Retail in Asia

In Telligence

How China’s population is shaping marketing strategies

Earlier in May, after a month-long delay, China released much of the population statistics from its once-a-decade census. Whilst there were no real surprises, the data quantified many trends that can help shape China marketing strategies.

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At a personal level, tracking the changes from the 2010 and 2020 censuses gave us a reason to look back and trace the past 10+ years that China Skinny has been consulting in the market, and provided another reminder of the dynamism of China. Below are some of the snippets.

Peaking population that is ageing, Driven by falling birth rates

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After a supposed leak to the FT revealed that China’s population may have already started its decline, followed by the delayed release of census data, and questions about 14 million ‘mystery children’, official data shows that China’s population continues to grow – 72 million since 2010 – although at its slowest rate in fifty years.

The population grew by an average of 0.53% a year over the decade since the last census and rose from 1.40 to 1.41 billion between 2019 and 2020. The well-known elephant in the room was the 7 percentage point decline in the working age population as China gets greyer. Over-60s rose 5 percentage points to 18.7% since 2010 while births have seen a steady decline from the 18 million in 2016 to 12 million last year.

What does this mean for marketers?

China’s falling birth rates have long been known and will obviously have an impact on mum and baby products and almost everything else as those kids age. Cushioning the decline is rising affluence and a stronger-than-ever desire to care for the precious child. This has increased spending more per mother, but brands will need to work harder for a piece of the pie, particularly as Chinese mums warm to domestic brands.

Similarly, demand for elderly-focused products and experiences will rise, presenting new opportunities for brands. Elderly have become easier to reach through digital channels with people over-60 accounting for 11.2% of internet users in December, up from 6.3% in March 2020. One of the big influencers in their purchases – their kids – are more educated and freer spending than ever.

As we noted last month, shrinking extended families will see individual tribes and interest groups influencing purchase behaviour more. We will also see family substitutes such as pets getting a larger share of spending.

The great geographical shifts

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One of the most staggering changes in China since opening up in 1979 has been the shift in people living in rural areas to the cities. Between 2010 and 2020 more than 200 million left the countryside for the bright lights of cities, taking the urbanisation count to 902 million – or 63.9%. That urbanisation has been driven by migrant workers – people living in a city that’s not their home – who swelled 88.5% over the past decade to 493 million. The big shifts extend beyond just the country-city balance, but also the regions people are choosing to live. The share of those living in central and northeast regions fell to 25.8% and 7% respectively, with the populations of Heilongjiang, Jilin and Liaoning dropping 30% since 2010. On the other hand, people flocked to south and east China for better jobs, living conditions and weather.

What does this mean for marketers?

The wealth between Chinese cities will continue to diverge, not just in wages, but also in areas such as house price appreciation, which influences spending. This will obviously impact price sensitivity and the types of products and services that consumers buy. Not only do lifestyles differ between cities, but also the psyche and day-to-day challenges.

The type of messaging that resonates with a consumer in a city that is declining is likely to be different that those dealing with ever-more traffic and rising property prices. Localisation by city has never been more important in China. Migrant workers have also become an enormous market in themselves. They have unique needs and drivers, and emotional buttons such as long absences from close family, which can help brands to connect in their communications.

Smaller households & singledom

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One of the lesser-published drivers of consumption in China has been the growth of households. Over the past decade, the number of households grew by almost a quarter from 402 to 494 million. That is a lot more places needing a fridge, sofas, and everything else than 10 years ago. The size of those households has become a lot smaller, from 3.1 to 2.6 people per household, driven by less children, more childless couples and singles living alone. This has not been helped by the gender imbalance growing to 34.9 million more males than females. As Chinese consumers get more educated, they are placing greater focus on careers than marriage and are also less likely to settle. 218 million now have a university degree – 15% of the population, versus 9% in 2010.

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What does this mean for marketers?

Smaller households bring different needs – from portion sizes to the need to get out more for that basic human need of social contact. China’s ‘singles’ economy’ has long delivered opportunities for adaptable companies. Brands who offer single-sized products and services, to messaging that resonates with consumers bucking the traditional wedded path, have been warmly received by a large and affluent sect of Chinese consumers. With education, also comes discernment and brand and product education needs to be smart and resonant with increasingly open-minded consumers for everything from sustainability to authenticity.

(Source: China Skinny)