Commentary: Chinese millennial and Gen Z consumers want more than a good bargain

SINGAPORE: China is the world’s largest market and biggest prize for global brands, but there’s an important transition in the profile of its consumers that could make or break foreign companies trying to succeed in the country.

I’m referring to the growing economic power of China’s millennials and Gen Zs.

These generations have come of age in an era of affluence and access to education unlike any other in the history of China. Along with that affluence and education have come shifts in tastes and approaches to consumption.

What firms need to understand is that these generations are less price-sensitive relative to older generations. They seek brands that resonate with their aspirations, ethics and the impact they wish to make through their consumption choices. Paying a premium is an acceptable tradeoff.

For foreign brands, marketing to Chinese millennials and Gen Zs requires re-evaluating their strategies to engage these nearly 600 million consumers.

EDUCATED CONSUMERS

Our latest Chinese consumer survey, which polled nearly 2,000 people across three generations in February, underscores the high education levels among Chinese millennials and Gen Z. With 60 per cent of both generations holding a bachelor’s or higher degree, their purchases are informed, discerning and principled.

Their education empowers them with skills to evaluate products that offer more than just a good price point. Chinese youth are willing to invest in brands that align with their personal ethics.

For instance, our survey found that more than 80 per cent of millennials and Gen Z consider the impact on the environment when they choose transportation. And nearly 90 per cent of both generations are concerned about China’s role contributing to climate change.

Having grown up in a fully digital and more globally connected China, Gen Z places even greater emphasis on brand authenticity and digital experiences. They are more likely to engage with brands that stand for something beyond their products, championing social causes and sustainability even more vociferously than their millennial counterparts.

This generation, particularly its females, is leading China’s outbound tourism, travelling alone more often and to countries less explored by older generations. Our travel sentiment reports found that nearly six in 10 Chinese tourists in 2023 were female and more than half had bachelor’s degrees.

WINNING OVER CHINESE MILLENNIALS AND GEN Z

Brands can leverage the curiosity and independence of young Chinese consumers through the following strategies.

First, companies can tailor their products to fit the local culture. KFC, one of the earliest fast-food chains to enter China, exemplifies effective localised marketing. It has continuously evolved its menu to include items that cater to local tastes and culinary traditions, going well beyond fried chicken.

For example, KFC introduced items like the Old Beijing Chicken Roll, a nod to Beijing's famous roast duck, and regional variations such as Seafood Egg Porridge in Shanghai. This approach works - our latest cross-generation consumer survey found that KFC is the most popular fast-food restaurant for Gen Z and millennials.

Second, high-quality products that deliver on their promises are non-negotiable. Apple's unwavering popularity among Chinese consumers can be attributed to its commitment to quality. Its products, perceived as status symbols, align with the desires of millennials and Gen Z for premium, reliable technology.

Third, companies must utilise digital platforms for marketing. Alibaba and JD.com have mastered digital engagement, using big data to personalise recommendations for customers and integrating social media into marketing campaigns.

Fourth, firms can offer an engaging brand experience, both online and offline, to enhance loyalty. Alibaba's supermarket chain Hema is a prime example of this, blending online shopping with traditional retail.

Customers can shop in-store, order groceries online for delivery within 30 minutes, and even scan barcodes of products in-store to get information and pay via Alipay. This approach provides a seamless shopping experience that leverages both physical and digital touchpoints.

THE WAY FORWARD

Innovation, sustainability, and digital engagement are no longer mere buzzwords; they are imperatives.

The growing purchasing power of more than half a billion highly educated, productive and savvy youth poses nothing short of a transformation in the way global brands make and market their products. The companies which take seriously their tastes and values will win the next three decades of the century.

Critically, winning in China doesn’t require lowering prices anymore; it requires raising understanding.

Subramania Bhatt is CEO of China Trading Desk.