2022
0
China Spending Habits in Lower Tier Cities Market Report 2022
2022-11-26T03:01:30+00:00
OX1103085
3695
157961
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Report
en_GB
“Consumers in lower tier cities are looking for flexible ways to cope with the economic uncertainty, especially the younger group who are more willing to develop hobbies and seek a…

China Spending Habits in Lower Tier Cities Market Report 2022

£ 3,695 (Excl.Tax)

Report Summary

“Consumers in lower tier cities are looking for flexible ways to cope with the economic uncertainty, especially the younger group who are more willing to develop hobbies and seek a second career. In terms of spending, consumers in lower tier cities tend to pursue an ‘exquisite’ lifestyle that is free, relaxing and effortless. They are increasingly acknowledging emotional values in addition to meeting practical needs. Their strong national pride and expectation of technology also provide a direction of innovation for brands to further develop Guochao marketing. Actively using classic cultural elements, launching co-creation campaigns to promote local culture, and creating a buzz of cross-category could help brands reach a wider range of consumers in lower tier cities.”
– Gloria Gan, Research analyst

Key issues covered in this Report

  • Impact of the outbreak of COVID-19: proactively coping with uncertainty and rising health awareness
  • Exquisite life: seeking relaxation and freedom, with a focus on emotional benefits
  • ‘Suitability goes first’: a new pragmatism that believes ‘only fit is worth it’
  • The evolution of Guochao: quest for comfort and technology and the emergence of cross-category co-creation
  • Live commerce: celebrity/IP-themed content that incorporates science and technology knowledge is popular.

Table of Contents

  1. Overview

    • What you need to know
      • Key issues covered in this Report
        • Objective and methodology
          • Quantitative research methodology
            • Figure 1: Sample structure for each city (2021-22)
          • Qualitative research methodology
            • Figure 2: Interviewed cities in the qualitative research
            • Figure 3: Profiles of respondents to the qualitative research
        • Executive Summary

            • The market
              • Mid-late stage urbanisation spawns new challenges and opportunities for industrial structure development in lower tier cities
                • Figure 4: GDP sector compositions, by city tier, 2018-20
              • COVID-19 outbreaks affect the consumption environment in lower tier cities more severely than tier 1 cities
                • Figure 5: Total retail sales and year-on-year growth rate of consumer goods, by city tier, 2018-20
              • Lower tier city consumers tend towards conservative consumption behaviours despite limited immediate impact of the outbreak
                • Confidence in financial situation rebounds steady in lower tier cities but will be indirectly affected by tier 1 and 2 cities
                  • Figure 6: Confidence in improving future finances – very confident/somewhat confident, by city tier, 2020-22
                • The consumer
                  • Impact of the outbreak of COVID-19: Proactively coping with changes and rising health awareness
                    • Figure 7: Impact of the outbreak of COVID-19 on life plans, by age, 2022
                  • Exquisite life: A relaxed mind and self-indulgence
                    • Figure 8: Selected impulse purchase occasions – Very likely, by age, 2022
                  • ‘Suitability goes first’: A new pragmatism that believes ‘only fit is worth it’
                    • Figure 9: Interest in personalised haircare – Selected items, by age, 2021
                  • The evolution of Guochao: Provide comfort and technology with cross-category support
                    • Figure 10: Guochao marketing innovations, by age, 2022
                  • Live Commerce: Opportunities for joint marketing with IPs and celebrities and for introducing new technology concepts
                    • Figure 11: Selected purchase occasions – Very likely, by age, 2022
                  • What we think
                  • Introduction to Lower Tier Cities in China

                      • Mid-late-stage urbanisation spawns new challenges and opportunities for industrial structure development in lower tier cities faces
                        • Figure12: GDP sector compositions, by city tier, 2018-20
                      • COVID-19 outbreaks affect the consumption environment in lower tier cities more severely than tier 1 cities
                        • Figure 13: Total retail sales and year-on-year growth rate of consumer goods, by city tier, 2018-20
                      • Real income growth slowing down in lower tier cities
                        • Figure 14: Per capita annual salary, by city tier, 2018-20
                      • Proportion of single, unmarried people in high-income groups in lower tier cities is approaching that of tier 1 cities
                        • Figure15: Family structure of respondents, by city tier, 2019-June 2022
                      • Car ownership and gym membership penetration rates comparable to tier 1 and tier 2 cities
                        • Figure 16: Car ownership and gym membership, by city tier, 2017-22 6
                    • Market Factors

                      • Lower tier city consumers tend towards conservative consumption behaviours despite limited immediate impact of the outbreak
                        • Figure 17: Impact of COVID-19, by city tier, 2022
                        • Figure 18: COVID-related actions in future, by city tier, 2022
                      • Confidence in financial situation rebounds steadily in lower tier cities but will be indirectly affected by tier 1 and 2 cities
                        • Figure 19: Confidence in improving future finances – very confident/somewhat confident, by city tier, 2020-22
                      • Home appliances leading trading-up in various categories, while commercial centres march into lower tier market
                        • Leisure and entertainment market has considerable room for growth, while ‘social economy’ offers great potential
                          • Figure 20: Ways of de-stressing, by city tier, 2022
                      • Impact of the Outbreak of COVID-19: Proactively Coping with Changes and Rising Health Awareness

