From ‘little emperors’ to big spenders: How a new wave of marketing optimism is sweeping China
While the economic outlook may remain gloomy for many of us, a new cool and affluent generation of consumers is painting a brighter picture for brands in China. Steve Blakeman, CEO of OMD in the Asia-Pacific region, tells us the lessons marketers can learn from China’s big-spending youth.
Steve Blakeman
China’s youth is changing rapidly. In the past, they were often referred to as 'little emperors' epitomised by the one child generation, idolised and indeed spoiled by all the attention lavished upon them by their doting parents and grandparents. But the latest generation have come into their own, exhibiting much larger buying power than their generational predecessors as they continue to live at home but enjoy the economic freedom to spend as they want, where they want, when they want.
There are a number of factors driving this rapidity of shift, but the most significant is that this new generation have ridden China's wave of economic development and never known the austerity and hard times of the past. They are buoyed by success, money and status. And the best way to demonstrate it? Flaunt it.
And that’s what sets them apart from the youth in Europe and the US. This generation of China’s youth have not experienced recession or economic downturn like their counterparts in the West. They have only witnessed sustained growth and prosperity.
However they have at least shared something with the youth in the West - the growth and usage of consumer technology. China’s youth are incredibly tech savvy and sate their appetite for all things new via ecommerce. They are much more likely to spend time online, and connect to the internet more often than not by their mobile phones. Consequently they are increasingly difficult to reach via traditional media, spending almost double the time on the internet that they spend on TV. And their affinity to tech, especially mobile, is more than double that of TV.
A prime example of this is evidenced by the huge retail success of China’s Singles Day on 11 November 2012. Its origins were as an annual celebration of singles across China, but it has now developed into the single biggest ecommerce retail day of the year - not just in China but across the globe. This was achieved by tapping into the psyche of China’s youth through a campaign featuring backdrops of New York City and Hong Kong, key aspirational landmarks for Chinese youth shoppers. Record sales online of RMB19.1 billion (US $3bn) made it the biggest one-day ecommerce bonanza anywhere in the world to date and clearly illustrates the rising purchasing power of China’s connected youth.
Youth power is also being felt at the box office. 2013 summer blockbuster Tiny Times is an anthem to youths in China, depicting young women in college against a backdrop of dorm rooms decked out in expensive, luxury items by brands such Hermes, Louis Vuitton and Dior - imagine a version of ‘Sex in the City’ set in Shanghai (minus the sex bit). This domestic ‘chick-flick’ was absolutely panned by critics but was still a resounding success at the box office. To put it into perspective it beat the Superman reboot Man of Steel on takings of $57m US dollars in its first week in theaters across the country.
And this trend for home grown youth content will inevitably continue. A decade ago, China's film industry saw no more than 100 domestic films produced annually and it only netted about 1 billion yuan. However, data for 2012 shows that 900 domestic films were produced and shown on the nation's 15,000 screens, not including documentaries or short films. Revenues also rocketed to over 34 billion yuan, according to official figures.
So what three lessons can be learned? First: recognise the power of youth consumers in China is here to stay. Second: they are digitally savvy and need to be reached on-line and empowered to purchase online. And third: positioning brands in aspirational situations that speak to the dreams and aspirations of Chinese youth will result in them voting with their considerably powerful pocket books.