In spending, the young rule the roost
Print Edition
CHINESE young people, with their smartphones ever at hand, love to shop online, and their enthusiasm for digital spending has made them the backbone of the nation’s consumer market.
In fact, people between the ages of 25 and 34 accounted for about a third of all consumers in China, according to a survey by comScore, a US research institute. That is a greater ratio than in most other countries around the world.
The younger generation is not only willing to buy but also willing to pay more. Most young people have firm and individualistic ideas about what they want. All this creates a demographic trend that vendors are keenly addressing.
Alibaba, the world’s largest e-commerce company, says that upscale consumers in China are 20 years younger than comparable classes in the United States or Japan.
Some 60 percent of VIP members on Alibaba’s Taobao platform are buyers born in the 1980s, and those born 10 years later account for another 15 percent. Together, both age categories spent an estimated 30 billion yuan (US$4.3 billion) online in one year, the report said.
Chinese young consumers no longer exclusively seek out the more expensive products or the most premium brands. A 2015 survey by Peking University found that 80 percent of respondents born in the 1990s follow personal preferences when shopping and less than 20 percent make decisions based on brand names alone.
Su Ya, a white-collar worker in the city of Tianjin, displayed her personal preference when she decorated her wedding apartment in the clean lines of Nordic style rather than the heavier, traditional rosewood furniture preferred by her parents.
“My husband was on my side,” Su said. “We are more concerned with creating our own lifestyle.”
The quest for individual expression has switched some of the buying focus to products offered by smaller European countries and away from US mainstream fashion and luxury brands.
Alibaba said about 10 percent sales in last November’s Singles Day online shopping extravaganza were imported goods. The US, Japan, South Korea and Germany led nations that supplied those goods.
“This year, I am expecting to see online stores testing different types of products, especially food and beverages, not usually sold online,” said Ding Jia, a college student in Guangzhou and a self-confessed online shopaholic.
Whatever happened to the China known around the world as a nation of savers? Are young people breaking that mold?
Not quite. In 2016, Chinese young people earned an average 6,726 yuan a month and spent 4,386 yuan, according to a consumer report by Yiguan, a data analysis company in China. The amount of money they saved in banks or through finance apps rose 15 percent from a year earlier to 2,340 yuan a month.
Kathy Wang, a 24-year-old postgraduate living in Beijing, keeps a running tally of daily expenses through an accounting function on Alipay that automatically records each transaction and even analyzes where all the money is going.
That’s not the only corollary offered by digital innovation. Young consumers also have access to installment plans, barter deals and social interaction.
Hector Bian, a 28-year-old researcher and amateur photographer, bought a lens for 4,500 yuan last month.
“I paid one-third of the price after applying for a three-month installment plan,” he said.
On JD.com, one of the top online retailers in China, college students are offered installment plans and interest-free consumer loans to buy digital gadgetry, electronics and appliances.
Xianyu, Alibaba’s secondhand goods market, is another channel for consumer to get what they want at prices they can afford or make a little money by selling things they no longer need.
Yang Fan, who is expecting her first child in Shanghai, has been using Xianyu to sell some unwanted cosmetics. She said she has already made more than 5,000 yuan, which will be put toward buying a pram later.
Older generations often complain that the young don’t have a good money sense and take too many risks buying on credit. Indeed, many Chinese millennials are being caught in a rise tide of debt. That can lead to unpleasant consequences.
In 2016, hundreds of female university students agreed to take naked selfies as collateral on loans. Their desire to buy, buy, buy overrode any concerns about modesty. It caused a national furor.
There’s no sign yet that the spending spree of the younger generation will taper off any time soon, despite slower economic growth in China. This year is shaping up to be a hot one for retailers, especially those offering interesting, competitive merchandise online.
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