing consumer behavior as consumers rely heavily on the internet for all kinds of goods and services. We also believe the rising trend of a seamless convergence between the online and offline worlds will become an important driving force for the growth of consumption going forward,” said Gao Hongbing, dean of AliResearch and vice president of Alibaba Group.
Consumer companies that want to capitalize in China need to acknowledge these trends, but they also need to go deeper. As China’s economy matures, its consumers are becoming more diverse. Rather than targeting large, homogenous demographic segments, companies need to understand the emerging profiles of these consumers, along with their distinct preferences and needs.
To that end, the report identifies five emerging consumer profiles in China, which illustrate the ways in which macroeconomic and demographic shifts are playing out at a micro level. Here’s a sample of the profiles described:
- The Savvy Shopper. Consumers are far more brand-aware than in the past, and consumption boundaries (like age and gender) are disappearing. For example, Chinese men in tier-one cities now spend 24 minutes a day on grooming, and 88% access grooming and fashion information online—both measures are up significantly in the past decade.
- The Single Person. Because of demographic shifts, people in China are increasingly likely to remain unmarried. Among urban dwellers, 21% of people older than 35 are single, up from just 4% a decade ago. This trend means growing demand for different types of products, such as furniture designed for one-person apartments, smaller appliances, and food sold in smaller sizes and convenient packaging.
- The Ecoconscious Consumer. Chinese shoppers are increasingly aware of environmental issues and sustainability; they want their products to be good for them and good for the planet. AliResearch found that 66 million customers (16.2% of the consumers on Alibaba’s China retail marketplaces) bought five or more green products in 2015, up from just 4 million in 2011 (3.4%). Just as important, these customers are willing to pay higher prices—33% more, on average—for sustainable products.
For consumer 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 customer experience between digital channels and physical stores, among other priorities.
“A lot is changing in China, but the fundamental story is one of very strong growth through 2021,” says Walters. “This market is growing by trillions of dollars, and companies that take the right steps today will set themselves up to win over the long term.”
A copy of the report can be downloaded here.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries. For more information, please visit bcg.com.
About BCG’s Center for Customer Insight
The Boston Consulting Group’s Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG’s various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG’s Marketing, Sales & Pricing practice and Global Advantage practice. For more information, please visit www.bcg.com/expertise/centers-accelerators/center-customer-insight/default.aspx.
About Alibaba Research Institute (AliResearch)
Founded in 2007, AliResearch is committed to becoming the think tank and intellectual platform of the new economy and new governance. Relying on the large and dynamic online business ecosystem of Alibaba Group, AliResearch creates and shares future-oriented new ideas, new insights and new rules, and collaborates with other researchers and organizations in all fields.
CONTACT: The Boston Consulting Group Eric Gregoire Global Media Relations Manager Tel +1 617 850 3783 Fax +1 617 850 3701 [email protected]