Chinese tourists spend around $1.4 billion per year in Australia, and that is set to almost quadruple over the next decade.
So a new report by AliResearch and Boston Consulting Group could spell good news for Australian retailers.
While China’s overall GDP growth is slowing, its consumer economy is still growing by 10% a year, the new report revealed.
This is faster than that of any other country on the planet.
By 2021, China will add $1.8 trillion in new consumption.
That is roughly the size of Germany’s consumer economy today, and more than one-fourth of all consumption growth in major economies.
These are among the key findings of the report, titled Five Profiles that Explain China’s Consumer Economy.
China’s consumer economy is benefiting from an emerging upper-middle-class and affluent households, a younger population that is eager to spend, and e-commerce through digital channels.
Report co-author Jeff Walters said they are trading up to higher-quality products.
“Digital technology is one of the underlying drivers that will continue to spur purchases.
"The Chinese population is more connected than people in other countries, and by 2021, 90% of all purchases in China will involve digital at some point in the process—browsing, comparing prices, or making the actual purchase.
“The consumer economy in China is one of the most digitised around the world."
Consumer companies that want to capitalise in China need to acknowledge these trends, but they also need to go deeper.
As China’s economy matures, its consumers are becoming more diverse.
Rather than targeting large, homogenous demographic segments, companies need to understand the emerging profiles of these consumers, along with their distinct preferences and needs.
To that end, the report identifies five emerging consumer profiles in China. These include:
• The Savvy Shopper. Consumers are far more brand-aware than in the past, and consumption boundaries (like age and gender) are disappearing. For example, Chinese men in tier-one cities now spend 24 minutes a day on grooming, and 88% access grooming and fashion information online—both measures are up significantly in the past decade.
• The Single Person. Because of demographic shifts, people in China are increasingly likely to remain unmarried. Among urban dwellers, 21% of people older than 35 are single, up from just 4% a decade ago. This trend means growing demand for different types of products, such as furniture designed for one-person apartments, smaller appliances, and food sold in smaller sizes and convenient packaging.
• The Ecoconscious Consumer. Chinese shoppers are increasingly aware of environmental issues and sustainability; they want their products to be good for them and good for the planet. AliResearch found that 66 million customers (16.2% of the consumers on Alibaba’s China retail marketplaces) bought five or more green products in 2015, up from just 4 million in 2011 (3.4%). Just as important, these customers are willing to pay higher prices—33% more, on average—for sustainable products.
“A lot is changing in China, but the fundamental story is one of very strong growth through 2021,” Walters said.
“This market is growing by trillions of dollars, and companies that take the right steps today will set themselves up to win over the long term.”