BEIJING: Companies hoping to gain ground with the expanding Chinese middle class stand to benefit from their desire to trade up, try new products and be "educated" by brands, new research has shown.
Nielsen, the insights provider, reported that the number of individuals within this demographic should hit 1bn by 2030. This can be measured against figures of 179m in 2010, and just 23m in 2000.
The country is therefore set to contribute almost a third of the 3.3bn middle class people in Asia by 2030. "This makes China a proving ground for global and local brands," said Paul Cha, director of consumer research at Nielsen.
As disposable incomes levels rise, Chinese shoppers are acquiring a wider range of items and trading up. Nielsen's data revealed that 42% of current growth in the fast-moving consumer goods segment is down to customers choosing more expensive lines.
Such trends are also observable in second and third tier markets, where 26% of buyers have visited nearby cities to pick from a broader choice of premium lines and enjoy a better experience.
"Those living in the largest cities have become more sophisticated in their purchasing behavior, while a burgeoning middle class in the lower-tier cities are becoming 'first-time' consumers," said Cha.
Additional research by Nielsen found that word of mouth from friends, immediate family and other relatives remains the most trusted information source in China for 83% of shoppers.
The firm also discovered 23% of adults gave brand reputation greater importance than price or value for money. Flattering word of mouth and high recognition scores can thus be a potent combination.
However, while strong branding is clearly important, Cha warned that customers in the Asian nation are unusually promiscuous when it comes to their in-store habits.
"In the early 1990s Chinese consumers were suddenly surrounded with superior products before they felt the need for them. These consumers got used to ... being educated by manufacturers and brands," he said. "This caused Chinese consumers to be more open to trying new brands."
In demonstration of the impact this has exerted, some 43% of Chinese buyers could be described as "trendsetters", defined as individuals willing to purchase new and untested products.
This can be compared with a global average of 32%. It also supports another major differentiator in China, where "leisure and killing time" is among the top three shopping occasions.
"This opens up an opportunity for manufacturers as it provides a chance to engage more closely with consumers. With the right touch point and right message, consumers are more likely to give a brand the time to showcase its benefits," said Cha.
Data sourced from China Daily; additional content by Warc staff