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Article - McKinsey Quarterly - October 2016 Chinese consumers: Revisiting our predictions By Yuval Atsmon and Max Magni Chinese consumers: Revisiting our predictions Article Actions Share this article on LinkedIn Share this article on Twitter Share this article on Facebook Email this article Download this article As their incomes rise, Chinese consumers are trading up and going beyond necessities.
In 2011, we tried our hand at predicting the ways in which, in the decade to come, Chinese consumers would change their preferences and behaviors. This article takes stock of those predictions. Why check in now. Another is a comprehensive new McKinsey survey, which follows nearly ten years of previous research that includes interviews with more than 60,000 people in upward of 60 cities in China.
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Deeper and more nuanced understanding of Chinese consumers can help reveal fresh opportunitiesfor new entrants and incumbents alikeand signal those areas where established players may need to be more wary. While geographic differences persist, Chinese consumers are, on the whole, more individualistic, more willing to pay for nonnecessities and discretionary items, more brand loyal, and more willing to trade up to more expensive purchaseseven as their hallmark pragmatism endures.
Just as it was then, generalizing about Chinese consumers continues to be almost as difficult (and maybe as foolish) as it is to generalize about European consumers.
We predicted these differences would remainand even grow more significant, especially in the consumption patterns and tastes that relate to discretionary items. To help companies better tailor their go-to-market approach, we grouped most cities in China into clusters based on their similarities, including their geographic proximity and the transportation infrastructure that connects them. Furthermore, when our latest survey compared the consumers in the Shanghai area to those around Beijing and Hangzhou, certain spending attitudes also showed marked differences.
For example, brand loyalty increased much faster in Shanghai (24 percent increase in three years versus just 7 percent in Beijing and 9 percent in Hangzhou), as did the willingness to pay for better or healthier products. Despite geographic differences, there are broad similarities among Chinese consumers. These mirror the general trends economists have found among consumers around the world as economies develop.
The general tendency is for consumers, as they earn more, to spend a lower percentage of their income on food, a little more on healthcare, and even more on travel and transportation, as well as on recreational activities.