Gen Z consumers in China in 2024.

China’s retail sector emerged as a key driver of economic recovery post-Covid and has surpassed even the most optimistic forecasts. Based on the latest news, retail sales, which is an indicator of consumption, increased by 5.5%. Although it slowed down from a 7.4% rise in December, it still beat the expected 5.2% gain.

During the eight-day Lunar New Year holiday in February 2024, there was a significant increase in travel, which supported the revenue of the tourism and hospitality sectors. As a result, there was a 3% growth in oil refinery throughput to meet the high demand for transport fuels.

Amidst this economic surge, China’s Gen Z—born between 1995 and 2009—are reshaping retail and consumerism in the country. Representing 19% of the national population, this demographic is significant in size and profound in influence. They effortlessly bridge the digital and physical worlds, champion a new wave of ethical consumerism, and exhibit spending behaviours that set them apart from prior generations. As revealed by a joint study from the Tsinghua-Nikkei Institute of Media Studies, their impact on the economy and culture is multifaceted.

Gen Z in China experiences unique challenges, including economic uncertainty and pressures from an ageing society. Although the year’s first quarter saw a better-than-expected growth of 5.3% in GDP, experts predict a slowdown in the coming years. The jobless rate among those aged between 16 and 24 is 15.3%, significantly higher than the national average. This economic environment shapes their consumption habits and lifestyle choices, leading to trends such as “reverse consumption” and the “stingy economy” in 2024. In these times, value for money and prudent spending are paramount.

Understanding and engaging with China’s Gen Z is imperative for brands looking to thrive in this dynamic market. Their unique consumer habits and technological savvy fuel China’s retail growth and are poised to redefine global market trends. Gen Z is essential for any forward-looking strategy, especially for brands aiming to secure a foothold in the world’s largest consumer economy.

Understanding Gen Z in China

Demographic Overview

Size and Economic Influence: China’s Generation Z comprises individuals born between 1995 and 2009, making up about 19% of the nation’s population. This translates to roughly 265 million people, forming a significant consumer force within the world’s second-largest economy.
Key Statistics:
- Age Range: Currently, ages 14 to 28.
- Urban vs. Rural Distribution: A significant majority reside in urban areas, mirroring China’s overall urbanisation trends. Urban Gen Zers are likelier to have higher disposable incomes and access to digital technologies than their rural counterparts.

Cultural Characteristics

Core Values and Attitudes:
- Individualism and Self-expression: Unlike the collectivist orientation of previous generations, Chinese Gen Z values individuality and self-expression, influenced by global cultural exchanges via the internet.
- Sustainability and Ethics: They show a heightened responsibility toward the environment and social issues, favouring eco-friendly and ethical brands.
Influence of Cultural, Socio-Economic, and Technological Factors:
- Global Influence: Exposure to global cultures through digital platforms has cultivated a more cosmopolitan outlook among Gen Z.
- Economic Context: Growing up during China’s rapid economic growth has fostered high expectations for living standards and personal wealth.
- Educational Opportunities: Improved education systems and resources have led to a more informed and competitive generation.

Technological Integration

Role of Digital Technology in Daily Lives:
- Connectivity: Nearly ubiquitous smartphone usage facilitates constant connectivity to social networks and e-commerce platforms.
- E-commerce Habits: Gen Z in China is highly comfortable with online shopping, and they often prefer online retail platforms to traditional stores for both research and purchasing.
Popular Platforms Among Chinese Gen Z:
- WeChat: A multi-purpose platform used for messaging, social media, marketing, and payments.
- Douyin (TikTok): The leading platform for short video content, highly popular for its entertainment value and as a source of trends and products.
- Bilibili: Known for its focus on anime, comics, and games (ACG) content, it’s a hub for niche communities and deeper fan engagement.
- Impact on Consumer Behavior: These platforms shape how Gen Z spends their time and influence their consumption patterns, from fashion and entertainment to food and technology.

Case Study: Soul – A Digital Ecosystem Tailored to Gen Z

Background:

Soul, a social media platform with about 80% of its user base from Gen Z, has become a barometer for the shifting preferences and lifestyles of this demographic in China. The platform’s data provides insights into how these young consumers navigate their economic realities with innovative social and shopping behaviours.

