1 Aug 2013
Mainland Middle-Class Consumer Survey Highlights Opportunities for Hong Kong Companies
Respondents Positive on Hong Kong Brands
1 August 2013 – Urbanisation on the Chinese mainland, as well as escalating incomes, education levels and spending power, is creating opportunities for Hong Kong companies, according to a new eight-city survey published by the Hong Kong Trade Development Council (HKTDC).
The “Mainland Middle-Class Consumer Survey” was conducted by the HKTDC from December 2012 to January 2013 in Beijing, Shanghai, Guangzhou, Chengdu, Wuhan, Shenyang, Nanjing and Changzhou. In all, 1,600 consumers were interviewed to understand how middle-class consumption and city lifestyles among different tiers are affected by social changes such as improved transportation and accelerated urbanisation.
HKTDC Deputy Director of Research (Greater China) Pansy Yau says that the mainland middle class is increasingly concerned with product and service quality. As well, mainland consumers’ demand for quality improvements − including choices in online shopping − has become more earnest, while the desire to try out new things and the pursuance of finer tastes and personal style is evident in their consumption behaviour.
Hong Kong Opportunities
“The mainland middle class likes to use imported or joint-venture-brand products,” said Ms Yau. “This provides considerable business opportunities to Hong Kong companies, whether they are building their own brands or bringing in suitable foreign ones.”
Overall, mainland middle-class consumers have positive perceptions of Hong Kong. For example, they reckon that Hong Kong is a fashion capital, and government oversight is stricter. They also believe that Hong Kong companies are able to produce safe and reliable products of fashionable design and good quality.
Among the respondents, 84 per cent agree that “Hong Kong is the place of origin of fashion trends and the trendsetter”. And 84 per cent of respondents indicate that “Hong Kong is the hub of the world’s latest fashion trends” while 50 per cent agree that “my outfits/lifestyle/pastimes are influenced by Hong Kong trends.”
The survey showed that 81 per cent of respondents have bought international brands in the past year, and 76 per cent agreed with the statement “I give first priority to quality”. In addition, 80 per cent have indicated that in the past year, they have made excursions to neighbouring cities and as many as 85 per cent have shopped online.
Passionate for International Brands
The survey reveals that the middle class is still enthusiastic about international brand-name products. Among respondents, 85 per cent have bought international branded products in the past year, with garments topping the category (74 per cent). They are also inclined to buy branded products, with more than half (52 per cent) of respondents agreeing with the statement “I prefer using well-known branded products even though they are more expensive.” Among branded products, middle-class consumers generally prefer imported brands and J-V brands, with 60 per cent agreeing that “I prefer joint-venture products to domestic products even though both are produced on the mainland.”
Mainland middle-class consumers are also paying more attention to quality, with 76 per cent of respondents agreeing that “I give first priority to quality,” indicating that consumers are becoming more sophisticated regarding “authenticity” and “quality of after-sale service.” Of respondents, 68 per cent agree that “sales staff knowledge about the product/service is very important to me in making my buying decision”. Furthermore, their frequency of buying organic products has increased significantly as 76 per cent of respondents agree that “I am willing to pay more for green products.”
It is worth noting that presently, though a significant proportion of middle-class consumers (57 per cent) still tend to use more "generally recognised famous brands," some are beginning to turn to niche brands to show their personality and depth. So-called “low-key luxury spending” is likely taking shape.
Retailing Environment of Second- and Third-tier Cities Improving
With an increase in private-car ownership and the further development of inter-city transport, the middle class has formed the habit of travelling regularly as 80 per cent of respondents say they have “made excursions to neighbouring cities.” In addition, in the past year 39 per cent of them drove themselves, and 35 per cent had travelled to other cities for holidays by high-speed rail. Where overseas travels are concerned, 29 per cent of the respondents have travelled to Hong Kong and Macau in the past year under the Individual Visit Scheme. In particular, compared to other cities, a significantly higher proportion of Guangzhou respondents have paid individual visits to Hong Kong and Macau and stayed in four-star or above hotels.
The survey findings also reveal that, good inter-city transport notwithstanding, only 22 per cent of the respondents have “shopped specifically in neighbouring cities” while 67 per cent of them agree that “there is no need for me to go to the key cities for shopping because the city I live in has a good business environment and a rich variety of brands and styles,” an indication that the environment and level of retailing in some second- and third-tier cities are improving.
As to consumer entertainment activities, there have been ever-more gatherings with family/friends and family activities among the middle class. Among respondents 74 per cent agree that “I now spend more of my free time with family/friends.” Judging from service-consumption frequencies in the past year, “gatherings with friends” and “trying out new restaurants” are on the rise.
Social Networks are Key Influencers
Where marketing is concerned, the Internet and social networks have a definite influence on middle-class consumption. In addition to the fact that the majority of respondents (83 per cent) have shopped online, more than half (58 per cent) agree that “I would make use of instant-messaging software or social networks to share my good or not-so-good experience in consumption.” Though TV is the channel through which most respondents obtain information, “sharing among relatives/friends/colleagues” is the most effective, thus, creating word-of-mouth publicity will be a key marketing strategy.
Note to Hong Kong Companies: Build a Clear Brand Image
With rising incomes and a heightened concern with product quality, the consumption attitude of mainland middle-class consumers has switched from “buying what is suitable for oneself” to using more branded products. Billy Wong, HKTDC Senior Economist (Greater China) says that to target the mainland middle-class market, it is important for Hong Kong companies not only to build a clear brand image, but also to have a good grasp of mainland middle-class consumers’ desire to express their personality and pursue finer tastes. They should therefore emphasise the style characteristics of their brands and convey to these consumers the image and concepts behind the brand they have just come to know.
Mr Wong adds that while some upmarket international brands are still concentrated in business districts in city centres, some medium- to up-marketing brands in fashionable products and fast fashion targeting young consumers are beginning to find their ways into shopping centres in new commercial districts. These new areas and the development of city transport would have a definite influence on choosing locations for retailing outlets.
See a video highlighting the survey main points with the survey’s economist: http://youtu.be/TkX72Epzrno
Research Article Survey on China’s middle-class consumers
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About the HKTDC
A statutory body established in 1966, the Hong Kong Trade Development Council (HKTDC) is the international marketing arm for Hong Kong-based traders, manufacturers and service providers . With more than 40 global offices, including 11 on the Chinese mainland, the HKTDC promotes Hong Kong as a platform for doing business with China and throughout Asia. The HKTDC also organises trade fairs and business missions to connect companies with opportunities in Hong Kong and on the mainland, while providing information via trade publications, research reports and online. For more information, please visit: www.hktdc.com.