Chinese technology companies such as Alibaba, Tencent, and Baidu have long been technically ready for their staff to work outside the office. But, remote working to the majority workforces in China remains new and uncomfortable.

As China continues to fight the coronavirus, remote working is no longer an option but a necessity for many. Communication and collaboration platforms are essential to remote workers; Alibaba’s DingTalk, a.k.a. Dingding in the Chinese version, has seen a spike in demand in China.

It has surpassed social messaging apps in popularity on Apple’s App Store for the first time as companies tell employees to work remotely due to the novel coronavirus epidemic.

DingTalk responded quickly to release free solutions for workers staying home including contacts management, attendance, video conferencing, cloud drive, group streaming, task coordination, and etc. It even offers a beauty touch-up for those who do not have time to dress up before making a video call.

DingTalk has set up a special 24-hour team as the number of users rose to about 200 million, according to Daily Economic News. The interests over both DingTalk and WeChat Work (separate app from Tencent that integrates with consumer app WeChat) have skyrocketed as indicated by the search data from Baidu:

Enterprise version of WeChat, or WeChat Work launched in 2016, has also seen fast growth over the past two weeks. It allows up to 300 people to join video calls while DingTalk allows up to 16 people. Tencent also offers Tencent Docs for online document collaborations while Alibaba offers Yuque (technically by Ant Financial team but used by all Alibaba teams).

Huawei also promoted their teamwork platform WeLink and Kingsoft’s WPS office software suite also has some popularity in China for their collaborative online work. Both provide their services for free. WeLink is more focused on security considering the nature of Huawei’s business.

Feishu, a team collaboration software from ByteDance, is also offering SMEs the business version for free for three years.

NASDAQ listed Zoom Video Communications is benefiting from the coronavirus outbreak. And, it also wants to help Chinese businesses:

But, the dedicated domain doesn’t have a fully localized Chinese page. Even the sign-up page is in English. Nonetheless, Zoom has some level of awareness in China; some MNC and technology companies like ByteDance use Zoom.

Baidu is also offering its solution Baidu Hi; but, it doesn’t seem to be seriously promoted at the moment. DingTalk is a winner; and, WeChat Work and Feiyu both saw some traction.

Continue reading Acquire, convert, and retain customers through WeChat Ads + WeChat Work or check out Rocky’s China Digital Trends podasts via Apple Podcasts, Google Podcasts, Google Play  or Spotify.

In spite of the fact that it’s possible the development rate for Chinese shopper spending will be somewhat lower in 2019 than in 2018, the Chinese keep on expanding their spending by a significant edge and are anxious to pay for things with a solid offer.  McKinsey’s most recent China Consumer Report released this month highlights five trends for 2020:

1. Young, free-spending consumers in lower-tier cities are today’s growth engine.

2. Most Chinese consumers are increasingly discerning, savvy, and frugal about their spending.

3. The health-conscious movement is here to stay.

4. Chinese consumers continue to be more sophisticated travelers.

5. High-end Chinese brands are increasingly appealing.

Download the report here (annual Standard/Premium subscribers).

During the National Day Golden Week (October 1-7) this year, online consumption is showing trends towards refinement, efficiency, and intelligence. Traveling is still the main way people spend their holidays. Overall, both consumption and tourism have shown trends of reshoring from abroad to domestic market and expansion from the first- and second-tier cities to the low-tier cities.

Conspicuous consumption is increasingly popular among Chinese. Data from Tmall shows that from October 1st to 3rd, compared to the same period last year, the sales of aromatic essential oils increased by 239.64%, perfumes by 50.59%, men’s makeup by 69.91%, sunscreens by 79.30% and makeup travel sets increased by 43.49%.

On the eve of the Golden Week, the sales of medical masks for sunburn repair and moisturizing on the Tmall’s healthcare platform showed a 510% increase compared to last year.

Foods and drinks is an ever-lasting theme for holidays in China. Consumers want to eat fresh food conveniently. In the first three days of the Golden Week, the sales of steaks increased by 60%, low-temperature milk by 191.39%, instant food and instant rice by 40.69% and 54.78% respectively, compared to the same period last year.

