2024年中國消費市場全景報告

2024

BIGPICTUREONCHINA’SCONSUMERMARKET

MINI-REPORT#1

BIGPICTURE

ONCHINA

CHINA’SMARKETINGLANDSCAPE,CONSUMERSENTIMENT

ABOUTTHISREPORT

Feb2024

2024BRANDMARKETING&MEDIAPLANNINGOUTLOOK

China’seconomyisstuckinaholdingpattern,confusedaboutapost-Covidrestartthatdidnthappenin2023.And,whileChina

hashadadistinctbiastowardoptimismandgrowth,theeconomyisstuckinthemiddleofadeflationaryrecessionandconsumersareturningnegative.MarketinginChinaiswitnessinganinflectionpointinto2024.

Giventhiseconomicbackdrop,marketerswillneedtoadjusttonewframeworksforgrowthinChina,andanenvironmentwhereconsumersaremorecautious,moreconsideredandmuchmoreselective.Theheadydaysofwildgrowthandimpulsepurchasesaregone-tobereplacedwithmorerational,cautiousandconsideredbuyingdecisions.

Despitethegrowingairofnegativity,thisenvironmentpresentsrealopportunityforbrandstomoveahead.Asweakerplayersareexposed,crippledorretreat,morewellmanagedcompaniesshouldbeabletofindbreathingspace.Onacategory-by-

categorybasis,ChinahasbeenthemostcrowdedandcomplicatedmarketintheWorld,oftenhaving10-50xthenumberofcompetitorspercategory(whencomparedwithmorematuremarkets).Thescaleofcompetitioncouldeaseastheresultofaprolongedmarketcontraction.

Thetricktocomingoutaheadishavingaclearperspectiveonthetiming,depthofthedownturn…aswellasinternalplansforhowtopositionandpriceaccordingly.

PositioningandstrategyaroundaudiencetargetingwillbekeyasChina’snewconsumerenvironmentunfolds.Withinthis

environment,therewillbefewerwinnerspercategory.Thegoalofmarketingteamswillbetoensurethattheirbrandsareamongthewinnersasthingsshakeout.Dialinginbrandpositioningandvaluepropositionwithacoreconsumergroupisanimportant

firststep.InSection5ofthisreportwelookintothepositioningimplicationsforbrandsduringrecession.

And,whiletherewillbeatemptationtoturnallmarketingeffortstowardbottom-of-funnelperformance,buildingemotional

connections(trust/affinity)shouldplayanimportantroleinthisnewparadigm.Whileconsumerswillspendlessinto2024,theywillstillpurchasethebrandstheyknow,loveandtrustmost.

Many(weaker)brandswillbewelladvisedtowithdrawfromChinagiventhecurrentconditions.Wellmanaged,wellpositionedbrandswillbeadvisedtostayfocused,buildlastingconnectionswithcorecustomers,andoutlastabloatedcohortofweakercompetitors.

AstheWorld’ssecondlargesteconomy,thescaleandpotentialofChinacannoteasilybereplaced(with,forexampleanewlyemergingmarket).So,pullingoutshouldbecarefullyconsidered.It’salsopossiblethatrestofworldfollowscloselyinChina’stracks,bydippingintorecession.Inthiscontext,pullingoutofChinanow-infavorofanothermarket-mightbackfire.For

instance,Germany,JapanandtheUKarealready,officiallyinrecession.

ChrisBaker

Founder,Totem

TOTEM’S9THANNUALREPORTONCHINA

Returningforits9thyearrunning,Totem’sChinareportisdesignedtohelpbrandleadersstayastep(ortwo)ahead.

Wehopethatitservesasatemplateforevaluatingandplanningbrandgrowth.Thereportlinkstogetherwiderinsightsfromthemacro-economyandconsumers,withkeydetailsofthemarketingandmedialandscape.Inthisyearoftransition,wealsohopethatitprovidesaspark,tohelpbrandsregroup,andsetnewplansforChinaandtheAsiaregionat-large.

Akeyingredientinthisreportarethecollectiveinsightsfrombrands.Wehadinputsfrom90marketingleadersinourthe2024survey(heldinNov’23).Thisdataunderpinstheoveralldirectionofouranalysis.

AbigthankstotheteamatTotemfortheirdedicationtothisprocess.It’salotofworkon-topofsomeveryhecticschedules!

THREEKEYTAKEAWAYS:CHINAMARKETINGIN2024

1

TheoverallenvironmentinChinahas

downshiftedfromrapid,unfetteredgrowth,toanewparadigmofcautionandprudence.

Brandsmustre-positionforthisnewenvironment

andbepreparedtosurviveand?ourishduringa

prolongedrecession.

