The importance of agility, innovation, and consumer-centric strategies in the China market
In October, PwC released its 60-page "2024 Voice of Consumers China Report." While the consumer research and analysis took place prior to Beijing’s late-September stimulus announcement - and don’t capture the market shifts since - the report offers many valuable insights worth exploring.
The study examines the evolving landscape of China's consumer market amidst economic uncertainties and shifting consumer behaviours. It highlights the critical need for brands to reinvent their growth strategies to stay competitive in China’s ever-changing market.
Recognising that time is precious and the report is a significant read, we’ve distilled the key insights and added some of our own observations:
China’s Consumer Market:
China’s consumer market is experiencing slow growth and intensified competition. While certain categories remain strong, recovery across sectors is uneven. This necessitates strategies tailored to specific categories or even sub-categories.Key Consumer Behaviour Shifts:
Economic uncertainties have prompted shifts toward value-conscious purchasing, with consumers increasingly seeking value and quality. This trend has diluted the impact of traditional sales events. Consumers are also demonstrating a preference for experiences over material goods, along with a growing focus on health and wellness. This has driven demand for many health-related purchases from consumable health products to outdoor sports.Technological Influence:
Technology is reshaping the consumer journey. The growing engagement with digital platforms underscores the need for brands to enhance their online presence and leverage social media for effective marketing. The rapid adoption of Generative AI is revolutionizing brand-consumer interactions, offering personalized experiences and operational efficiencies.Sustainability Trends:
Interest in sustainability and eco-friendly options is rising. Beijing’s policies play a pivotal role in this shift, and brands aligning with these initiatives while delivering individual consumer benefits are well-positioned to succeed.
Based on these conclusions, there are a number of recommendations in the report for retailers and brands:
Adapt to Economic Fluctuations:
Employ flexible strategies such as diversifying product offerings, dynamic pricing, and enhancing online channels. While pricing remains a significant focus for many brands, we believe well-executed brand building can help cushion the impact of price-centric competition. Innovation remains essential for sustaining brand appeal.Target Emerging Segments:
Focus on promising segments such as the next generation of high-net-worth Gen Z consumers. We believe, despite the hype around Gen Z consumers, foreign brands should recognize that Millennials - who account for half of cross-border imported goods purchases - may be a more lucrative audience due to their longstanding aspirational view of foreign brands. In contrast, Gen Z consumers, accustomed to strong domestic brands, tend toward more patriotic purchases. A one-size-fits-all segmentation strategy is unlikely to succeed; targeting with laser-focus is essential.Build Consumer Trust:
Prioritize compliance with data protection regulations to build and maintain trust over time. We believe the importance of building strong consumer communities should also be part of the toolbox to build trust.Leverage Technology and Sustainability:
Utilise Generative AI and digital platforms effectively - we think its also worth noting the importance of creating robust owned channels to ensure sustainable ROI. Sustainability should also remain a cornerstone of brand strategy to resonate with environmentally-conscious consumers.
The underlying themes in the report hold true for almost all brands selling in China – the importance of agility, innovation, and consumer-centric strategies for retailers and brands to thrive in China's dynamic market environment.
Anyone who has spent time in China is likely to have noticed how elaborate the packaging can be relative to similar products in Western countries. Goods are wrapped up as if for high tea in the depths of a Heilongjiang winter - one may have to make their way through four or five layers of intricate wrapping before reaching a tasty morsel buried deep inside. The perceived status, discovery or safety from fanciful packaging trumps any environmental concerns for most consumers.