China's Changing Taste: Consumption upgrades push companies to better their products

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China's purchasing power is rising, as more and more consumers are spending their money abroad. For domestic companies, upgrading their products to meet shifting consumer demand is the only way to compete with foreign rivals. One company in Guangdong Province is latching onto the momentum of e-commerce, and has found ways to attract millions of young buyers. CGTN's Cui Hui'ao tells us more.

Like most young girls for her age, Yang Jiao began wearing makeup in college. She says she used to browse for products at big shopping malls, trying different samples on her face before deciding what she wants. But two years ago, she found a new way to shop.

YANG JIAO COSMETICS SHOPPER FEMALE "Now I do research before making orders on platforms like Tmall and Xiaohongshu. Buying makeup online is more convenient and cheaper with all the discounts."

And it's more than just clicking the purchase button! What Yang also enjoys is the "buyers show" - writing reviews and posting photos on the web so her followers can interact with her.

The prevalence of social media has formed a new consumer trend. Publishing photos online allows those Cosmetics Superstars or ordinary users like Yang to build their community. In turn, that enables companies to build their brands.

CHRISTY SUN, MARKETING VP PERFECT DIARY FEMALE "More post 95s are getting into this field, starting to use cosmetics products. The penetration rate is growing from 7 percent to 20 percent."

This internet startup got its foot in the cosmetics door in 2016. Now it's achieved big success. 18 months after it was launched, its brand Perfect Diary ranked first in sales on Tmall, surpassing Maybelline and other international brands.

Sun says their success is due in part to China's e-commerce boom. But even more so, it's thanks to studying the market and fine-tuning their products to suit new generations of consumers.

CHRISTY SUNMARKETING VP, PERFECT DIARY FEMALE-ENG "We notice that color eyeshadow palette is very popular in international market, so we decided to launch in China and then we use Chinese popular stars to endorse the product. So that was our first success this July."

CUI HUI'AO GUANGZHOU "Chinese purchasing power is increasing. As Premier Li Keqiang said Chinese consumers are now the powerhouse of the economic growth. So companies have to think more on how they could improve their product quality to meet the new demands."

WANG HAIZHONGPROFESSOR OF BRANDING AND MARKETING SUN YAT-SEN BUSINESS SCHOOL "Chinese companies have a higher level of consciousness. They want better quality and more personalized products. Meanwhile, more and more companies are now taking advantage of digital technology and differentiating their products."

In the first half of 2018, consumption drove nearly 80 percent of China's economic growth and online retail sales grew more than a third. Professor Wang says this noticeable trend in industry restructuring cannot be overlooked, as it reflects a new growth model for the Chinese economy. Cui Hui'ao, CGTN, Guangzhou.