How Gen Z in China will re-shape consumer industries in 2020

An insider’s perspective

By Wendy Wang

The oldest Gen Z’er has turned 24 this year. According to Bloomberg, 2019 was the year that Gen Z ousted Millennials as the most populous generation, amounting to roughly 32% of the global population. 

So what does it mean being the most powerful generation, in China, the country with the second-largest GDP in the world? 

Purchase behavior

China’s Gen Z (born between 1995-2002) is an increasingly important demographic for brands. According to research by Bain, this is the generation that will account for more than 46% of purchases in the global market by 2025. 

Compared to their western counterparts, Chinese Gen Z is noticeably more carefree in its spending behavior. Gen Z’ers spend more and save less. So how have they become such a powerful spending force when most of them are not even part of the workforce yet? 

According to Kantar, as a result of China’s one-child policy (which lasted from 1980-2015) and economic growth, each household has the ability to splurge on their only child. On average 70% of the unemployed Gen Zers receive a minimum of 3,000 RMB (US$420) in allowances per month – with 21% getting over 10,000 RMB (US$1400) a month, while the minimum wage of Shanghai in 2019 is 2480 RMB/month. Chinese Gen Zers, who do not work, already have the financial ability to surpass the working class.

The fact that most of them grew up with smartphones instead of siblings has lead to Gen Z’s eagerness to socialize. Even more so than their predecessors, they turn to social media and consumption to establish social circles while exploring individual identities.

Also known as the Moonlight Clan (月光族) which stands for a buy first, think later mentality, “What I Buy” has become a tool of self-expression to connect themselves with like-minded social groups.

Yet it’s still quite a challenge to target this purchase Powerhouse generation and establish brand loyalty. They grew up during a dynamic combination of tech/social advancements and the country’s censorship. This nurtured their sensitivity for authenticity and social responsibility. 

Up to 70% of the Gen Z in China prefer to shop via social media channels, with the majority of them confirmed to be influenced by recommendations from KOLs (influencers) and celebrities in their final purchase decision. Kantar also found that 23% of the Chinese Gen Zers had bought at least one co-branding edition products in the past 12 months. 

Social Platforms where all the cool kids are

China’s social media giants like WeChat and Weibo have become commercial platforms in China and at the same time fierce battlefields of digital marketing. Numbers show the majority of users on these platforms are Baby Boomers and Millennials. So where is Gen Z?

They tend to favor fast and easily digestible video content. This is also the generation that is more eager to participate and co-create rather than just to consume content. Xiaohongshu, Tik Tok, Toutiao and Bilibili are platforms that have not yet been widely used by international brands but are showing great potential to reach the Generation Z. 

In September of 2019, Tiktok released its recent in-video feature: “Visual Searching”, which is currently in the testing phase exclusively for China. The update takes the Google image search concept to the next level. Without the need to upload an image, users can then simply tap on the Tiktok video they are watching and search for a face and any piece of clothing/ product. Then Tiktok will find the face or product you are looking for and recommend various (in-app) videos and/or stores where the product can be purchased. 

This makes in-app online shopping more seductive than ever, giving us a sneak peek into the future of in-app shopping.

The Future

This is the generation that won’t be told what to do, they would rather be encouraged to be themselves. They have strong opinions and are shifting the power dynamics between brands and consumers. 

Slowly but surely this fascinating generation is reshaping the face of consumer industries with their distinctive behavioral patterns while leading a new round of social culture. 2020 is THE time for businesses to start re-thinking about how they can shape their products/services to be ahead of the curve and cater to this vitally important generation and their needs.