NEWS AND INSIGHT

An insight into China consumers from China UnionPay’s big data

2015-5 施淑媛

In April 2016,  I participated in the IRIS (an international organization of 35 independent market research companies around the world) conference held in Mexico. I went to Toronto afterwards to talk to about 30 Canadian enterprises to reveal demands and behaviour of Chinese new consumers, which includes the latest analysis of big data from China UnionPay (CUP).

Three characteristics of Chinese new consumers

There are three characteristics of China new consumers. Firstly, they represent a kind of new consumerism, which has great expenditure on tourism, luxury and education. Additionally, they also keep a new special relationship with brands. Finally, they are not only a huge consumer group, but also a new type of working group, holding the aspiration and value towards work that differs from the former generations.

 

The new consumerism

Analyzing CUP’s data, we can see that there were about 100 million credit cards and debit cards with consume records in 2014. 1% of them spent over 500,000 RMB, which can be categorized as the top segment. 2% of them spent 200,000-500,000 RMB, which are the rich middle-class segment. The remaining 94% of them are regular segment, spending less than 100,000 RMB. Among the top 6% of consumers, there was an obvious increase in tourism and luxury expenditure.

Tourism is identified as a symbol of fashion and status. Moreover, there is an old saying says that that it is better to travel ten thousand miles rather than read ten thousand books for a man to know the world. Nowadays, simplified foreign visa process and fast-developing domestic transportation bring greater convenience to people’s travelling. Therefore, it can be seen from CUP’s data that there was 137% increase in expenditure on domestic travels in 2014 than 2013, while 75% increase in expenditure on overseas travels.

In terms of destination, there was a big growth in expenditure in Switzerland and Dubai. Switzerland is famous for its beautiful nature scenery. When visiting Switzerland, Chinese consumers usually spend a great amount of money on luxury watches. Dubai has already been pictured as a shopping paradise due to heavy promotion in China.

In terms of hotel, Chinese consumers spent 203% more on Hyatt in 2014 than 2013, 105% more on Conrad, and 45% more on Indigo. Hyatt hotel group is well known for its high-end design and services. Notably, unique boutique hotels such as Indigo have become more popular. It can be grasped that there are some new consumers emerging in the market, who appreciate customized needs from hotels.

 

Chinese consumers usually shop a lot a lot when they travel overseas. One of the reasons is that they can purchase unique and high quality products abroad. Meanwhile, they can enjoy a lower price. Therefore, from our recent market research about Chinese consumers, we found that consumers were snapping up some unique products such as electronic rice cookers and toilet seats in Japan.

 

Cities that new consumers are concentrated

From the CUP’s data, we found that consumers in Shenzhen instead of Beijing spent the most, comparing 2014 data with 2013’s. Moreover, second-tier cities have much potential. Zhengzhou, Nanjing, Wuhan, Chengdu and Chongqing all worth attention. 

During my business trip to Chengdu earlier in the year, I found that it has many luxury brand shops and strong purchasing power. When I arrived Wuhan, I also noticed that there were a large number of consumers buying jewelleries. It has been found that most of them came from third-tier cities around Wuhan. It can be foreseen that second-tier and third-tier cities would have great impact on Chinese economic development in the future.

 

New relationship between consumers and brands

We have also tried to understand the relationship between consumers and luxury brands from CUP’s data. We have learned that the expenditures on brands such as LV are continuously increasing. Comparing data in 2013 and 2014, it has increased ny 45.7%. Meanwhile, we also found the rise of some niche brands. Expenditures on brands such as Givenchy have grown 131.2% in 2014, in comparison with the data in 2013. Givenchy gains the reputation and customers by using its long product line (including clothes, ACCs, etc.), fashionable products and innovative online marketing. Givenchy takes advantages of social media such as WeChat and tells the vivid brand stories, leaving a deep impression on consumers and achieving success.

 

In terms of purchase influencer, recommendations from family and friends, comments on social media and websites are the main channels. Therefore, how to achieve word of mouth by online marketing has been an important subject in this digital era.

 

Additionally, we also gathered that the country of origin (COO) has become more valued, influencing consumer’s preferences and confidence. Hence, national marketing has become more important.

 

New work group

These new consumers are mostly the new work group. They have different life needs, preferring work life balance, creative work and work environment. They uphold freedom and have unique characteristics. Therefore, instead of considering merely selling products to this segment, many enterprises should think of how to satisfy this segment at work. This might involve job design, incentive system and training system etc.

 

Conclusion

CUP’s data covers a wide range of information, which is very useful for consumers’ findings and analysis, providing evidence for marketing strategies. It can achieve better result if a company can integrate the CUP’S data with the company’s internal data.