Centennials or Gen-Z is the next generation of influential shoppers in China. When it comes to spending, they are said to surpass even the high-rolling Millennials. 40% of Chinese consumers are expected to belong to Gen Z by 2020. It is no wonder, then, that many companies are already readjusting their strategies to appeal to and resonate with this group.
Gen Z: China’s Rising Affluent Consumer Segment
Gen Z is a demographic group born between 1995 and 2003, the products of China’s one-child policy and astronomic economic growth. By 2020, they will account for 40% of the global Gen-Z purchases. Currently, there are about 149 million Gen-Zers in China. This number is projected to balloon to 312 million in the upcoming years.
Privileged and accustomed to luxury, this group has a liberal attitude toward spending. They are a discerning generation of consumers with a greater sense of identity than past generations. Gen-Zers are the first crop of Chinese born when the region was fully modernized and digitized. Interestingly enough, they are less apt to follow trends.
China’s Gen Z Consumers’ Defining Characteristics
For Chinese Gen-Z consumers, purchases are less about the products and more about experiences. They share this same mindset with Millennials, but to a larger extent. Gen-Zers seek the unique and are always in for a wild ride socializing with peers is also important to them. An important factor in their purchase decision is whether a product will help them make new friends.
Gen-Zers care about their image. They are what they buy, so they only go for the best. It is all about making a personal statement in their purchases. For this reason, Gen-Zers are rational shoppers. They look for quality products, purposely seeking out one-off or limited-edition merchandises. Money is no object as long as their purchases serve their purpose – to help boost their reputation, especially in this social media age.
The Gen Z is not called the new “moonlight clan” (those that empty their wallets every month) for nothing. As products of China’s one-child policy, they did not have to share while growing up. They spend money to be happy and revel in the instant fulfillment that consumption can provide. With more disposable income, the Gen-Zers see no problem in saving less and are confident about their futures.
Opportunities for Businesses
For many companies, China’s Gen Z consumers are an exciting new market waiting to be tapped. The key is understanding how this generation differs from the previous ones. Compared to Millennials, Gen-Zers are more enthusiastic about live online streaming and social media shopping. They are also more digital-savvy and enjoy sharing information online.
To market products effectively, it is vital for brands to choose the right platforms to reach this consumer segment. For instance, while Millennials prefer WeChat, Weibo and QQ space, Gen-Zers tend to use social apps like Meipai, Toutiao and Douyin because of their broadcasting and live stream video features.
China’s Gen-Z may be an enticing market for brands, but it still poses a number of challenges. For instance, continuous monitoring of this segment is necessary since their needs and preferences can change quickly. It is also important to note that Gen-Zers have less brand loyalty than Millennials.
The consumption power of Gen Z cannot be ignored. This group spends about 15% of a household’s income, the highest proportion in the world. Most of them have a stable money source, aside from the financial support they receive from their parents. Gen-Zers’ monthly purchases are impressive, reaching $507 (RMB 3,501).
They are also an increasingly important demographic for luxury brands. With a $4,358 (RMB 30,000) monthly salary, most of them lead an affluent life and can more than afford an expensive product they want. By 2025, China’s Gen-Zers will account for 46% of purchases in the luxury market.
Parting Thoughts on How to Unlock China’s Gen-Z Spending Power
With their high expectations and worldly perspective, China’s Gen Z consumers are expected to shape the ways businesses create and market their products in the region. As they become increasingly influential, businesses need to be prepared and realign their business strategy for this consumer segment.