BEIJING: Chinese consumers are choosing fewer and more expensive brands, raising new challenges for marketers seeking to get their brand on the consideration list.
According to a study by consulting firm McKinsey, around half of Chinese consumers always opt for the best and most expensive within their budget.
In The Modernization of the Chinese Consumer, based on interviews with 10,000 people aged 18-56 across 44 cities, McKinsey highlighted the growing desire for premium products across a range of categories.
In FMCG, for example, some 51% of consumers now automatically seek out the best they can afford, compared to just 32% who did so in 2011. A similar rise – from 28% to 48% – was evident when it came to clothing.
Overall, 59% of those surveyed said they would buy famous branded products if they had more money, up from 41% in 2011.
And while that trading up is potentially good news for international brands – which tend to dominate premium segments such as fashion while local brands perform much more strongly in the mass market – they are facing added difficulties in breaking into these consumers' considerations.
Chinese consumers are increasingly focused on just a few brands, with some loyal to a single brand. McKinsey's study noted that fewer are willing to switch to a brand outside their "short list" – apparel, for example, has seen a nine percentage point drop, from 39% in 2011 to 30% in 2015, in the proportion of those willing to look beyond their existing favourites.
"Fewer consumers are open to new brands, and promotions are becoming less effective at encouraging consumers to consider them," it said.
Another side of their spending habits is a shift away from products to experiences, with over half planning to spend more on leisure and entertainment in the coming year.
Data sourced from McKinsey; additional content by Warc staff