One of the most significant drivers of change is the evolution in the behavior of Chinese consumers. More affluent, more digitally savvy, with more purchasing options than ever before, a significant share of Chinese consumers has come to regard the Internet as integral to the shopping experience and to view value as a crucial differentiator among products and services. Willing to pay up for the quality, features and product integrity they seek, these leading-edge consumers are increasingly loyal to the brands they know and trust. They’re also fully prepared to turn their backs on lower- priced brands and products that fall short of their rapidly rising expectations. And in many cases, they show a marked preference for foreign brands.

 

The combination of burgeoning wealth and growing digital sophistication makes the vast Chinese market an irresistible target for consumer-facing companies, both domestic and multinational. Over the last years we have identified two mayor trends:


1. Value as Differentiator

A leading trend is the growing perception among Chinese consumers of value as a crucial differentiator. A growing number of consumers now have a greater range of purchasing options, and they are responding by seeking out higher-quality goods. Rather than simply opting for the lowest-priced items, value-minded consumers are increasingly basing their choices on reliability, consistency and product integrity, with price a secondary consideration.

The market has been galvanized by the emergence of premium brands that differentiate themselves by product quality. Consumers who differentiate among products by their value are primarily residents of Tier-1 and Tier-2 cities. In their prime earning years – their ages range from 21 to 50, with the largest cohort aged 31 to 40 – these consumers command monthly incomes of RMB5,000 to RMB50,000 (US$814 to US$8,135). They are eager to spend their money on products that reflect their needs, values and aspirations.


2. The Rise of Digitization

Digitization is a must for consumer-facing companies, given the spread of e-commerce and the increasing integration of social media into the day-to-day lives of consumers. Chinese consumers have embraced social media and are doing an increasing amount of their shopping online. E-commerce is in the midst of an explosive growth phase, increasing 66.5 percent from 2010 to 2011 alone and rising to 6.1 percent of total retail activity. Recognizing the opportunity to intensify the relationship between brand and consumer, get a better view of the market and develop a powerful new sales channel, both Chinese and multinational companies singled out the rise of digitization as one of the top two trends of 2013. Yet, a majority of companies, both foreign and domestic, expressed doubts about their readiness to convert Chinese enthusiasm for online interactions into a sales advantage.