WhileChinaremainstheWorld’ssecondlargest

economy,manyoftheassumptionsaboutthe

marketarechangedandwillchangerapidlyin

thecomingyear(s).

Lowertiercitiesandthenewlyemergingmiddleclassesmaynolongerbecentersfornewgrowth.

Newrulesfordemographictargetingandengagementwillneedtobewritten.

2

MarketingandsalessuccessinChina

remains?rmlyconnectedtosocial

commerceroutines.

Winningbrandsareexpertincultivating

customersonsocial,rallyingaudiencestobuy,via

apotentmixof;in?uencers,livestreaming,social

mini-programsandprivatetra?ctactics.

Theaimsandapproachofsocialcommerceis

howeversubtitlingchangingasaresultofthe

currenteconomy.Wherethegoalusedtobe

aboutbuildinghype,theapproachisnowmore

aboutbuildingafoundationofassuranceand

trustforconsumers.

Socialvalidation,reviews,WOMandprivatetra?c

allneedtobealignedtowardcon?dence.

3

Theriftbetweenbrandandperformance

marketingwillbestressedagain,as

companiescovetconversion.

Itsanenvironmentwherecompanieswillbe

temptedtogear-downandfocusonconversionandbottom-of-funnelmetrics.Categorypricingwarsand‘racestothebottom’willbecomeeven

morecommon.

Buttoinsulatethemselvesfromthissortof

marginerosion,companiesshouldmakegreater

e?ortsaroundbrand.Therewillbespacefor

customerstobuythebrandtheyloveandtrust-

eveninthefaceofdeepdiscounting.

Brandsneedtobepositionedtohavecoreaudienceswholove,trustandbuythem.

THEBIGPICTURE

6CHINA’SDIGITALECONOMY

13CONSUMERCONFIDENCE

18MIDDLECLASSMOMENTUM

19CITYTIERS&CLUSTERS

21GENERATIONALTIERS

1

CHINA’SDIGITALECONOMY

Chinaremainsapredominantlydigitalrealm,withoverabillioninternetuserswhospendextensivehoursonmobiledeviceseveryday.

Theprevalenceofmobilepayments

continuestogrow,withmoreadoptingthismethodforroutinetransactions.

Thisdigitalconcentrationhassustained

China'sgloballeadershipinretail

ecommerce,whereitstillcommandsa

significantportionofworldwideecommercespending.EcommercespendingmaintainsasubstantialleadovercountriesliketheUS,whereonlineretailcontinuestorepresentasmallerfractionoftotalretailsales.ThisgapunderscoreshowChinaisoutpacingmostdevelopednationsintheirrapidadoptionofdigitalcommerce.

Thepaceofmarketinginnovationhasn'tslowed,andtheintegrationoflivestreamcommerce,AR,VR,andAIismore

entrenched–fusingthemtogetherin

innovativewaystocatertoaconsumerbasethat’seagerfornoveltyandinteractive

experiences.

CHINAMARKETSCALE

THETOTALNUMBEROFINTERNETUSERSINCHINACONTINUESTOGROWAT

AROUND5%EACHYEAR,ANDCURRENTLYSITSATOVER1.079BILLION.

OFTHOSE,1.076BILLIONAREMOBILEUSERS(MORETHAN99.8%OFCHINA’SINTERNETPOPULATIONAREMOBILE).

Bycomparison,thereare311.3millionnetizensintheUS(asofJanuary2023)-andan91.8%mobile

penetrationrate.

1,400

1,050

700

350

CHINA’SINTERNETPOPULATION

China'sNetizenPop.(Millions)Penetration(%ofPop)

71%

74.4%

76.4%

50%

53%

57%

1,079

67%61%

1,051

939

854

802

751

710

1,010

20162017201820192020202120222023

Source:CNNIC2023

AUDIENCETIMESPENT-MOBILE

CHINA’SVASTPOPULATIONOFMOBILE

USERSDEDICATESMOSTOFTHEIR

SCREENTIMETOSHORTVIDEOCONTENT,SIGNALLINGTHEFORMAT'SDOMINANCE

USERSHAREOFTIMESPENTONMOBILE

INENGAGINGAUDIENCES.

Messagingremainsakeyactivity,whileother

categorieslikenews,onlineshopping,andstreamingrepresentsmallersharesofmobileusage.

NUMBEROFINTERNETUSERSINCHINABYACTIVITY(INMILLIONS)

1,047

1,044

1,026

943

884

841

781

InstantMessaging Onlinevidoes ShortvideosOnlinepaymentOnlineshoppingSearchenginesNews

765

726

Live-streamingMusic

550

528

535

OnlinegamingOnlineliterature

472

454

OnlinemealorderingOnlineride-sharingservicesOnlineTravelBooking

2755508251,100

Others33%

News7%

OnlineShopping4%

Messaging21%

Streaming6%

ShortVideo28%

Source:CNNIC2023

Source:Questmobile,2023

CHINAMARKETSCALE

RETAILECOMMERCESALES2023(BILLIONS,USD)

+%%

2022-2023%Changeinretailecommercesales

CHINA

8%

+

47%

2023Ecommerce

shareoftotalretail

$196B

sales.

