What do China's young consumers want in their brands?

What do China's young consumers want in their brands?

Staff Writer
Staff Writer
Pinduoduo Content Team
December 10, 2020

Chinese consumers in their 20s want great value for their money and are more open to buying homegrown brands.

Those were two key takeaways from a seminar by Beijing Normal University to discuss the findings of their research into the generation of consumers born in the 1990s. The research showed that these digital-native consumers are less enamored of name brands than their older brethren and are more value-conscious in their purchase decisions.

Read: How Gen Z's individualism is opening doors for new brands

The findings are important because post-1990s consumers have become the biggest group of internet users in China and will become the main driver for consumption in years to come.

In the tourism segment, these young consumers already contribute nearly half of consumption. They account for 51% of food-and-beverage spending, according to Guan Lixin, deputy director of the Institute of Circulation and Consumption Research of the Ministry of Commerce.

Read: How China's favorite mosquito repellent is attracting new fans

"The new generation has become the main driving force of consumption," Guan said at the seminar. "They have become more rational and prefer practical, cost-effective goods and services."

Globally, Gen Z consumers are the among the most prone to switching brands, especially to less expensive private-label brands, according to a McKinsey & Co. report on consumer shopping habits based on a survey in six countries, including the US and China.

According to a December report by the Ministry of Commerce, this "independent streak" among younger consumers is driving a wave of personalization in product development.

Read: Pinduoduo accelerates factory plan to help create new brands

Pinduoduo, which has the highest proportion of young users among major Chinese e-commerce platforms, shared the story behind one of its top-selling items, a $10 pair of cotton pants that racked up more than 100,000 in sales in less than a week without any promotion.

In trying to find out why the item went viral, Fan Rizhao, a researcher from the Institute of New Consumerism at Pinduoduo, tracked down one cluster of buyers in northern China.

A first-year female undergraduate had bought the pants and recommended them to her dormitory mates because she found the product to be good value for money. They then joined a team purchase game on Pinduoduo to get more discounts, which led to more purchases from her class, eventually spreading to the entire university and beyond.

"This shows the power of offering value-for-money products to the New Youth generation," said Fan.

Read: China exporters find promising market back home thanks to e-commerce

Being cost-conscious is only part of these new consumers' characteristics, said Professor Liu Dehuan, deputy dean of the School of New Media at Peking University.

"Buying national brands also shows that the new youth group is choosing a smart lifestyle, one that is not pretentious, more sensible, and more positive."

In China, many contract manufacturers are building their own domestic brands with e-commerce platforms like Pinduoduo. They are adopting a new data-driven approach to research, using analytics provided by e-commerce to pinpoint consumer preferences more accurately.

Read: How a century-old soap brand became a Gen Z favorite

Pinduoduo has worked with many heritage brands, including Pechoin and Honey & Bee, to develop new product lines suited to younger consumers' needs. As of October 2020, Pinduoduo's New Brand program, which works with manufacturers to develop products, has generated 460 million yuan in orders.

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