Image credit: Soul app website

Key Insights:

Strategic Shopping: During major shopping festivals like Singles Day, a significant portion of Gen Z users on Soul meticulously plan their purchases, prioritising value and quality over impulsive buying.
Engagement Trends: The platform has noted a rise in “narcissism” among its users, which is seen not as selfishness but as a form of positive self-care and acceptance. This reflects a broader trend in which mental and personal well-being are as important as physical health.

These insights underscore how digital platforms are retail channels and communities where Gen Z finds support and affirmation for their values and choices. It highlights the critical role of digital ecosystems in shaping young consumers’ purchasing habits and lifestyle choices in today’s economy.

Marketing and Product Strategies for Engaging Gen Z

Product Innovation and Adaptation

Importance of Innovation and Customisation:

Adapting to Preferences: Gen Z in China values products that serve functional purposes and reflect their personal identity and ethos. Innovation and customisation are crucial for products to resonate with this demographic, which prizes uniqueness and personalisation.
Speed to Market: Rapid prototyping and quick iteration are essential to keep pace with Gen Z’s changing tastes and trends.

Examples of Successful Products Tailored for Gen Z in China:

Tech Gadgets: Smartphones and wearables with customisable features (e.g., skins, interfaces) that allow personal expression.
Fashion and Beauty: Brands like Perfect Diary offer cosmetics that appeal through limited-edition collaborations with pop culture icons and localised trends, driving online and in-store engagement.
Food and Beverage: Snack brands offering exotic flavours or health-oriented products tailored to young consumers’ desire for novelty and wellness.

Branding and Communication

Strategies for Building a Brand That Resonates:

Authenticity: Transparency in production processes and business practices, as Gen Z consumers are more likely to scrutinise the authenticity and ethics behind a brand.
Sustainability: Emphasising eco-friendly practices and products, supporting social causes, and engaging in community initiatives that reflect their values and desire for ethical consumption.
Community Building: To foster a sense of community, creating spaces for engagement and dialogue, whether through brand-sponsored events or online forums.

Effective Communication Strategies:

Language and Tone: Utilising a relatable and conversational tone in marketing communications that speaks directly to Gen Z’s values and lifestyle.
Aesthetics and Design: Visually appealing, bold, and distinctive styles that stand out in the crowded digital landscape.
Media Channels: Focusing on digital-first platforms like social media, influencer collaborations, and content marketing on platforms popular among Gen Z, such as Douyin and Bilibili.

Leveraging Technology

Using AI, AR, VR, and Other Technologies:

AI: Personalised shopping experiences through AI recommendations based on browsing and purchase history, enhancing user engagement and satisfaction.
AR and VR: Offering virtual try-ons for items like clothing and makeup or immersive experiences that allow consumers to engage with a brand or product in innovative ways.
Gamification: Integrating game mechanics into apps and campaigns to increase participation and loyalty.

Importance of Mobile-First and Omnichannel Experiences:

Mobile-First: Designing campaigns and content with a mobile-first approach, considering most of Gen Z’s interactions and transactions occur on smartphones.
Seamless Omnichannel Experiences: Ensuring a consistent brand experience across various online, mobile, and in-store channels to meet Gen Z’s expectations for a fluid shopping experience.

Case Studies and Examples

Success Stories

Case Study 1: Perfect Diary

Background: Perfect Diary is a Chinese cosmetics brand that has skyrocketed in popularity among Gen Z consumers through savvy digital marketing strategies and collaborations with pop culture phenomena.

Image Credit: YouTube

Strategies:

Influencer Partnerships: Leveraging partnerships with major celebrities and micro-influencers to build trust and authenticity.
Limited Edition Releases: Creating time-limited products in collaboration with popular TV shows, celebrities, and even national museums, sparking buying frenzies.

Analysis: Perfect Diary’s success reveals Gen Z’s affinity for brands that offer unique, personalised experiences and demonstrate a deep understanding of cultural trends. The brand’s approach illustrates the power of community-driven marketing and the importance of adapting quickly to emerging trends.