Tmall Supermarket’s data shows that from October 1st to 3rd, the number of people participated in the flash sale of Maotai (arguably the most famous Chinese liquor) reached 3 million. The sales of liquor increased by 12 times compared to last year. The total turnover of Tmall Supermarket increased by 40% compared to last year.

Hema, the new benchmark for retail, has opened 171 stores in 22 cities across the country. In the first three days of the Golden Week, the average daily sales of Hema stores across the country increased by 22% compared to normal days. In Beijing, Shanghai, Guangzhou, and Shenzhou, the increase was 17.5%; and in second- and third-tier cities, the increase was close to 30%.

Many people who do not want to travel and see crowds of people have chosen to spend their time shopping and eating in Hema stores. According to data from Hema, in-store consumption in the first three days of the Golden Week increased by nearly 30%. The top ten best-selling products were all seafood. The sales of king crabs increased by 3,000%, compared to the same period last year, and over 40,000 Yangcheng Lake hairy crabs were sold.

Home living has become increasingly intelligent. From October 1st to 3rd, on Tmall, the sales of indoor fresh air systems increased by 111%, electric curtains by 168%, home security cameras by 84%, robot cleaners by 17 times and electric mops and brooms by 23 times, compared to the same period last year.

Login below or subscribe here to read the full article.

New energy vehicle is the hottest theme of this year’s Beijing Auto Show. Kantar TNS Auto expert summarizes major trends in this sector.

China is the world’s largest auto market. Its annual auto show, which is held in Shanghai and Beijing in turns, has become one of the most important events for the world’s auto industry. This year’s show is being held in Beijing’s China International Exhibition Centre, New Venue from April 25 till May 4.

Given that new energy vehicle is increasingly becoming mainstream in China, I noticed some major trends in this sector during my trip to the mega exhibition.

Many traditional automakers launched new plug-in hybrid electric vehicle (PHEV) models for today’s China market. Apparently, PHEV has become the main route towards the next phase of the new energy revolution in China.

Ford, for example, launched its first new energy vehicle for the Chinese market: Plug-in hybrid version New Mondeo. Chinese car maker Geely also unveiled plug-in hybrid sedan Borui GE, which is due to hit the market within this year. Compared with previous hybrid cars using gasoline engines to recharge batteries or to power the electric drive motors, plug-in hybrid vehicle represents a step towards a pure electricity driven car era.

Compared with plug-in hybrid electric vehicles, pure electric vehicles have made more noteworthy progress in designing. Previously, automakers have kept the external designs of new energy vehicles similar to gasoline versions – in some cases even exactly the same.

Now, pure electric vehicles, regardless from traditional car makers or disruptive newcomers, have more distinct exterior designs compared with fossil fuel-based vehicles.

The body design and interior styling of electric cars distinctively emphasize on simplicity, streamlining and futuristic design, as well as fully loaded technology features, such as intelligent user-interface, connectivity, and self-driving features. Car makers wish to impress car buyers to provide them with easier, simpler, smarter but at the same time more customized services.

BYTON, one of the high-profile disruptive car makers and founded by a team led by former BMW senior executives, unveiled its CONCEPT car and became one of the most attractive new launches during the show.

In fact, traditional car makers are also rolling out sexy concept cars, such as ICON from Geely:

Pure electric vehicles have become more personalized: automakers are not rolling out just one or two models, but various models designed for very specific car buyer segments. BAIC, for example, displayed its two-seat pure electric LITE in 12 colors for 12 zodiac signs. It will also roll out models with different driving ranges to cater for the needs of different buyers, such as single buyers, the family of two or family with a small child.

Many businesses in China are expanding outside of their “native” industry, automakers are no exception. I have seen many automakers promoting their vehicles’ connectivity with “smart home” devices, as showcasing the benefits of automobiles connected with Internet of Things.

Dongfeng Motor displayed their vehicles’ ability to turn on air conditioners and water heaters at home within a certain pre-set distance. Geely displayed apps that could be installed on their in-car operating system and control devices at home and other locations. The examples demonstrated these automakers’ vision as how a connected car-home ecosystem can enhance life quality.

