How Brands Can Successfully Target Gen Z in China
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Understanding young consumers in China can have a significant payoff, with Gen Z poised to be some of the most prolific shoppers ever
Just when you’ve mastered millennial appeal, along comes Gen Z and their unique demands, expectations and tastes. Taking the time to tailor a business strategy with this market in mind can mean tapping
In China, Gen Z is a distinctively new consumer segment that is on track to represent the next wave of the country’s domestic growth. Considered to be those born between 1996 and 2010, Gen Z make up about 15% of China’s population. Only 15%, you might think… but only 15% in China is actually more than 210 million people. And they love to shop.
“China accounts for the highest share of Gen Z household spend at 13% compared to only 3% for the UK and 4% for USA,” says Veronica Wang, Associate Partner, OC&C Strategy Consultants.
“These statistics are enough to urge brands to rethink their business strategy if they want to capitalise on China’s booming market.”
Unlike in the West, it’s not necessarily women driving this boom: male Gen Z shoppers are outspending women by 20% on fashion and luxury goods.
So what makes China’s Gen Z unique – and what can your brand do to make sure you’re maximising your appeal?
Gen Z – Digital natives mean digital shopping
Gen Z is China’s first generation of digital natives. Using tech as a form of communication and entertainment comes instinctively to them. Whatsmore, they also naturally view tech, and specifically social media, as a first point of call for making purchases.
In fact, social commerce is so developed in China that its Gen Z citizens are instinctively shopping with just a few clicks.
“China’s Gen Z are the most spontaneous of all, with 47% telling us that they buy products on the go, five percentage points higher than for Chinese Millennials (aged 24-38) and more than 10 percentage points higher than for China’s Gen X,” according to new research by McKinsey.
This spontaneity is a sign of just how optimistic Gen Z in China is of their future. They’re not just spontaneous, though, they’re also splashing serious cash. The same McKinsey study reported that:
“78% of Chinese Gen Z respondents said they believe they will earn more, or much more, in the future. This combination of impulsiveness and optimism also leads 36% of our survey sample to overspend their budget.”
Gen Z – Shopping Preferences
For China’s Gen Z, splashing cash (digitally, of course) doesn’t mean they’re not disconcerting. Quite the opposite. They have distinct preferences that brands should recognise and cater to in order to capture this lucrative segment. Those preferences include:
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1. Customisation
Known to seek out unique and limited-edition products, Gen Z shopping habits represent their desire to stand out. Brands that have found success with Gen Z in China have often offered customers the ability to personalise products. The opportunity to engrave their name or initials on a bottle of perfume, for example, or even a mix-and-match approach that allows customers to personalise a skincare set, has proven to be highly attractive to these consumers.
More than half of China’s Gen Z actively prefer brands that offer customised products, while 53% opt for brands that provide tailored services. This preference for uniqueness is much more pronounced than the equivalent segment of consumers in China than Australia, Japan or South Korea.
When it comes to luxury goods, China’s Gen Z takes their preference for uniqueness even further.
“Gen Z believes that to qualify as true luxury, a brand needs more than high price points, heritage and craftsmanship. It must also convey an elevated sense of aesthetics, with unique qualities and character,” according to a 2021 China consumer report released by Vogue Business.
2. Multi-Channel Shopping Experiences
As the worlds largest e-commerce market, it’s no secret that Chinese consumers prefer to shop online. In fact, forecasts show that China will be responsible for more than half of all e-commerce sales worldwide in 2021.
Read more: How UK Retailers Can Capitalise on China’s Demand For ‘Brand Britain’
Even with a preference for e-commerce though, Gen Z still expects omnichannel shopping experiences – even more so than in other countries.
When it comes to clothing, for instance, almost 40% of Gen Z consumers in China stated they would browse in-store, but shop online while only about 15-30% of Gen Z in other countries stated they would do so.
3. Recommendations Via Social Media
Whereas a millennial might place a significant influence on what skin cream their friends recommend, for Gen Z, this type of influence is increasingly less influential.
In fact, only 43% of Gen Z respondents to a recent survey put the ‘family and friends’ category in their top three sources of influence, versus 69% for Gen X.
In what’s a marketers-dream scenario, a brand’s official social media channels is actually far more important to these young shoppers in terms of influence, as are KOL’s (key opinion leaders, the Chinese equivalent of bloggers).
Read more: Why KOL Marketing is so effective in China – and how you can use it
If there was ever a market to focus resources on developing a localised social media presence, China is it. Not only does it directly influence shopping decisions, but it’s also often the portal for the actual sale.
4. Lifestyle-Focussed
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In the ultimate sign of style over substance, Gen Z in China is increasingly favouring products that fit into their lifestyles. Functionality is valued less.
“Brands should follow Apple’s example in this regard. It has successfully positioned itself as a lifestyle brand while Samsung, which sells similar products, is considered a technology company,” advises Vogue Business.
Perhaps the ultimate sign of this was a recent report that British brand Dyson has morphed from ‘ultimate vacuum cleaner’ into…art. Jing Daily reported on a Chinese consumer having one of the brand’s devices hanging on the wall: “I have no idea if it’s any good. I don’t use it,” he laughed, only to reveal a Toshiba vacuum hidden out of sight under the stairs. “I do the cleaning with this.”
The Dyson device has “transcended its traditional functionality for a much loftier one: signifying an aspirational, tech-led lifestyle”.
This lifestyle approach goes beyond aesthetics, though. With high levels of anxiety and huge societal pressures, brands that offer entertainment or a form of escapism hold great appeal to Gen Z in China.
The bottom line? Successful products “must resonate with Gen Z lifestyles and subcultures”.
“Brands should associate themselves with solutions by appealing to their audience’s hobbies, passions, or subcultures, such as gaming, fitness, or sustainability,” according to Chinese culture expert Arnold Ma.
Whether you’re new to China’s e-commerce market, or want to switch partners and take advantage of cheaper transaction rates than offered by the High Street, we can help. Contact us today to maximise your chance of success in China.