Two Trends on Chinese Consumers

A recent McKinsey report “How half the world shops: Apparel in Brazil, China, and India” reveals some interesting patterns of consumer spending in these countries. Two things stand out for me on the Chinese consumers. I thought I would comment briefly here as the Chinese consumers are related to my upcoming book on the Chinese middle class:

First, the Chinese mass market consumers (defined as annual household income from $3,000 to $12,000) have relatively small, undifferentiated wardrobes – 40 percent of the Chinese women reportedly wear similar clothing at work, formal social occasions, and dates with friends or family.

This photo was taken at Vienna Cafe in Shanghai. The picture on the wall is Chairman Mao and his famous motto “Serve the People.”

I did notice, even in Shanghai, people are less sensitive as to what to wear for different occasions. For example, I met a girl friend, who was wearing a beautiful dress, for coffee on a Saturday afternoon. She used to be a marketing professional in a multinational and is now running her own PR firm. But the next day when I met her again in a totally different situation, I was surprised to see that she was still wearing the exact same dress as she wore the day before. However, as China continues opening up to the world, I would expect people will become more sophisticated in this area.

Another thing is that China’s urban youth (18 to 25 years old) is dramatically different from other consumer segments (see my previous post on China’s cyber-savvy and pragmatic youth). They favor international brands and are much more open to try on foreign products compared with the youth in other countries. This segment currently comprises about 15 million people.

This photo was taken in the Plaza 66 – the luxury mall in Shanghai

When I visited the Plaza 66 – the luxury mall in Shanghai, I was perplexed to see that most consumers in the mall were young people in their early twenties. I really wondered how on earth they could afford to buy Fendis and Luis Vuittons and where they got the money. My friend Shaun Rein, who studies the youth culture in China, explained: “It was the secretaries who are making 3,000 yuan a month who buy these luxury goods.” Well, if so, it’s hard to imagine this kind of consumption will sustain.