Many companies also displayed their solutions to tackle the biggest bottleneck preventing electric cars from taking off in China: power charging.

BAIC displayed a model “battery station” solution which can swap a used battery pack for a fully charged one within 2’30”. This echoes the direction of start-up Chinese pure electric maker NIO is taking. According to this model, electric car buyers won’t be buying battery packs. Instead, they pay for the usage of these batteries or rent it. It is possible that people will be charged at “battery stations” based on how much power they’ve used or distance they’ve driven on the battery packs being taken down.

For the pure electric vehicle, the latest models now can be charged up to 80% within 30 to 40 minutes in quick charging mode and fully charged to 100% within 6 – 8 hours in slow charging mode. Both modes are considerably shorter, especially quick charging mode, which used to take 1 to 2 hours. At the same time, most newly launched pure electric vehicles will have at least 500 kilometers of driving range.

At every major auto show in China, we can see many cool and sexy concept cars. But after quite a few “PPT auto start-up” busts here, which refers to start-ups trying to win investment and early buyers with nothing other than a nice presentation deck, we need to be more cautious. Let’s take a step back and think twice before being carried away.

It is true that China has gone a long way in new energy vehicle development, with traditional and disruptive automakers launching new concepts, new ecosystems or new theories one after another. But we also need to check how many of these fancy models eventually hit the streets.

A newcomer announced a pure electric SUV for 300,000 yuan. Another one promises to start to sell a pure electric racing car at 600,000 yuan to 1 million yuan range this June. We have to be patient and scrutinize which ones of these big promises are in the end delivered.

It doesn’t matter whether this automaker is new or long-existing, what matters is if this company can produce safe and efficient new energy cars that brings value to Chinese consumers. They are the true “new energy” to bring Chinese auto market forward.

This post was originally published on Kantar.com.

Evolving cultural values and how brands can use them to switch on growth.

Trend 1: Time lost and gained

Cultural observation

The last couple of decades have been defined by a sudden increase of the social and personal pace of life: from society passing to modernity, to early loss of carefree childhood and rise of hectic everyday routines. This begins to be realized now and results in the idea of time being more consciously acknowledged and increasingly valued.

Many new films and songs are about time passing by quickly and nostalgia for when protagonists were younger.

Cultural example 1:

Film “Youth” (《芳华》) Directed by Feng Xiaogang (冯小刚) and written by Yan Geling (严歌苓), released on December 15, 2017.

Cultural example 2:

Song “Waiting For You” (《等你下课》) by Jay Chou (周杰伦), released on January 18, 2018.

Branding implication

A brand that enables time saving and appreciating; either through functional benefits such as simplification of processes and efficiency of services, or through emotional ones by facilitating or re-enacting precious moments, or even curating laziness.

Brand example 1:

The speedy courier service provider Shansong (闪送) which emphasizes its quick responses and speed by designate individual courier to each package they deliver. On average, a parcel within 5 kilometers will be delivered within 23 minutes. They are also available 24 hours a day.

Brand example 2：

Pay-by-use mini KTV booths in public places satisfying consumers’ need for fast and easily accessible visits. Paid sessions can be as short as 15 minutes and could be paid through mobile phones right away.

Brand example 3:

Laziness becomes an increasingly important value counteracting periods of time with frantic pace, and enabling consumers to “own” time instead of the other way round. Branded festival of laziness where people win by doing nothing better than others.

Inewsweek.cn, the website under China Newsweek affiliated to China News Service (中国新闻社), in September 2016 held a “dazing competition” in Beijing. Participants were required to daze for up to 2 hours without doing anything – no talk, no music, no mobile phone. Those whose heartrates were among lowest became winners.

Trend 2: Multiplicity

Cultural observation

China is moving from a firm allocation of roles to a loosening of social hierarchies and strictness to meet the increasing complexity of Chinese modernity. As a result, people are embracing multiple interests, identities and roles to fit different occasions (at work, alone, with family, with friends, with strangers and so on).

Cultural example 1:

“Slash youth” became a popular buzzword in 2017 about living with multiple identities/roles, with many publications and events promoting it.

