Growth and Trends of Chinese Market
Growth and Trends of Chinese Market
December 13, 2019
By Eddie Tabakman, Director of Marketing + Communications at WPIC
The purchasing power of China’s consumers continues to grow despite recent reports that the growth of the 2nd largest economy in the world is slowing down. The ease of a seamlessly integrated digital retail experience is part of the reason why.
China and its continued dominance as a global e-commerce leader, with a market that is expected to exceed $1.3 trillion USD in 2019, is well known at this point, however some of the key contributing factors that are converging to enable this are, perhaps, lesser known.
Read on to discover the top 4 learnings within China’s digital consumer market, and plan ahead for 2020.
Trend 1 – KOLs and Live Streaming
A key component to China’s e-commerce dominance is in part, thanks to the increasing appetite for branded content and the rise of Key Opinion Leaders, also known as “KOLs”.
In 2018, the KOL market value was about $102 billion RMB. And, on Singles’ Day 2019, the Chinese internet saw over 2,000 KOLs live streaming products online during the busiest shopping day of the year.
While a “QVC-style” product display may not seem like an innovative tactic for Western consumers, they are the latest and greatest tactic in driving conversions in China. KOLs not only amplify brand awareness, but they frequently aid in the decision-making process of their digital followers. Savvy brands in China are taking this insight into consideration as they build robust campaigns for reaching target audiences through KOLs and live streaming on China’s leading video and e-commerce platforms.
Trend 2 – The Silver Population
An increasingly influential component of China’s consumer population is that of the elderly. More than 170 million individuals in China are 60 years of age and older, the needs of senior citizens include: user-friendly technology; and nutrients and supplies for the maintenance of good health.
And, present-day seniors are demonstrating a slightly more liberal spending attitude than their earlier 60+ aged predecessors and are buying more than just practical necessities.
This was elucidated in a survey by management consulting group McKinsey: “In our 2011 survey, the elderly [in China] were more inclined to save and less willing to spend on discretionary items such as travel, leisure, and nice clothes. These tendencies will probably be much less apparent in 2020.”
International brands stand to benefit from this increasingly important segment as there exists an increasing awareness of health, fashion, and beauty among Chinese seniors.
Trend 3 – Health Food
China is the biggest food and beverage generator in the world with a projected online retail market volume of $36.67 billion USD, in the next three years.
In 2019, revenue from F&B segments is projected to hit north of $22.7 billion USD, showing an increase of 22.5% when compared to the year earlier.
However, despite China’s physical size, the country has run out of agricultural space (not all the country’s land is arable) and must lean on other states to supply a variety of meats, produce, and other foods.
China will be looking towards the rest of the world for more food import opportunities, as Chinese consumers equate those products with health and quality.
Trend 4 – Active lifestyles
As Beijing plans to host the Winter Olympics in 2022, the Chinese government is encouraging active lifestyles and plans to build an $813 billion USD athletic industry by 2025. The Chinese Government has also initiated a domestic campaign to encourage physical fitness and sports and has supported that campaign with sponsorship of marathons, yoga programs and other participatory sports events.
Lian Weiliang, the Vice President of the National Development and Reform Commission said as much: “There’s immense potential in the sports market.” All evidence seems to agree with Mr. Lian, as over 104 million mobile phone users in China have at least one mobile fitness application on their phone.
What does that mean for revenue, however? China’s sports sector is set to reach $425 billion USD, by the end of 2019, which means there is a ripe opportunity for global brands to make a mark in the market and drive significant revenue.
For foreign sports and active brands looking to launch in China, now is the time.
Interested in more data-driven insights? Contact WPIC for a market-entry report with specific insights on your sector.