HONG KONG: Entertainment, travel and similar experiences are more important for China's wealthy young consumers than shopping, according to a new survey.
International bank HSBC polled more than 2,000 Chinese consumers aged 18 to 34 with an income above 120,000 yuan a year and revealed findings that will provide encouragement for global brands seeking to reach this crucial demographic.
For example, in the food and personal care segment, a full 94% of respondents say they consider foreign products to be better, or at least of similar quality, than Chinese brands, the South China Morning Post reported.
Health is a priority for these young consumers and HSBC reported that the top factor that influences the products they buy is the perception around how healthy they are.
That helps to explain why the fastest growing food categories are milk, yoghurt, bottled water and fresh fruit, although more than half (55%) continue to drink Baijiu, the fiery Chinese spirit.
Travel is also of keen interest for this generation, the report found, as it highlighted the opportunities still open to travel brands because only 35% of these consumers have taken a trip abroad even though 70% are passport holders.
"A majority of consumers would rather spend on travel and entertainment than shopping, even abroad," the report said. "Nature, hikes and tasty food are more important factors than shopping in choosing a destination."
On top of providing further insight into the habits of China's young, well-heeled consumers, HSBC also used the findings to recommend certain stocks for investors.
With the top five destinations for these consumers being Hong Kong, South Korea, Macau, Australia and France, HSBC advised investment in the China Youth Travel Service and Spring Airlines, the Chinese budget airline, among others.
The report confirmed that this is a digitally savvy generation, with 75% of respondents saying they will spend more time on messaging app WeChat in the future, while 65% will spend more time on Taobao, Alibaba's online marketplace. Friends are also a key influence for their purchase decisions, HSBC found.
Erwan Rambourg, Global Co-head of Consumer and Retail at HSBC, picked out the key takeaways from the report and said the findings reinforced the bank's decision to recommend a dozen stocks.
"Most notable were the reality of travel (even domestic), the very high regard consumers have for imported goods, the influence of friends in many decisions and the soaring relevance of e-commerce platforms," he said.
Data sourced from South China Morning Post; additional content by Warc staff