                        • Responding proactively to the uncertainties
                          • Figure 21: Coping with uncertainties – interview excerpts, 2022
                          • Figure 22: Other income sources, side jobs/changes of career or plans – interview excerpts, 2022
                        • Rising health awareness drives demand for sports and fitness-related activities
                          • Figure 23: Hobbies and related spending – interview excerpts, 2022
                        • More than half of young people aged 20-39 in lower tier cities are considering a side business
                          • Figure 24: Impact of the outbreak of COVID-19 on life plans, by age, 2022
                        • Food and home consumption is also a priority for younger ones
                          • Figure 25: Actual spending ways of extra money – select items, by age, 2022
                        • Encourage positive embrace of change and flexibility in creating life
                          • Figure 26: Intel China x Ergeng TV launched a Weibo campaign with the topic of ‘What kind of life can young people create?’, 2022
                        • ‘Content output’ to help build interest among consumers in lower tier cities
                          • Figure 27: Fila x Liu Genghong collaborative marketing, 2022
                      • Exquisite Life: A Relaxed Mind and Self-indulgence

                        • ‘Exquisite’ reflects the pursuit of freedom, relaxation and effortlessness
                          • Figure 28: Definition and opinion of exquisite living – interview excerpts, 2022
                        • Both self-reward and impulse purchase can boost mood
                          • Figure 29: Self-rewarding – interview excerpts, 2022
                          • Figure 30: Impulse purchase – interview excerpts, 2022
                        • Emotional spending becomes a key driver of consumption in lower tier cities
                          • Figure 31: Selected impulse purchase occasions – Very likely, by age, 2022
                        • Young people are more inclined to seek an exquisite life of freedom and feeling themselves inside
                          • Figure 32: Selected definition of exquisite life, by age, 2022
                          • Figure 33: Selected definition of exquisite life, by age, 2022
                        • Encourages a lifestyle of freely pursuing one’s true self
                          • Figure 34: Douyin’s annual IP campaign ‘Douyin Lifestory Tellers’, 2022
                        • Adding value to products with meaningful emotional experiences
                          • Figure 35: ‘Nose’ launched by Dior Perfume, 2021
                      • ‘Suitability Goes First’: A New Pragmatism that Believes ‘Only Fit is Worth It’

                        • Measuring ‘practicality’ by frequency and mood of use
                          • Figure 36: Practicality as a shopping criterion and its importance – interview excerpts (positive feedback), 2022
                          • Figure 37: Practicality as a shopping criterion and its importance – interview excerpts (other feedback), 2022
                          • Figure 38: Purchases and opinions on smart scales – interview excerpts, 2022
                        • Personalised solutions are welcomed
                          • Figure 39: Opinions on personalised customised formulations of health supplements – interview excerpts (positive feedback), 2022
                          • Figure 40: Sharing personal health data – interview excerpts, 2022
                        • Over 30% of consumers in lower tier cities are interested in customisable haircare products
                          • Figure 41: Interest in personalised haircare – Selected items, by age, 2021
                        • Young people expect brands to be more experiential
                          • Figure 42: Expectations of a favourite brand, by age, 2021
                        • Visualisation of the product’s application through art exhibitions
                          • Figure 43: Xiaomi ‘The Birth of Passion’ (热爱的诞生) Mijia All-Round sweeping and mopping robot Promotion, 2022
                        • Innovate personalised solutions based on data algorithms
                          • Figure 44: Personalised haircare solutions by Effortless
                      • The Evolution of Guochao: Provide Comfort and Technology with Cross-category Support

                        • Highlight distinctiveness and differentiation in comfort and technology to win consumers’ hearts
                          • Figure 45: Favourite brands – interview excerpts, 2022
                        • Strong national pride and willingness to support domestic products
                          • Figure 46: Support for national brands – interview excerpts, 2022
                        • Younger consumers are more interested in Chinese-style packaging, while consumers aged 30-39 expect an immersive experience infused with technology
                          • Figure 47: Brand marketing activities, by age, 2022
                        • Consumers aged 30-39 expect classic culture elements to be incorporated into Guochao
                          • Figure 48: Interest in Guochao elements, by age, 2022
                        • An immersive show ‘space’ combining Guochao elements and technology
                          • Figure 49: Unique Henan: Land of Drama, a Guochao immersive Autumn/Winter fashion Show launched by Li-Ning in Zhengzhou, 2021
                        • Introduce fun co-creation activities with local consumers to encourage the expression of local culture
                          • Figure 50: Gucci’s co-creation campaign Blooming Shanghai, 2022
                      • Live Commerce: Opportunities for Joint Marketing with IPs and Celebrities and for Introducing New Technology Concepts

                        • Impulse spending and buying for hobbies are on the rise
                          • Figure 51: Live shopping and reviews of their experience – interview excerpts, 2022
                        • Live streamers’ endorsement helps promote new technology concepts
                          • Figure 52: The appeal of new technologies and technology-related claims – interview excerpts, 2022
                        • Live streamers who create atmosphere and conversation and showcase their personal traits and style are favoured
                          • Figure 53: Favourite live commerce hosts and reasons to like them – interview excerpts, 2022
                        • Leverage the multiple influences of celebrities, IPs and KOLs
                          • Figure 54: Selected purchase occasions – Very likely, by age, 2022
                        • Half of young consumers get their latest tech information from tech bloggers
                          • Figure 55: Information channels for getting information about emerging technologies, by age, 2022
                        • Collaborating with technology uploaders and celebrities to promote products that incorporate emerging technologies
                          • Figure 56: Peak collaborated with He Tongxue and Wu Lei to promote its HALS 3D-printed sneaker ‘Future Origin’, 2022
                        • Combining hot IP themes to enrich the live-streaming experience
                          • Figure 57: Maogeping collaborated with IP ‘Great Beauty China – Renyin: Ode of Pepper Flowers ‘(《大美中国壬寅篇·椒花颂声》), 2021
                      • Appendix

                        • Abbreviations

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