Budgeting for the summer holidays: a typical scenario in the Chinese middle class
One of the hot topics you couldn’t miss in China this summer was a Chinese mum’s WeChat post talking about the expensive summer holiday costs she has to cover for her elementary school aged daughter, which went viral immediately. This working mum, a senior manager with 30,000RMB monthly income (Appx. 3,500 GBP, in China’s tier 1 city Guangzhou, claimed that she couldn’t afford her daughter’s summer holiday. The fifth-grade girl’s summer holiday cost 35,000 RMB (Appx. 4,000 GBP).
Chinese parents have long sent their children to academic programs during summer vacations to keep them busy and more importantly, build their “competitiveness” to stand out from school peers, now the growing trend is sending kids to top-notch US and UK summer camps / schools. They are paying for a Western lifestyle and culture for their kids, which they hope brings an invisible, formative influence on future success.
This white-collar mum’s spending is a quite typical example of the emerging middle class in China, who were born in the 1980s, highly educated, living an indulgent, modern life in Tier 1 and Tier 2 cities. They are paying for experience rather than product, which shows a considerable difference compared to earlier generation in China. These individuals, with an annual income of 100,000 RMB to 500,000 RMB (12K to 60K GBP) are spending more and more on personal development and traveling, for both themselves and family. They are also more globally-aware and more sophisticated with exposure to western cultures, which gives them access and confidence to literally “shop the world”, for not only goods, but experiences.
Experience-oriented, lifestyle upgrade, demand for uniqueness
Living a balanced and healthy life, exploring unknowns, enjoying premium products and services that bring out, or enhance their uniqueness – wellbeing, education, travel, fine dining and drinks, entertainment and socialising are the key themes of this rising class. Which obviously makes them the major driving force of Chinese consumer power, about 65% of the total consumption growth.
Knowing that they account for the majority of total Chinese overseas tourists, and spend more than double that of the avg. Asian millennial travellers per trip, it’s time to dig out their preferences – where are they spending more money when travelling the world? By spending much more on culture, sports and entertainment when overseas and allocating less travel budget for shopping, the emerging middle-class travellers are breaking the stereotype of Chinese tourists. We’ve seen a 2200% growth in London theatre bookings last summer via CTrip, the biggest online travel platform in China. Enjoying musicals and plays, fine dining and wine, from the most popular bars to weekend markets, this generation is searching for the local experience as much as they can, and paying for added-value bespoke services such as private tour guides for galleries and suit tailoring.
As a brand are you ready for these young consumers who have ever-growing expectations on the experience and service they receive? The so-called “C2B” model is not just a concept but reality in China. Today it’s the customer who sets the rules, shaping a brand’s offerings and redesigning the market, constantly. It’s a certain fail if any brand positions itself as a pure product seller today and resists responding to this trend.
Winning the emerging middle class
To win this most empowered, influential and well-connected generation, who are undoubtedly expected to be the future biggest spenders, brands should introduce unprecedented concepts to “wow” them and lure them into repeat visits.
Before digital really took off in China, it used to be sufficient for companies targeting China to apply a customer segmentation built on basic demographic factors. It is a completely different story now if you are trying to market to Chinese consumers, namely this emerging middle class. It’s never too detailed when it comes to the segmentation of today’s customers in China – what image they are trying to build for themselves, their desire of personality statements, what they perceive as important elements in terms of upgrading their lifestyle, how they connect, are influenced and influence others… And more important is how much insight you continuously receive through communication and interaction with your target audience! If you are unable to identify more or deeper segments than you had spotted a year ago, you are not playing a great game and you are falling behind.
Before rushing into channel designs or promotion plans, ask yourself a simple question: How well do you know today’s Chinese consumers, who have you chosen to target and why?
To unlock the golden opportunity to reach, engage and sell to this customer segment, please join our China digital masterclass on 20th September, click here for more information.
- “A Chinese white-collar mum who claimed that she couldn’t afford the summer holiday for her daughter”
- “Summer camps: A dilemma for Chinese parents”
- “26 facts of China’s emerging middle class”
- “Understanding China’s new consuming class – the millennials”
- “Five profiles that explain China’s consumer economy”
- “Aspirations and dilemmas of China’s new affluent consumer class”
- “Chinese tourists’ bill – global travel spending report 2017”