The Hong Kong Trade Development Council (HKTDC) released results of a survey showing that mainland China’s emerging middle class overwhelmingly favors international brands, even if they know they are made on the mainland.
The “Mainland Middle-Class Consumer Survey” was conducted by the HKTDC from December 2012 to January 2013 in Beijing, Shanghai, Guangzhou, Chengdu, Wuhan, Shenyang, Nanjing and Changzhou. In all, 1,600 consumers were interviewed to understand how middle-class consumption and city lifestyles among different tiers are affected by social changes such as improved transportation and accelerated urbanisation.
HKTDC Deputy Director of Research (Greater China) Pansy Yau says that the mainland middle class is increasingly concerned with product and service quality. They are seeking more online shopping options and are pursuing products that will help them express their personal style.
The survey, which focused on opportunities for Hong Kong exporters, showed that 81 per cent of respondents have bought international brands in the past year, and 76 per cent agreed with the statement “I give first priority to quality.” In addition, 80 per cent have indicated that in the past year, they have made excursions to neighbouring cities and as many as 85 per cent have shopped online.
The middle class remains enthusiastic about international brand-name products. Among respondents, 85 per cent have bought international branded products in the past year, with garments topping the category (74 per cent). They are also inclined to buy branded products, with more than half (52 per cent) of respondents agreeing with the statement “I prefer using well-known branded products even though they are more expensive.” Among branded products, middle-class consumers generally prefer imported brands and J-V brands, with 60 per cent agreeing that “I prefer joint-venture products to domestic products even though both are produced on the mainland.”
Emphasis on quality growing
Mainland middle-class consumers are also paying more attention to quality, with 76 per cent of respondents agreeing that “I give first priority to quality,” indicating that consumers are becoming more sophisticated regarding “authenticity” and “quality of after-sale service.” Of respondents, 68 per cent agree that “sales staff knowledge about the product/service is very important to me in making my buying decision”. Furthermore, their frequency of buying organic products has increased significantly as 76 per cent of respondents agree that “I am willing to pay more for green products.”
It is worth noting that presently, a significant proportion of middle-class consumers (57 per cent) still tend to use more “generally recognised famous brands.” However, some are beginning to turn to niche brands to express their personality. So-called “low-key luxury spending” is likely taking shape.
Rising car ownership, better highways stimulating travel
With an increase in private-car ownership and the further development of inter-city transport, the middle class has formed the habit of travelling regularly as 80 per cent of respondents say they have “made excursions to neighbouring cities.”
In addition, in the past year 39 per cent of them drove themselves, and 35 per cent had travelled to other cities for holidays by high-speed rail. Where overseas travels are concerned, 29 per cent of the respondents have travelled to Hong Kong and Macau in the past year under the Individual Visit Scheme. In particular, compared to other cities, a significantly higher proportion of Guangzhou respondents have paid individual visits to Hong Kong and Macau and stayed in four-star or above hotels.
The survey findings also reveal that, good inter-city transport notwithstanding, only 22 per cent of the respondents have “shopped specifically in neighbouring cities” while 67 per cent of them agree that “there is no need for me to go to the key cities for shopping because the city I live in has a good business environment and a rich variety of brands and styles,” an indication that the environment and level of retailing in some second- and third-tier cities are improving.
As to consumer entertainment activities, there have been ever-more gatherings with family/friends and family activities among the middle class. Among respondents 74 per cent agree that “I now spend more of my free time with family/friends.” Judging from service-consumption frequencies in the past year, “gatherings with friends” and “trying out new restaurants” are on the rise.
Social networks are key influencers
Where marketing is concerned, the Internet and social networks have a definite influence on middle-class consumption. In addition to the fact that the majority of respondents (83 per cent) have shopped online, more than half (58 per cent) agree that “I would make use of instant-messaging software or social networks to share my good or not-so-good experience in consumption.” Though TV is the channel through which most respondents obtain information, “sharing among relatives/friends/colleagues” is the most effective, thus, creating word-of-mouth publicity will be a key marketing strategy.
With rising incomes and a heightened concern with product quality, the consumption attitude of mainland middle-class consumers has switched from “buying what is suitable for oneself” to using more branded products.