Case Study 2: HeyTea

Background: HeyTea, initially founded in 2012 in the second-tier cities of Guangdong, has emerged as a trailblazer in the tea industry by introducing cheese tea, a novel beverage that combines freshly brewed tea with a creamy cheese topping. Originally a small tea shop, HeyTea gained national fame by reinventing traditional Chinese tea culture for a younger audience with new flavours and an Instagram-worthy aesthetic. This innovation has revolutionised the way young consumers in China enjoy tea, particularly in affluent eastern cities.

Image Credit: The Economist

Strategies:

Product Innovation: HeyTea redefined traditional tea by introducing cheese tea, served at a 45-degree tilt as recommended by the brand’s ‘tea-ristas’ to perfectly blend the bitter tang of tea with the salty cream cheese cap. This unique product offering captured the imagination and taste buds of a young, urban clientele.
Exclusivity and Demand Generation: In its early days, HeyTea created a buzz by limiting purchases and maintaining exclusivity. The long queues at their outlets, sometimes extending up to three hours, were managed by security guards, and the brand had to impose a limit of two cups per person to deter scalpers. This strategy, often referred to as “thirst marketing,” although contested by HeyTea, effectively built a sense of urgency and exclusivity around the brand.
Selective Distribution: Initially, HeyTea chose to stay off major food-delivery apps to focus on crafting a high-quality experience that couldn’t be rushed or commoditised. This approach emphasised the artisanal aspect of their offerings, differentiating them from other tea chains that relied on pre-made or powdered ingredients.

The phenomenon of HeyTea speaks volumes about modern consumer behaviour in China. The willingness of customers to hire others to stand in line or the implementation of purchase limits illustrates the high value placed on trendy and exclusive products. By offering a product that needed careful preparation and was served in a specific way, HeyTea not only set a new trend but also raised the bar for quality and customer experience in the beverage industry.

HeyTea’s strategy also reveals several crucial insights into broader market trends and consumer preferences:

Experience over Convenience: Despite the convenience culture prevalent among Gen Z, the success of HeyTea underscores a contrasting willingness to seek out and wait for unique, quality experiences.
Quality as a Differentiator: In a market saturated with quick-service options, HeyTea’s focus on high-quality, freshly brewed, and uniquely presented products helped it stand out, demonstrating that consumers are ready to prioritise quality over speed.
Cultural Resonance and Innovation: The introduction of cheese tea not only leveraged traditional Chinese tea culture but also innovated upon it, showcasing that blending tradition with creative modern twists can resonate deeply with young consumers.

HeyTea’s journey from a small tea shop to a national phenomenon encapsulates the dynamic interplay of innovation, marketing savvy, and a deep understanding of consumer desires, setting a benchmark for others in the beverage industry and beyond.

Lessons from Failures

Case Study: Dolce & Gabbana’s PR Crisis

Background: In 2018, Dolce & Gabbana planned a major fashion show in Shanghai. However, promotional videos and comments made by the founders were perceived as racially insensitive by many in China, including Gen Z, leading to a massive backlash and cancellation of the event.

Image Credit: The New York Times

This failure highlights the critical importance of cultural sensitivity and awareness. Brands targeting Gen Z must understand and respect their audience’s cultural contexts and values, as Gen Z consumers are particularly attuned to social issues and brand ethics.

Future Trends and Predictions

Emerging Trends

Sustainability and Eco-Friendliness: Gen Z’s preference for sustainable and eco-friendly brands will deepen as environmental concerns continue to rise. Brands that invest in sustainable practices and transparently communicate their environmental impact will gain favour.
Enhanced Personalisation through AI: Artificial intelligence will play an increasingly significant role in offering personalised shopping experiences. From AI-curated shopping lists to virtual fitting rooms, these tools will tailor the consumer journey to individual preferences and behaviours.
Virtual and Augmented Reality Shopping: With advancements in VR and AR, immersive shopping experiences will become more mainstream, allowing Gen Z to explore products and environments virtually before making purchases.
The Rise of Social Commerce: Social media platforms will evolve beyond branding channels to become integral shopping venues, leveraging live streams, social storefronts, and peer recommendations.
Health and Wellness: Health-conscious products, including wellness apps, fitness gear, and healthy food options, will see increased demand as Gen Z continues to prioritise mental and physical well-being.

