In the past year, a new phrase has entered the Chinese dictionary-Agar Agar, which literally means “the exquisite poor”.
It does not refer to some sort of obsession with poverty, because the rich tradition of wealthy westerners is to seek inspiration or sympathy through poor countries.
Over the past decade, China has emerged as the world’s largest luxury goods market to date, and brands have been using China for years. However, young people in this high-end consumer industry are struggling to surpass their weight, and of course exceed the recommended spending level.
It also doesn’t represent recent examples, such as a viral adventure by Italian luxury shoemaker cheap golden goose, which sells a “distressed and stylish” sneaker with scratches, dirt, and a toe cap Together tape-expensive. Over $ 500 tags.
Instead, the term refers to an increasing number of young Chinese who often spend far more than their income level on luxury or special goods.
A Beijing resident who asked to be identified only as Guo said she attributed this trend to three factors in her 30s: “I want to say that young people ’s advertising is more effective because young people are more susceptible to trends .Second, many people have never been as poor as their parents and grandparents. Third, many people do not plan to buy a house at least in the near future, at least in expensive large cities, so they feel that the need for savings has diminished. “
The data confirm some of Guo’s assumptions. For example, the younger generation of Chinese people seem less concerned about long-term financial stability than their predecessors. A LinkedIn China survey last year found that Chinese born in 1995 or later only stayed in their first job for an average of seven months and many did not leave the second position in line. The study found that, in comparison, the average Chinese worker born in the 1980s worked an average of 3.5 years.
Chinese young people’s savings have also decreased. A survey conducted earlier this year by OC & C Strategy Consultants found that 24% of Chinese born after 1998 have no savings, compared with 15% worldwide.
However, according to McKinsey & Co.’s China Luxury Report 2019, these young frugal behaviors are “a double-edged sword.” Although they continue to spend money despite the economic slowdown, their tastes are changing so fast that they are very adaptable to the shift in online trends, so that “this is both an enticing opportunity and a hidden danger for brands to stay up to date. Otherwise, you risk losing money. Attract more digital-savvy competitors. “
However, with the economic slowdown in other parts of China, it is not just young people in the working class that are driving luxury sales.
A survey conducted earlier this year by OC & C Strategy Consultants found that 24% of Chinese born after 1998 have no savings, compared with 15% worldwide.
The country’s super-rich are often younger than the global average. According to New York-based research firm Wealth-X, 27.5% of individuals with a net worth of more than $ 1 billion in China are under the age of 50. This is more than double the global average of 13%.
So what are they buying? Cars are an example of the luxury sector that has weathered the overall economic downturn.
Last year, Chinese car sales fell for the first time in three decades. But according to the China Association of Automobile Manufacturers, despite overall car sales falling by 12%, luxury car sales actually increased by 11% in the first nine months of 2019.
Western brands seeking to maintain strong sales in the high-end market may also notice the second trend. As the economy slows, fewer and fewer Chinese are traveling abroad, and they are increasingly turning to domestic and online luxury purchases. In a survey earlier this year, nearly half of Chinese respondents told consulting firms CSG and Ruder Finn that they intend to buy more Chinese fashion brands in the future than before.
“Our belief is that the distribution ratio between shopping abroad and domestic shopping will change from 75-25 a few years ago to an average 50-50 distribution ratio in the next 12-24 months,” said Managing Director Global Erwan Rambourg said head of consumer and retail research at HSBC Hong Kong.
If all of these trends remain the same, foreign brands that can target high-end consumers may focus on three key areas: paying close attention to the dizzying tastes of young buyers, ensuring a solid online presence, and as Chinese consumers move towards Localization For this 2,000 yuan clothes or wallet, please consider working with trusted domestic players.