- POSTED: 28 Dec 2013 00:17
This graph is an experimental feature that tracks number of views over time.
China's growing middle class has often been hyped as the next big thing in boosting the country's consumption, but getting them to spend would not be easy.
SHANGHAI: China's growing middle class has often been hyped as the next big thing in boosting the country's consumption, but getting them to spend would not be easy.
Dove’s internationally acclaimed advertising campaign celebrating the real beauty of women, by featuring women of all shapes and sizes, failed when it was launched in China. But Sephora’s advertisement, which features a Chinese model, works, as do other similar advertisements.
That is because looking good is considered an asset amongst the women in China.
"Chinese women here are not shy to admit that beauty will play a very significant role in their road to success,” said BBH China managing director Christine Ng.
“The number of graduates who keep coming out into the workforce… realise that ‘if I have to stand out, then I have to be using anything I can to help me move ahead’.”
Such pragmatism stems from a post-80s generation poised to be China's main driving force of consumption, even though they lack the spending power to do so.
At about 500 million and growing, China's middle class consumers may look like the most bankable market for advertisers, but they are actually poorer than their American counterparts.
Their highest average annual disposable income is just over US$4,500, compared with nearly US$37,000 in the US.
Official data also shows that the Chinese, especially those born in the 1980s, save up to a third of their income for healthcare, property and future uncertainties.
Ms Ng said: "They've been born into this situation whereby everything was growing...and there are a lot of opportunities. But they also know that...it is getting more difficult to get what they want...the reality of rising real estate prices and inflation. So the word they always use is 'balance'."
In their efforts to seek a middle ground between aspiration and affordability, the post-80s generation also tends to spend more time window shopping rather than actually spending.
Aware of this, Ikea has catered specifically to their shopping and spending needs, by building their largest showrooms in China, with modern European furniture and slashed prices by half.
"Maybe they don't spend the biggest money on shopping but they're definitely the ones who spend most time shopping around," said IKEA marketing manager Camilla Hammar.
"We see a lot of young couples who actually come here and maybe it's the first time they're talking about getting married, which is something we're really happy about being able to provide an environment where people can dream about their lives."
The strategy worked as sales rose 17 per cent to US$1 billion in 2013.
As China's middle-class consumers become more sophisticated in their tastes, analysts say consumers are also starting to appreciate quality over low prices and will increasingly become more demanding of products and services.
That is expected to transform the country's economy and how advertisers position their products in the coming future.