Cultural example 2:

Chinese web TV series “A Seven Faced Me” (《柒个我》), which is a remake of South Korea television series “Kill Me, Heal Me”. It featured popular star Zhang Yishan (张一山), whose character has seven personalities.

Branding implication:

A brand that understands and serves multifaceted personalities promotes multiplicity, rather than speaking in generalizations and addressing stereotypes. Facilitating diversity and offering tailor-made products or services that enable an effortless switch from one personality trait and occasion to another.

Brand example 1:

Brands are celebrating multiple identities by using spokespersons with diverse personality traits.

Huang Xiaoming (黄晓明) appeared with triple roles (actor/singer/environment protector) while featuring in Rémy Martin’s One Life/Live Theme posters/videos.

Brand example 1.5:

He also appeared with four personalities in the poster of ZWILLING J.A. HENCKELS.

Brand example 2：

The brand product that enables consumers’ transformation based on their different moods and occasions.

Schwarzkopf’s Fresh Light Hair Blush products allow consumers to add a few streaks of various colors to several strands of their hair quickly. And they can wash them off with normal hair washing.

Brand example 3:

In April 2017, CHANEL opened a pop-up cafe in Shanghai. Unlike previous pop-up cafes in Tokyo, Toronto, and Singapore, the Shanghai cafe really offers coffee and deserts to visitors. It is a museum of CHANEL brand, and also a place for fans to see latest CHANEL products. After trying out new CHANEL products on display, visitors were invited to take photos against a CHANEL product wall to earn free coffee coupons. The shop became a multi-functioning retail space for CHANEL brand and it did go viral on social media.

Trend 3: Playful technology

Cultural observation

Chinese have been historically fascinated by technological progress associating it with social and national prosperity. Technologically enabled unmanned services are penetrating more areas of life and are not only embraced – as opposed to the West where they are met with skepticism – but also turned into a source of unexpected fun and joyfully entertaining experience.

Cultural example 1:

From ordering and paying to assist with public order and information, technology is starting to penetrate all aspects of life creating playful and fun interactions.

Xian’er (贤二) is a robotic monk that Beijing Longquan Temple created together with AI experts. The 60-centimeter tall robot can answer simple questions, chant Buddhist sutras and play Buddhist music.

Note: Master Xuecheng is the Abbot of Longquan Temple.

Branding implication

A brand that is all about technical proficiency can add a twist of playfulness to its personality. By disguising mechanisms and interfaces in cute animation or entertaining processes, it humanizes technology while at the same time turns initial feelings of coldness and alienation into an intimate and inviting experience. In such a way, a brand can express technological expertise without losing warmth and approachability.

Brand example 1:

Samsung launched a campaign to highlight its AI assistant Bixby in smartphones. The scenarios featured in the creatives consisted of dialogues between the user and AI, with AI providing humorous answers.

Trend 4: Pragmatic honesty

Cultural observation

Hectic and vastly changing lifestyles, fierce competition and lonesomeness are creating an even stronger sense of anxiety, stress, and depression. Instead of the traditional stance of keeping these feelings suppressed in order to “save face”, we observe a massive shift towards acknowledging them: treating them with honesty and sometimes self-irony, as well as celebrating a state of imperfection.

Cultural example 1:

On China’s popular question-and-answer platform Zhihu (知乎), the topic of “how to overcome anxiety” was viewed by more than 1.6 million times and followed by 18,000+ users.

Branding implication

Brand should not promise a utopian – and in essence hypocritical – transformation, but speak with a pragmatic and sympathetic tone of the voice recognizing rough conditions, promoting realistic authenticity and motivating consumers to embrace their imperfection.

Brand example 1:

The fast-rising Chongqing liquor brand Jiangxiaobai (江小白) targets young consumers and positions itself as a social tool during team building activities in companies. In this poster, the text is similar to a seasoned colleague’s encouragement for a hard-working younger peer.

The text said:

“Toast to yourself.

You’ve eaten the first buns at 5 am,

You always turn off office lights because you’re the last one leaving.

