A view on China

FROM PRODUCTION TO INNOVATION

Chinese consumers are expected to continue to spend despite the slowing down of the macroeconomy. Individualism of the Chinese consumer will develop a new kind of energy that drives innovation and personal development, this will trigger global brands to be innovative and aware of the cultural needs of the Chinese consumers. Local Chinese brands will grow and develop an own unique design language and tech driven retail innovations that will be influencing global trends.

OvN's view on China shows how the Chinese consumer is evolving and becoming more selective about where to spend their money, shifting from products to services and from mass to premium segments. The search is for a more balanced life where health, family, and experiences are a priority.

While income is expected to rise across China, some cities and regions are already significantly wealthier than others. China is big and its regions are so diverse they should almost be treated as separate countries. Global culture is spreading through social media and a lot of developments you see in China are part of this global movement. Yet, they are similar but different. Because Chinese consumers are fast to adopt new technologies and are drawn to the new and different and have money to spend, the most interesting changes and ideas will be coming from China in the next few years. China will lead the way with new retail concepts, e-commerce, tech services, automatisation and the implementation of AI.

The most interesting changes and ideas will be coming from China in the next few years.

YOUNG GENERATION

The “young generation” people born in the 1980s, 1990s and the first decade of this century spend more than their elders. They are loyal towards brands and are highly influenced by social media. The share of total consumption by the young generation is projected to increase from 45% to 53% by 2020. (Source: World Economic Forum).

DISCOVERY DRIVEN

Highly personalized online shopping experience helps consumers discover new products and make lifestyle choices based on social interaction and location data. Everything consumers see on their screen is shopable and updated in real time. The path from discovery to purchase is seamless and easy. Discovery driven consumer journeys are more likely to deepen consumer engagement. Chinese consumers are increasingly open to local brands. Chinese brands are developing their own handwriting in design with a mix of Chinese heritage and contemporary global style. Chinese consumers want to see the world, and enjoy life with a focus on new and unique experiences. They love heritage, buying a piece of history and visiting countries all over the world. They love to experience luxury, not just buying the products but the whole experience. Technology is not seen as a luxury product, luxury is timeless and technology is not. People do enjoy the blending of technology and luxury.

HEALTH FOCUS

Healthy living is on the rise. The Chinese consumer has become more health conscious and more focused a better quality of life. People are not just working all the time, they’re actually starting to enjoy themselves and also care more about what they eat and how they take care of themselves. The number of Chinese running and doing exercise is higher than in the US. You see a shift from products to services and experiences that enhance a personal sense of well-being such as healthy foods, education, and travel. The market for health & wellness will reach nearly 70 billion USD by 2020. This is a result of both rising incomes and increasing awareness about healthy lifestyles among a growing middle and upper class.

FOOD FOCUS

Most Chinese consumers consider food globalization a good thing, they buy imported foods because these products are not available in China or because of food safety issues. Dairy products & children’s foods most imported. Consumers are interested in clean eating and this is also reflected in the increased popularity of organic produce, locally grown vegetables, and farmers markets, as well as the growing number of healthy food concepts like Tribe, Glo Kitchen, Obentos and Soul Bowls. Young people are used to ordering food on-line and rarely cook themselves. Food start-ups that run innovative delivery services are on the rise. Food is increasingly seen as self-expression, that fits to your lifestyle and what you can share online.

POLLUTION

China’s personal and environmental health can have a significant impact on the rest of the world. China is the world’s largest carbon dioxide emitter and urban air pollution is a severe health issue. There are also significant water pollution problems with many of the rivers affected by industrial and agricultural waste. But times are changing, China is one of the world's leading investors in renewable energy, most notably hydroelectric power plants.

City of trees, The Liuzhou Forest City — City of trees, The Liuzhou Forest City

High tech edge

China is moving from production to innovation. Dream Town near Hangzhou is nurturing 710 start-ups supported by the government. Also in China you see the rise of start-ups, collectives, other ways of working together and co-working spaces. The next generation is encouraged to be entrepreneurial, creating the ideas, technologies and jobs to feed the country’s future development.

Technological developments in Chinese retail are different from what we see in the western world, the pace of innovation is much higher. What creates the divide is the different attitude towards privacy, facial recognition and a controlled society. Face recognition is seen as an efficient tool in retail, nothing to be scared off.

New retail concepts are focussed on efficiency and speed. Alibaba plans to open 1,000 of its Hema supermarkets in the next five years. A lively part of the stores is the seafood area where consumers can choose and have their fresh seafood cooked onsite. You can pay with facial recognition technology linked to your Alipay account. 60 per cent of the sales in Hema stores are made via the Hema app, and the other 40 per cent are made in store. Deliveries are gathered in the stores, transported on rails running across the ceiling and delivered within 30 minutes. Seamless merging of off-line and on-line, tech and fresh cooked meals make the Hema stores lively and dynamic.

AI 2030

The Chinese government plans to lead the world in AI by 2030. Artificial intelligence is developing fast in China because of its quantity of data. SenseTime, the most valuable AI startup in the world can identifying your face, estimate your age and predict your purchasing habits. O2O, online-to-offline startups create a new ecosystem of data, merging users online behaviour with their physical world.

Changing values

UNIQUE

Seek something special, prioritizing premium products. something that sets them apart from the others. Logo’s are less important.

QUALITY OF LIFE

Balance and small pleasures instead of status and wealth. Living a more balanced, healthy, and family-centric life.

MORE INDIVIDUALISTIC

More open-minded and individualistic than older generations. Taking care/treating yourself. Social approval, the self via social media.

seamless lives

Open minded towards new technologies that make life efficient and experiences more seamless. Cultural attitudes about data privacy are very different, people are used to having little privacy.

Opportunities

Want to know more? OvN researches changing behaviours, retail developments and future demands. If you want to know what it means for your brand or product please contact us at info@oltmansvanniekerk.nl