Consumer dichotomy in focus

0 Comment(s)Print E-mail China Daily, November 26, 2018
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Customers go shopping at a tax-free shop in Sanya, south China's Hainan Province, Aug. 12, 2011. [Photo / Xinhua]

Two distinctive sets of consumers are on the rise in China, each with its own motivations and spending patterns, which leaves room for new business entrants to cash in on the world's largest consumer market, a survey has found.

The first silo is middle-income earners and above, typically residing in top-tier cities like Beijing and Shanghai, and willing to pay a premium for quality, said global consultancy KPMG in its research on consumer insights released earlier this month.

Meanwhile, the second persona belongs to a more price-conscious consumer group, which has more time and less money and therefore regards online revolution as a way to stretch their budgets.

"China's consumers are born of two very distinctive paths, and that's something very different from other countries," said Willy Kruh, partner at KPMG and global chair for its consumer and retail practice.

Such dichotomy is giving new players plenty of opportunities to enjoy rapid growth, even if the market has seen mega platforms like Alibaba's Tmall to the messaging-to-payment WeChat.

Kruh cited Pinduoduo, an e-commerce platform, which processed 5.3 billion transactions in 2017, in less than two years since its founding. This and the spectacular growth of other services like teenager-friendly social media app Douyin show the dynamism of the market.

"Douyin and the Little Red Book illustrate the rapid user-generated content, which is leading to further fragmentation of consumer attention," said Kruh.

He noted that influencers emerging from these platforms, who are known as key opinion leaders or KOLs, are active in every sphere of China's online life, from business to finance, exerting a much wider influence on audiences than their counterparts in the United States and Europe, who are mostly confined to the lifestyle niche.

"The unrelenting, ubiquitous nature of technology in this market means that consumers' time and attention are more fragmented, more complex to understand, and more challenging for organizations to secure," he said.

"For brands, you can't just think about grabbing all customers. You are going to miss that huge, multi-hundred millions of population."

In response to this issue, Kruh suggested foreign brands to forge local partnerships and get advised on matters such as market entry and regulatory requirements, in order to have a clear mapping of the market to hit the ground running.

Despite the divergence, Chinese consumers are generally more mobile-centric and tech-savvy than their counterparts in other countries.

Some 70 percent of those surveyed by KPMG said they would rather lose their wallet than their phones-a stark contrast to any other country surveyed.

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