Let’s seal the past in the liquor!

Then, when you recall old days, you have good stories to tell,

Those must be fxxking awesome days.”

Brand example 2:

In terms of graphic design trends, this is expressed by imperfect (glitch art) style – with out of focus, blurry and pixelated visuals – creating an aesthetically stylish execution of a non-perfect world.

Lenovo Wifi router poster on JD.com

Brand example 2:

Didi’s “Go when you want to go” series.

Trend 5: Spontaneity

Cultural observation

Spontaneity has to do with instant, unexpected and experiential gratification; its defining characteristic is that it happens so fast that catches people off guard resulting in a brief but high dosages of excitement. In China, it is very freshly relevant as it results inauthentic and more real reactions without people having time to rationally process it through traditional behavior and social conventions such as “public face”.

People want surprises as urban life becomes busier and social rules are less strict; thus, we see flash mobs, innovative public art events, and reality TV series basing their experience on the element of surprise.

Cultural example 1:

In 2017, one of the classic moments of the phenomenally popular web reality show “The Rap of China” (中国有嘻哈) was Chris Wu (吴亦凡) asking rappers to perform freestyle. In battle sessions, the rappers have also to think of lyrics at the same time as they rap.

Branding implication

Some brands can emphasize that it is all about instant gratification, pleasure and excitement in its most pure, authentic and real. Curating experiences and moments of small yet intense joy as small breaks within mundane routines. This can also be associated with products that stand for real and good taste and ingredients and/or youthful design and energy.

Brand example 1:

Tmall held a “See Now Buy Now” event at Shanghai’s National Convention and Exhibition Center on October 20, showing off branded fashion and apparel that will be available to buy for Alibaba’s 11.11 Global Shopping Festival.

It featured a number of the world’s iconic fashion and apparel brands, including Guerlain, Adidas, Pandora, Ray-Ban, Estee Lauder, Victoria’s Secret, Rimowa, Ralph Lauren, French fashion group SMCP, Italian leather goods brand Furla.

The event was taped live and broadcast on October 31 across seven media platforms, including Tmall and Taobao apps, video website YouKu, news aggregator Toutiao, Weibo, and traditional TV channel. While watching the show, audiences were able to buy what they see, when they see it, on all those platforms. Sites and platforms will offer listings, links or buttons to pre-order the items ahead of 11.11.

Brand example 2:

Pop-up shops and ambient media create a spontaneous feeling of pleasant and instantaneous discovery, associating related emotional values with the brand.

Lipton felt they were struggling with the business environment stereotype image, especially among younger consumers. To tackle the issue, it opened pop-up stores for two consecutive years at Shanghai Fashion Week to emphasize its youth and fashion element. In 2017, its four-day pop-up shop used cherry flower as the theme.

This article was originally published on Kantar.com

The Big Picture of Mobility: 2017 Deloitte China Mobile Consumer Survey is an online survey conducted by Deloitte China TMT industry during the past five years. The survey focuses on consumer behaviors, trends, and opinions regarding a broad range of wireless and mobility products and services.  

Aiming to explore the level of applications, devices and support, this survey covers several recent hot topics such as the content consumption, mobile payment, digital devices, data security, biometrics and internet of things (IoT) in order to reveal the key trends that drive the mobile markets and to provide suggestions for relevant enterprises.

Smartphones will still remain dominant

• The mobile phone has surpassed tablets and other digital devices in ownership rate, and vastly exceeded emerging digital products represented by smartwatch and smart bracelet in this regard.
• The smartphone’s success in the future is likely to be the introduction of an array of innovations that are largely invisible.

Machine Learning (ML) will be fitted as standard in phones

• AI chips will be fitted as standard in smartphones, and the amount of machine learning-based applications is expected to steadily increase.
• With smartphones becoming an increasingly viable deployment option for ML, the spectrum of potential scenarios is expanding.

Fingerprint authentication marks the password-free era

• Fingerprint authentication has become a standard configuration of smartphones, exceeding password as the main way of unblocking smartphones.
• At the moment, nearly seventy percent of smartphones are with fingerprint authentication function. Full coverage will be achieved in the future and more usage scenarios of fingerprint authentication will appear.

