China Center for International Economic Exchanges

Chen Wenling: Ten Trends of China’s High-end Consumption
Date:Mar 13,2018    Source:CCIEE

The report of the 19th CPC National Congress gives priority to create the new growth point and new momentum by developing high-end consumption, which is a very important new proposal. The people’s growing need for a better life will trigger a revolution of the consumption pattern. In the near future, the new and high-end consumption will show the following ten trends.

First of all, there will be a faster than ever increase in China’s online shopping. In recent years, China has continued to strengthen its investment in the so-called soft infrastructure. From 2015 to 2017, China’s investment in building a new generation of information infrastructure has exceeded 1.2 trillion RMB. China has already had a huge group who enjoy online shopping and such a trend is unstoppable because this is the choice made by consumers. What can the online shopping and big data bring to our society? We should keep a close eye on the evolution of consumer behavior as this will change the lifestyles and living conditions of the consumers.

By analyzing the big data of consumption, we can easily trace consumers’ needs in such areas as tourism, shopping, culture and entertainment, social life, and employment status. The data here is not just numbers because tell us everything about the consumers. The analysis of consumer behavior will help company to better understand what the consumers really want, find a market niche and more importantly, satisfy their needs.

Secondly, consumption in fashion will become a dominant feature of the structural change in consumption. After the masses have met their basic needs for food and clothing, they will spend more money on fashion. According to the survey conducted by relevant international organizations, the value of China’s luxury goods industry reached 120 billion RMB in 2016, and its fashion consumption accounts for 30% of the world’s total, making China the largest consumer of luxury goods.

This kind of fashion consumption, on the one hand, is completed through overseas travel and on the other hand, is done through online shopping, which has become a trend among the young people. In any era, the change and upgrade of consumption structure always start with fashion and luxury consumption and gradually, this kind of consumption will become accepted by most of the people and the supply-side structure will change accordingly.

Thirdly, the smart consumption will become a new preference of the consumers. The rapid development of the Internet, Internet of Things, big data, cloud computing, and cloud services in China, and the continuous investment in the soft infrastructure have created a solid foundation for smart consumption. For example, the rapid development of the new business model such as the sharing bicycles need to be supported by smart infrastructure. The smart infrastructure made the wide application of mobile payments possible, which in return create the real-time consumption and settlement. The smart infrastructure established by China in a short period has changed the social public management and people’s preferences. Apart from the invisible hand of the market and the visible hand of the government, there will be a third hand, the intelligent hand in the future, which does not belong to any private or government agency. It may be a digital intelligence platform based on blockchain technology and will continuously collect and analyze digital information of individuals and enterprises, so as to better allocate resources and meet consumer demand as well as unleash social productivity.

The fourth trend is that the sharing consumption will help us to fully use the stock resources and create incremental resources to meet the diversified needs of consumers. Among the five development concepts proposed by President Xi Jinping, the concept of sharing development and economy will not just create many new business models and service formats, but also create more employment and entrepreneurs. Sharing consumption is a vital part of future consumption and an important source of improving the quality of the supply system, but not all industries and products can adopt the same business mode.

Fifth, the experience-based consumption will become a new trend. In 2015, the number of people traveling within and outside China reached 4.1 billion, 4.4 billion in 2016 and 5.1 billion in 2017. In the past, travelling is only about sight-seeing but now, it is more about experience-based consumption. According to the National Tourism Administration, the visitors to special towns accounted for nearly 40% of the total travelers. Places with cultural characteristics, ethnic characteristics, and unique environmental resources have become a popular attraction, and various experienced-based consumption such as cultural products, food culture, and ecological environment will become a new consumption trend.

Sixth, there are more people who are willing to spend a large amount of money to make themselves more beautiful. For example, there are now many people go to South Korea for a facelift and this trend is likely to continue for some time despite the fact some of them had very unpleasant or even terrible experience. In order to make themselves look prettier, many people spend huge sums of money. The beauty-improvement consumption is a new trend, which is not only about plastic surgery, but also include facial washing, foot massage and sports. For China’s new generation, especially the one who are born after the 1990 and 2000, the beauty-improvement consumption will be so important, not to mention the large group of female consumers.

Seventh, the health-related consumption will become the basic consumption to improve people’s health and establish a national health system. Health is an important foundation for improving the quality of labor, people’s living standard and happiness, and ensuring the sustainable development of the economy and society, which means health-related consumption will become a basic consumption. People have never valued health as much as they do now and correspondingly, the planning and construction of some featured towns are aimed at improving people’s health. For example, Ningbo city has introduced German technology to plan the Sino-German International Health Town. As can be seen, health-related consumption is not only the need of the elderly, but also a lifelong need of all the people.

Eighth, the culture-related consumption will become a sustainable consumption that improves the quality of citizens and our cultural confidence. The people’s demand for culture has experienced profound change. For example, the need for learning ancient Chinese and poetry has already become a high-end consumption. The tuition fees of EMBA courses based on learning Chinese classics offered by some university cost more than 600,000 RMB, nonetheless, there are still more people want to take the course. Furthermore, foreigners are also learning Chinese literature. A video of Trump’s granddaughter practicing her Chinese and ancient poetry left a deep impression on many people and became a sweet moment in the US-China diplomacy. Therefore, the self-confidence of Chinese culture, the return of the value of Chinese culture, the use of Chinese aesthetics to guide and promote the production of more original culture will become a new market niche without boundaries and capacity constraint.

The ninth trend is that safety-related consumption has become the most fundamental and urgent demand. In the past 40 years of reform and opening up, many problems also occurred during the rapid development. How can we obtain safe products needed for our survival and development? How can we make our environment safer? All these questions have created many new demands. For example, people are now willing to spend more money on buying safe food, and such kind of demand will increase with the increase in people’s income level and purchasing power, which will guide the supply-side structural reforms of all the relevant industries.

Last but not least, customized consumption will become a new trend that embodies consumers’ personality and their personalized needs. With the development of the Internet, Internet of Things, big data, cloud services, and artificial intelligence, the traditional consumption characterized by imitation and mass production is gradually fading away, while the pursuit of fashion, health, leisure, and quality is leading China to a new era of personalized, diversified and multi-level consumption. The online shopping is able to collect fragmented demand and turn it into personalized and creative merchandise. For example, the change in clothing consumption will encourage retailers to use electronic fitting rooms, smart positioning, self-service terminals, and VR presentations to create a series of smart applications that will give consumers a completely different shopping experience. The data generated from these different processes will allow the factory to produce the clothing which matches consumers’ requirement precisely.

Of course, the trend of the new and high-end consumption will not stay unchanged but to develop with the changes in consumers’ behavior and preferences. The supply-side structural reform will never end and actually, the change in consumption is the force driving the supply-side structural reform. The key to solving the major social conflict is to achieve consumer transformation and upgrading, change the traditional consumption to new and high-end consumption and meet people’s growing needs for a better life, which will the driving force for continuous supply-side structural reform.


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