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Spending patterns shift in China

News, 16 March 2016

MELBOURNE: Contrary to the perception that Chinese consumers are spending less on luxury goods, international brands need to recognise that a fundamental shift in behaviour is underway, a leading market researcher has warned.

Shuan Rein, the managing director of China Market Research Group, told delegates at the Australian Financial Review Business Summit that the Chinese market is becoming much more individualised.

For the first time, Chinese consumers are showing signs of wanting to buy differentiated brands and that development is rapidly altering their approach to global luxury brands.

He said an increasing number of Chinese consumers are opting for niche apparel brands and, far more than in the past, now prefer Chinese-made products in the white goods and home appliances sectors.

Nowadays, he added, only very well targeted advertising specifically designed for the Chinese market will work effectively for major global brands.

Although Rein's address was pitched mainly at Australian and New Zealand business leaders, his observations have relevance for brands from all countries seeking to tap into China's vast retail market.

As well as well-crafted marketing, he recommended that companies invest more in opening up a physical presence in China so as to better understand their potential market. This has been a successful strategy for Blackmores, the Australian natural health group.

Rein went on to say that pollution is also having a huge impact on consumer behaviour in China, being one of the reasons why consumers often prefer to buy online.

They also want safe and healthy food imports, while Chinese tourists are keen to share their experiences of overseas travel on social media apps, such as WeChat.

Countries like Australia and New Zealand are well-placed to take advantage of this trend, Rein said, because of their reputation for being safe, clean and honest.

Data sourced from Australian Financial Review, Sydney Morning Herald; additional content by Warc staff