Over the years, we have performed extensive on-the-ground research to understand consumer behavior across China and other emerging markets (EMs), with an emphasis on the two age demographics — millennials and Generation Z — that fuel much of these countries’ total consumption. This is part of what we call our “grassroots” research process.
In keeping with this tradition, we recently conducted our second post-COVID-19 survey of Chinese consumers to get the pulse of consumption and lifestyle trends in the wake of the global pandemic. We targeted respondents in higher-tier Chinese cities, between 20 and 40 years old, with “middle” incomes of 50K – 70K renminbi per year.
For this survey, we asked many of the same questions from our 2020 survey (click here for those findings), when COVID was already receding in China, well ahead of the rest of the world. We also added some questions related to the environment and demand for electric vehicles (EVs) in China. Here’s a snapshot of what we learned.
What we learned from the consumer survey
- As we saw in 2020, Chinese consumers have generally maintained a cautious view on spending. The same percentage of consumers as last year wanted to reduce unnecessary or irresponsible expenditures (so-called “binge spending”), while a greater percentage than last year expressed a desire to boost their savings.
- With respect to discretionary purchases, hand phones and kitchen appliances were the top two product categories where consumers signaled an intent to buy within the next year. Of the respondents, 62% indicated they were planning less frequent purchases of luxury items as compared to a year ago.
- Broadly speaking, our survey revealed that Chinese consumers’ other top priorities for 2021 and going into next year were likely to focus on food safety and quality, their health care and overall well-being, environmental considerations (such as pollution), and job stability.
- Prevalent lifestyle choices among respondents included prioritizing healthy living habits (such as exercise), cooking and eating at home more, and less overseas travel (even after the rest of the world returns to “normal” post-COVID).
- Regarding the environment, many Chinese consumers have placed an increased focus on environmentally friendly products since the pandemic and have even stated that they would be willing to pay premium prices for such products (Figure 1).
- In the next two years, 98% of respondents plan to purchase an automobile, and 44% of those would prefer to buy a new energy vehicle (NEV). For the other 56%, a key reason cited for not wanting to buy an NEV was too-few charging stations, which can be a concern when driving for long periods and/or in nonurban areas.
Investment takeaways from Chinese consumer behavior
In light of these findings, there may be investable opportunities in:
- Companies aligned with Chinese consumers’ greater focus on their “needs” over their “wants”
- Companies that can benefit from Chinese domestic travel as opposed to travel abroad
- Companies with environmentally friendly products, including well-positioned local brands
- Sustained strong demand for NEVs in China, where current estimates of penetration rates look too conservative