"Digital natives" drive consumption in China

World
Europe

‍Data from the National Bureau of Statistics shows that the total sales of consumer goods reached 36.6 trillion yuan last year. That was 10.2 percent more than the previous year, and marked 14 consecutive years of double digit growth.

Consumer spending was a huge part of the Chinese economy: 58.8 percent of the total economic growth came from it. Consumer spending last year was 7.7 percentage points lower than in 2016 but it still was an important driving force for the economy.

China's retail sector has been transformed by technology in recent years as more retailers are embracing the new online-and-offline combination model to drive additional sales.

“As the consumer journey becomes increasingly integrated and seamless, the border between online and offline, brand push and pull, marketing and sales are disappearing too,” said Luan Lan, associate partner at Mckinsey & Company. “Companies need to think about how to holistically capture mind-share and wallet-share in a digital, social and entertaining way.”

Data shows that total online retail sales in China reached 7.1 trillion yuan in 2017. That translated into 32 percent growth year-on-year.

The sales volume of the five thousand major online retailers surveyed by the Ministry of Commerce, jumped 4.7 percent last year. That was up 0.7 percentage points from a year ago.

“Mass marketing, offline mass channels are past-tense, social marketing, new-retail are happening,” added Luan.

VCG Photo

Changes can also been seen in the spending landscape. China's Engel's Coefficient, which considers family spending, dropped to 29.3 percent last year. That's 0.8 percentage points lower than 2016, and 3.7 percentage points lower than 2012.

Beside, data also shows that young consumers are willing to spend more money these days, and love to buy high quality goods and customized products.

“It is no longer about mass and volume, it is about quality. Consumers care about health and well-being,” said Luan. “Young consumers are generally willing to pay for new, special things, to show their own taste and differences.”