UNITEDKINGDOM

$1.16T

GERMANY

-17%

$82.8B

CANADA

USA

20%

3.8%

+

$79.4B

+15.9%

$147.4B

30%

2023Ecommerce

shareoftotalretail

sales.

$97.3B

$3T

KOREA

+3%

FRANCE

16%

-

$193.4

JAPAN

14%

+

11%

15.8%

2023Ecommerce

shareoftotalretail

sales

$118.9BINDIA

+42%

China48%

US

18%

$6.3T

39.6%

SHAREOFGLOBAL

2023Ecommerce

shareoftotalretail

sales.

ECOMMERCESPEND

2023

Japan3%

RestofWorld25%

SouthKorea2%

UK3%

Source:eMarketer2023

CHINAMARKETSCALE

GROWTHINCHINA’SRETAILECOMMERCE

SECTORHASBEENCONSISTENT,OVERALONGPERIODOFTIME.

CHINARETAILECOMMERCEVALUE(CNYTRILLIONS)

ECOMMERCECONTINUESTOOUTPACETHEGROWTHRATESOFOFFLINERETAIL.

COMPAREDTOTHEOVERALLRETAILGROWTH

RATEOF7.2%(SOURCE:NBS)IN2023,12%GROWTHINDIGITALISIMPRESSIVE.

EcommercehasbecomeintegraltotheretaillandscapeinChina,despiteagradualdecreaseintherateofgrowth.

MOBILEPAYMENTSUSERS(MILLIONS)

852

633

911

903

469

583

527

943

2016

2017

20192020

2018

2021

2023

2022

Source:Statista

22.7%

19.4%

%GrowthRate

E-commerceValue

25.5%

18.1%

17.2%

14.2%

12%

10.6%

19.6

17.6

15.7

13.8

11.8

30

20

10

10.9%

10.6

9

7.2

6

2016201720182019202020212022f2023f2024f

Source:GlobalDataBanking&PaymentsIntelligenceCenter

CHINAMARKETSCALE

CHINA’SDIGITALLANDSCAPEIS

SHAREOFSOCIALCOMMERCEINE-COMMERCERETAIL

STRUCTUREDAROUNDSOCIALCOMMERCE.

ASELECTFEWDOMINANTENTITIES(BATB)HAVECAPTUREDTHELION'SSHAREOF

CONSUMERFOCUS,WITH"SUPERAPPS”THATBLURTHELINESBETWEENSOCIALNETWORKINGANDONLINESHOPPING.

THEAIMOFSOCIALCOMMERCEISTO

CHANNELAUDIENCEEXCITEMENTAND

INTENTTOWARDSCHECKOUT,USINGAMIXOFINFLUENCERMARKETING,REAL-TIME

VIDEO,CONTENTANDREVIEWSHARING.

China'snotoriouslycautiousconsumersdotheir

researchbeforemakingpurchases.Unlikethetypical

USbuyerwhomightconsult3-4sourcespre-purchase,Chineseconsumerstypicallyexplore15-20di?erent

sources."SuperApps"o?erstrongnetworksofsocialendorsementswithintheirexclusiveecosystems.

500

375

250

125

GMV(Billions)

14.2

%oftotalretailecommercesales

13.8

13

11.6

10.3

315.5

474.81

242.41

186.04

394.69

20192020202120222023

15

11.25

7.5

3.75

Source:eMarketer

THECHINAECOSYSTEMISDIFFERENT

SOCIAL-ECOMMERCEINCHINA

There’sverylittlehoppingfromonedigitalplatformtothenextinChina.Brandactivitiesoccurwithinsilos,onplatformsdesignedas“SuperApps.”

Insteadofone,masterfunnel(tiedtoanownedWebsite)brandsinChinamustconcurrentlyberunning4-6funnels-oneforeach“SuperApp”

(WeChat,Tmall,RED,Douyin…etc).

GLOBAL

Customersjumpbetweenchannels

seamlessly.JourneysareWeb-first,

platformsecond.

Eachchannelhasmorediscrete

focusandcontributesalonga

holisticpath-to-purchase.

Transactionsflowtobrand“own”

Websites.Digitalplatforms

contributeto“DTC”outcomes.

