China's Gen Z Has the Power to Make or Break Western Brands
They’ve got money to burn, eschew foreign labels, and are driven by a swelling sense of nationalism that can ensnare even the biggest global brands.
They’re China’s Generation Z and they’re shaking up shopping.
The 270-million-strong cohort born since the mid-1990s is already flexing their power: they have the fastest spending growth out of any generation in China, are top buyers of cosmetics and tourism services, and have upended online shopping. Their influence will only grow, with spending set to rise fourfold to 16 trillion yuan ($2.4 trillion) by 2035, according to China Renaissance.
Meeting the demands of the young, nationalistic and exacting Gen Z will require an immense shift in how Western companies -- who have bet that decades of demand for foreign goods will endure -- do business in China and poses an unprecedented challenge to their market dominance. It also sets the stage for a rise in domestic companies to meet growing appetite for, and pride in, China-made goods.
Young, Big Spenders
China's Gen Z population is smaller than India's, but they're far bigger spenders
“Gen Z is the first real consumer generation in China,” said Zak Dychtwald, founder of trend research company Young China Group. “Similar to the baby boomers in the U.S., China’s Gen Z are redefining the country’s consumer economy and will continue to do so in every single life stage that they go through.”
It’s not just the sheer size of the market that sets them apart from their peers. Unlike their counterparts in the U.S. or Europe, who grew up during the global financial crisis and its aftermath, China’s young shoppers have known nothing but sustained growth – the pandemic is the first major blight on the economy in their lifetimes – and many were only-child ‘emperors,’ doted upon by parents willing to spend to meet their every need.
That’s now reflected in their money habits. About a quarter of China’s Gen Z don’t save at all, compared with the global average of 15%, according to an OC&C report. They’re also more likely to be impulsive with their purchases. The term Moonlight Clan has been coined to describe people who spend their entire paychecks each month -- or an entire lunar cycle, according to McKinsey & Co.
The group also prefers to spend their money on themselves, and is less inclined to have kids or buy property, which are becoming increasingly unaffordable.
Read More at https://www.bloomberg.com/news/features/2022-05-24/china-s-gen-z-has-the-power-to-make-or-break-western-brands