Confidence & Debt: Key Drivers for the next Decade of Chinese Online Consumption

 In China, Digital Marketing, Ecommerce, Social Media Marketing

Over the past few years and certainly since President Trump took to the world stage, we’ve seen a new and more confident China emerging.

Its citizens are now self-assured economically-powerful drivers of luxury consumption the world over. By 2025, Chinese consumers are expected to make up 44% of global luxury spending, some 1 trillion RMB (USD 147bn) and double their current spend. Chinese consumers are now paying for the best and expect to be treated as such – whether goods are local or foreign or whether they shop at home or abroad.

Brands must of course tailor their message to their customer, but in China this customer has been a moving target. Chinese luxury shoppers in 2017 are very different to the label-conscious shoppers of the early millennium, for example, and will be very different again from the Chinese luxury consumers of the 2020s.

Two key trends underpin this current meteoric growth in Chinese spending on- and off-line, however: Chinese consumer confidence and Chinese consumer debt.

In this article, we’ll look at how both impact online spending now and in the next five years.


Chinese consumer confidence is riding high. Despite slowing economic growth, China is taking a much greater role in world political leadership as America turns inwards and most Chinese consumers are optimistic about the nation’s future.

A recent survey of 10,000 urban and rural Chinese consumers showed that despite falling growth, 80% believe their household income will rise in the next 5 years.

This is particularly the case for China’s ‘Post-90s’ generation, who have come of age with China’s ascendency. Comfortable with spending and exposed to Western products, culture and technology in a manner far beyond their parents, McKinsey estimates the demographic will drive 20% of total consumption growth in China to 2030.


Source: Chinese National Bureau of Statistics


This increased confidence and willing to spend comes at a price, however; one that will seem foreign to the parents of the ‘Post-90s’ generation – debt. McKinsey pegs Chinese household debt at around 50% currently, lower than most developed countries, but not insubstantial. Where the parents of ‘Post-90s’ shunned debt, this generation have embraced it as a means of wish fulfilment and creating a ‘buy-now-pay-later’ culture.

One virtual lender, Huabei raised credit limits for 80% of its customers during Alibaba’s Singles’ Day shopping event – a transparent bid to raise consumption. Users can then pay for the purchases in instalments after an interest free period or opt for a range of payment plans – with 38% of users opting to pay in 12 monthly instalments. Huabei users can even ask friends to chip in for purchases they make through the platform, in effect crowdsourcing their luxury purchases.

Beyond Huabei, a whole host of virtual lenders now service Chinese ‘Post-90s’ with credit, whether they are looking for plastic surgery, rail tickets, restaurants or simply to borrow a shared bicycle.

So the Chinese consumer of the future is young, confident and comfortable with credit. Where does this leave retailers? And how can brands meet those needs?

Chinese Household debt rising between 2006 and 2016

Source: South China Morning Post


Due to these trends Chinese consumers are happy to pay a premium for foreign products (more on this in our post here). They are looking for quality products with lasting design value and cachet – as Dyson has shown, growing sales more than 200% in China in 2016 alone. As a China marketer, you must play into this trend, demonstrating the value proposition that differentiates your product from its Chinese counterparts.

At the same time though you must remove all friction to making a purchase of your product – as when Chinese consumers want to buy, they want to buy now. Payments integration with products like Alipay and WeChat Pay brings with it automatic integration with lenders like Huabei. But this is just the tip of the iceberg and the principal applies across the digital ecosystem in China – you must be present wherever your customers are, whether in social, in search or in content marketing.

In the past this kind of deep commitment to China marketing has been the exception amongst foreign brands. In the future, it will be the rule.

TongDigital is an agency at the forefront of social commerce and digital marketing in China. We focus on social commerce through WeChat, social media marketing, digital PR and media buying in China.

Get in touch for a preliminary consultation on how to best sell direct to the Chinese consumer.

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