Economic Influences on Gen Z Consumer Behavior

As we look to the future, the economic landscape will continue influencing Gen Z’s consumer behavior significantly. The rise of what has been termed the “stingy economy” reflects a shift toward more economically cautious spending habits. This trend is not merely about spending less but seeking greater value and efficiency in expenditures. Platforms like Xiaohongshu and Douyin have become crucial in this shift, allowing Gen Z consumers to meticulously research and compare prices before purchasing.

Emerging Lifestyle Trends:

Value-for-Money Lifestyle: Increasingly popular among Gen Z, this trend focuses on maximising the value received from purchases and experiences, driven by a pragmatic approach to spending.
Lazy Health: This trend signifies a growing preference for low-effort, high-impact health and wellness activities, such as ensuring adequate sleep and engaging in stress-free physical activities.
City Walks and Special Forces Travel: These trends reflect a desire for experiences that require minimal investment but offer maximum enjoyment and relaxation, aligning with the broader shift toward economic leisure activities.

Predictions on how these trends will shape future marketing and product strategies:

Brands must integrate sustainability into their core operations to attract eco-conscious consumers.
Marketing strategies must increasingly rely on data analytics and AI to deliver hyper-personalised communications.
Companies should invest in AR and VR to create compelling, interactive marketing campaigns and shopping experiences.
Social commerce will necessitate strategies that effectively engage influencers and leverage user-generated content to drive sales.

Adapting to Change

Strategies for Staying Relevant:

Continuous Innovation: Regularly updating product lines and experimenting with new marketing tactics to keep pace with Gen Z’s evolving tastes.
Feedback Loops: Implementing real-time feedback mechanisms to gather insights directly from Gen Z consumers and quickly adapt products and campaigns.
Collaborative Engagements: Partnering with Gen Z influencers and thought leaders to co-create content and products that resonate authentically with the demographic.

Importance of Agility and Continuous Learning:

Agility in Business Practices: Being agile means more than reacting to trends; it’s about anticipating changes and being prepared to pivot strategies swiftly and efficiently.
Emphasis on Continuous Learning: Staying informed about technological advancements, cultural shifts, and consumer behaviour patterns is crucial. This includes ongoing education and training for teams to remain adept and responsive.

Understanding and adapting to emerging trends is vital in a world where change is the only constant. For marketers and product managers targeting Gen Z in China, staying ahead means embracing a culture of innovation, maintaining agility in strategic planning, and committing to continuous learning. By doing so, they can ensure their brands remain relevant and appealing to this dynamic and influential consumer segment.

The Imperative of Understanding and Adapting to Gen Z Consumers in China

Gen Z consumers’ dynamic and ever-evolving characteristics in China underscore a pivotal challenge and opportunity for brands aiming to thrive in the modern marketplace. This demographic defines their consumption patterns and setting trends that influence the global economy.

For brands, understanding and engaging with Gen Z is not merely about tapping into a new customer base but about aligning with the future of commerce itself.

Gen Z’s unique blend of digital savviness, ethical consumerism, and preference for personalised and immersive experiences demands a rethinking of traditional marketing and product strategies. The brands that successfully captivate this audience demonstrate authenticity, innovate continually, and leverage the latest technologies to create engaging and meaningful interactions. Moreover, the responsiveness to environmental concerns and the integration of sustainability into core business operations are becoming non-negotiable aspects that can significantly sway Gen Z’s loyalty and advocacy.

Therefore, brands that anticipate and adapt to Gen Z’s needs position themselves for increased market share in the present and set the groundwork for sustained relevance and success as this demographic matures.

The stakes are high, and the brands that effectively decode the preferences and values of Gen Z will likely lead the charge in shaping the future economic terrain.

To deepen your understanding of Gen Z’s impact on global markets and to refine your strategies accordingly, we invite you to download our exhaustive global Gen Z report. Gain detailed insights and practical guidance to harness the potential of this crucial demographic.

Access the report now at The Definitive Guide to Gen Z.

This comprehensive report is invaluable for any business leader or marketer aiming to make informed decisions that resonate with Gen Z and propel their company toward long-term success.