Consumers attach more importance to the phone storage space

• The consideration of necessity and storage space will become major factors that affect the number of Apps installed. In view of this, App differentiation is likely to be the new ground for the development of mobile phone applications.

The self-introspection of mobile phone addicts should arouse attention 

• Consumers are trying to limit their phone usage to prevent live and work from being occupied, while smartphones utilization will continue to rise given the increasingly assembled function embedded in smartphones.

Physical stores and online stores will keep the back-and-forth relationship

• The physical stores are showing signs of revival since the consumers focus more on the product experience, brand, and innovation etc.
• Online stores are losing price advantages and will experience a slowing growth in the future.

The outlook of wearable devices and IoT devices are still unclear

• Due to the price issue as well as low intelligence degree, IoT equipment will keep low ownership rate in short time and will mainly focus on entertainment products.

Mobile video will encourage the data traffic consumption

• The video contents are popular and the demand of consumers for data traffic will further increase. Hence the core position of data traffic services in the whole business of operators will be further deepened.

Personal information leakage becomes the new normal 

• Driven by economic interest, enterprises collect and reveal consumer information, which causes the frequent leakage of personal information and arouses consumer attention on such behavior of enterprises.

Log in to see the hidden charts.

Three factors contribute to instant noodles rebound in 2017. But the increasing popularity of food delivery apps might push this category back into decline.

When talking about consumption upgrading in China, people often use the category of instant noodle as a typical victim. As people chose to eat fresher and healthier food, they began to stay away from instant noodles. As a result, since 2013, the sales of instant noodles did enter a downward spiral.

However, instant noodle makers never give up their fight and managed to have a surprising comeback. Kantar Worldpanel data showed that in the 52 weeks ending December 1, 2017, the sales of instant noodles in the urban area increased by 6.2% in value and 4.1% in volume. There are multiple factors contributing to this category’s revival. We can analyze the trends in product, consumer, and channels.

New premium products unlock growth

Following consumers’ desire to switch from “eating enough” to “eating well”, instant noodle manufacturers have launched several premium products to cater to this trend. For example, Master Kong and President both have introduced instant noodles featuring tasty soups. Kantar Worldpanel data showed that the sales of premium instant noodles achieved double-digit annual growth in 2017. In the 52 weeks ending December 1, 2017, among all urban families, 31% have bought premium instant noodles. About 10.63 million families are new consumers to this category.

Rekindled interest from middle class families

Our data showed that middle-class urban families (household income higher than 9,000 yuan per month) have significantly regained interest in instant noodles: the annual spending from these families increased by 19% from a year ago. Middle-class families contributed 40% of sales value and 37% of sales volume of instant noodles in China. Their support is pivotal to this category’s revival.

Huge room for growth in e-commerce

While hypermarkets, supermarkets, and other offline channels are struggling, online sales of instant noodles have been doing very well: in 2017, the e-commerce sales of instant noodles jumped 28% from a year ago. The average basket size for online purchasing was much bigger: across all channels, the basket size for instant noodles was 5.4 units per purchase, while it was 9.0 units per online purchase.

Compared with the shining data from the current situation, the future of e-commerce is even more appealing. Now only 5.8% of urban Chinese families have bought instant noodles online – a very small number compared with the penetration of offline channels. More than 30% of urban families have bought premium instant noodles through offline channels.

Threat from food delivery apps

Besides abovementioned positive drivers for instant noodle category, there is a fast increasing service that might end its revival: food delivery apps. Since March 2016, Kantar Worldpanel APP Meter has begun tracking mobile app usage behaviour of 32,000 sample consumers across five city tiers in China.

We noticed when consumers get used to ordering food through food delivery apps, they will reduce spending on instant noodles. After a user begins to use a food delivery app, within the first half year, his/her purchasing of instant noodles won’t change much. But it will start to decline gradually if the user continues to rely on food delivery app for meals.

We are not alone in noticing this threat. Instant noodle manufacturers have taken proactive measures to counter these apps’ erosion. They’ve launched DIY noodles, snail noodles, and instant hot-pots to keep attracting new users.

