China, with its huge population and increasing affluence, is a very lucrative market for companies and brands in the Pacific. The Demand Institute, a non-profit think tank that focuses on understanding how consumer demand is evolving around the world, projects that consumers in China will spend $56 trillion over the next decade, with a largely young, affluent, connected consumer base with disposable incomes leading the charge.
The Nielsen Global Premiumisation Survey reveals that more than seven-in-10 (72%) Chinese consumers feel they are financially better off than what they were five years ago. This is more than double the proportion of Pacific consumers in this position (30% of Australians; 35% of New Zealanders).
Seventy-two percent of consumers in China also say they live comfortably and are able to buy some things just because they want them - again well above Australian consumers (57%) and Kiwis (55%).
With more money in their pockets, many Chinese consumers are trading up for products and
services they couldn’t previously afford. Premium products - which Nielsen defines as goods that cost at least 20% more than the average price - grew by 23% between 2012 and 2014 in China.
The connection to a brand’s values is important to Chinese consumers. As consumers move up the economic ladder, they’re attracted to aspirational brands that signal they’ve achieved a certain level of success.
China was the second highest market globally to somewhat or strongly agree that buying premium products makes them feel good (66%), only behind India (78%). And Chinese consumers are much more likely to spend a premium in categories associated with flaunting their own personal brand and style including personal electronics (48%), cosmetics (38%) and clothing/shoes (38%). A very different picture to the Pacific where the highest number of respondents (30%) say they are willing to pay a premium for meat or seafood.
When it comes to the likelihood of purchasing premium products, not all product attributes are created equal. Certain product qualities justify a higher price tag in consumers’ minds - and Chinese consumers are more than willing to pay a premium for them.
Compared to the Pacific, consumers in China are much more inclined to fork out more for a product that comes with high quality standards (60% versus just under a quarter for the Pacific); contains organic/all natural ingredients (57% versus 16% in Australia and 15% in New Zealand); and contains environmentally friendly/sustainable materials (50% versus 15% in Australia and 16% in New Zealand). The scores across the countries are similar, however, for those highly willing to pay more for goods that deliver on social responsibility claims (around half the number of respondents for each market).
With increasing affluence, Chinese consumers are more inclined than other markets to buy products based on how they make them feel. Premium products tap directly into a desire for products that provide specialised, enhanced or exclusive benefits. But delivering on the consumer’s expectations of the brand experience remains critical. When a product is positioned as premium, consumers have less tolerance for poor performance or undesirable attributes.
The number of opportunities to conduct your business via digital, e-commerce channels across borders is growing. The AFGC and Nielsen have joined forces to host an exclusive breakfast that helps you navigate the prospects and hurdles of exporting your goods overseas, particularly focusing on China. The breakfast (Sydney: 4 April 2017; Melbourne: 5 April 2017) will begin with a keynote from Yan Xuan, President of Nielsen Greater China, and will be followed by a panel session on the export opportunity. This is an exclusive chance to hear from retail industry leaders about winning the hearts and carts of Chinese consumers! Click here to register for this event.
The Nielsen Global Premiumisation Survey was conducted March 1–23, 2016, and polled more than 30,000 online consumers in 63 countries throughout Asia-Pacific, Europe, Latin America, the Middle East/Africa and North America. The sample includes internet users who agreed to participate in this survey and has quotas based on age and sex for each country. It is weighted to be representative of internet consumers by country. Because the sample is based on those who agreed to participate, no estimates of theoretical sampling error can be calculated. However, a probability sample of equivalent size would have a margin of error of ±0.6% at the global level. This Nielsen survey is based only on the behavior of respondents with online access. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60% internet penetration or an online population of 10 million for survey inclusion.