Maybe it’s better to have a bowl of hot noodle that is instantly ready to eat on your desk than wait for a meal that is often late and arrives cold in your hands. Instant noodle manufacturers in China are trying their best to create value and stay relevant in consumers’ fast-changing lives.

Also check out China’s luxury consumption trends here

This article was originally published on Kantar.com

Three major trends are shaping China’s luxury market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

On August 21^st, CBNData and Tmall published a report entitled “Luxury Consumption Trends in the Era of New Retail, 2017”. Using Alibaba’s consumer data to analyze consumption patterns, the report highlights several trends in changing luxury consumer demographics as well as showing the changing ways that luxury brands pursue consumers in China.

Between 2014 and 2016, the number of luxury brands using online sales channels has continuously increased; by 2021, online sales are expected to account for 13% of the luxury goods market.

Changing consumer demographics…

It considers young consumers, consumers from small cities, and cost-conscious consumers to be the up and coming forces driving growth in luxury consumption.

The generations known in China as the “post-90’s” and “post-95’s” are now a major market for luxury goods, and increasingly the primary targets of marketing campaigns by major players. There has been steady growth in the numbers and purchasing power of the post-90 generation since 2013, and the past few years have seen a rapid expansion of the post-95’s online presence.

Residents in the increasingly prosperous smaller cities, with lower costs of living and fewer pressures to save, are entering the market en masse, making up an ever-larger portion of consumers. Online sales of luxury goods have driven their penetration into second- and third-tier cities and rural markets where few have an offline presence.

In 2015, the size of the average luxury purchase by consumers in third- through sixth-tier cities surpassed the average for first- and second-tier cities. At the same time, the ten cities with the highest growth in luxury consumption are almost uniformly third-tier and lower. High-end cosmetics and watches are particularly explosive markets in smaller cities.

Consumers generally fall into three categories: “quality of life” consumers, mass consumption consumers, and price-conscious consumers; price-conscious consumers are coming to the forefront as the generations born after 1970 and 1980 settle into family life and more closely consider how to spend their larger disposable incomes.

In recent years luxury goods brands have effectively pursued the latter two markets, increasing their market share in those demographics. However, marked differences remain between each group’s purchasing habits; cost-conscious luxury consumers embrace brands with an image of utility (ex. Tissot) and up-and-coming brands, while “quality of life” consumers remain focused on household names such as Burberry.

… and new market trends…

At the same time, it shows that three major trends are shaping the market today: expansion of luxury brands into everyday categories, increased attention towards niche brands and personalization, and “normalization” of online sales of luxury goods.

Luxury brands have “infiltrated” certain sectors to the point where they account for significant portions of daily spending; from 2013, the share of skincare product sales held by luxury brands has continuously increased, while luxury brands now account for more than 40% of all watches and alcoholic beverages sold. Luxury goods, in these sectors, are no longer conspicuous consumption; they’re just consumption.

“Luxury” is no longer synonymous with “LV, Gucci, and Hermes”; rather, Chinese consumers are increasingly aware of niche brands which more closely match their needs and preferences. When entering the market many brands choose to list on Tmall and other e-commerce platforms to increase visibility and attract younger consumers.

In years prior, Singles’ Day events provided a huge boost to luxury goods sales; in the past two years that effect has become less pronounced, as luxury goods have become a more “normalized” part of people’s everyday consumption patterns

… are changing the luxury goods market

These three trends are improving customer experiences and quality assurance to further drive movement of consumers to e-commerce, making new retail formats the preferred choice for luxury consumption. Luxury brands are working to more finely target smaller markets, with goods that will fill gaps in their everyday lives, through online channels.

Other trends affecting the market include gradual reductions in tariffs for imported luxury goods, relaxation of import regulations, and global pricing strategies on the part of major brands, all reducing the appetite for grey market goods or those purchased while traveling abroad.

One result is that the flow of luxury spending abroad is gradually coming back to China, with part of the 600 billion yuan (US$90.2 billion) currently spent by Chinese abroad on luxury goods shifting to domestic e-commerce platforms.