AWARENESS

AWARENESS

CONSIDERATION

CONSIDERATION

PURCHASE

PAYMENT

ENGAGEMENT

ENTERTAINMENT

PURCHASE

CHINA

Journeysareplatformspecific.

Eachplatformisitsowncomplete,

separatefunnel.

Platformsoperateas“SuperApps”fullyencirclingusers,withamixofcontent,social,payments,stores.

Brandshavepoints-of-saleoneachplatformandpaytosustaintraffic toeachoftheseplatformstores.

“PrivateTra?c”initiativesaimedat

movingmoreDTCcontinuetogrow,

withbrand‘owned’Mini-Programs

servingtheroleof‘owned’sites.

AdvertisingaspredominantDigitalplatformsprioritize

businessmodeleCommercebusinessmodels

CONSUMERCONFIDENCE

Chinaisstillstuckinaneconomicholding

pattern,whereconsumersaretakingawait-and-seeapproachtorecovery.

AccordingtotheNBS,China’seconomy

grewat5.2%in2023,withretailsales

outpacingoverallgrowthat7.2%.Whilethenumberssoundimpressive,theseyear-over-yearnumbers,comparingto2022,aretakenfromalowbaseandaweakpreviousyear.

Lookingatthebigpicture,therehasbeenapivotinconsumerconfidenceoverthepastcoupleofyears,whichaclearshifttowardcautionandprudence.Propertyweaknessandjobinsecurityalsoweighheavilyon

overallsentiment.

Travelhasbeenarelativebrightspot.Domestictravelhasreboundedtosurpass2019levels,andtravelto

HongKong,Taiwan,andMacaoisapproachingpre-pandemicfigures(83percentof2019levelsin

September).Whileinternationaltravelremainsat

aroundhalfof2019levels,thisisprimarilyattributedtovisarestrictionsandhighflightprices.

APIVOTPOINTFORCHINA?

Chinaisinthemidstofamajorshiftinapproachtomarketing,growth&consumption.Brandsneedtore-frametheapproachtoChinagiventhechangesunderway.

PAST

Robust,unfetteredgrowth

Massiveexpansion

ofmiddleclass

Brandstargetlowertiercities,

tappingendlesspoolofgrowth

Aplethoraofglobal

andChinesebrands

Wealthe?ectfromrealestate

drivescon?dence

CURRENT

Cautious,wait-and-see

Middleclassbracingfordowntrend

Brandsre-frameongenerationalandincometiertargeting

Globalbrandsretrenching,Chinabrandslookingtoglobal

Questionsaboutwealthfromstalledpropertymarket

FUTURE

Downturn,slowreturntotrend

Middleclassshrinks,wealthdividesincrease?

Re?ned,nuancedcustomertargeting.LoyaltyasKPI.

FewerglobalandChinesebrands.

Contraction,consolidation.

Incometoreplacepropertyasdriverofconsumercon?dence

CONSUMERSENTIMENT

CONSUMERCONFIDENCEINCHINAISCLOSELY

RELATEDTOTHEPROPERTYMARKET.THEWEALTHEFFECTFROMPROPERTYGAINSHASFUELED

ROBUSTCONSUMPTIONINTHEPASTDECADE(S).

CONSUMERANDPROPERTYCONFIDENCEHAVE

BEENMOVINGDOWN-INCONCERT-SINCEBEFORECOVID.MOVINGFORWARD,JOBINSECURITYMAYBEAFURTHERDRAGONCONSUMERCONFIDENCE.

Chineseholdmostoftheirpersonalwealthinproperty,withmorethan75%investmentsinproperty,comparedto30%intheUS.

Inadditiontotheweakpropertymarket,thesmallshareof

investmentsthatdogoto?nancialassetsaregettingtrampled,asChina’sstockmarketshavegottenslammedin2023-24.

CHINA

USA

HOUSEHOLDINVESTMENTMIX(CHINAVSUSA)

·PropertyFinancialAssets·CommercialAssetsOtherAssets

25%50%75%100%

Source:Survey&ResearchCenterforChinaHouseholdFinance

150

120

90

60

35%

30%

25%

20%

15%

10%

CHINACONSUMERCONFIDENCE(2010-2023)

ConsumerCon?denceIndex

ShareofHouseholdsExpecting

House

PriceIncrease

127

123

123

122

120

104

106

104

116

100

100

102

8887

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Sources:NBS,People’BankofChina2023

CONSUMERSENTIMENT

FESTIVALSALESHAVELONGBEENABAROMETERFORCONSUMERCONFIDENCEINCHINA.ASSUCH,THELASTFEWYEARSHAVEBEENDISAPPOINTING.

DESPITEALIBABANOLONGERPUBLISHINGOFFICIALSALES(GMV)TOTALS,ESTIMATESARETHATDOUBLE11RESULTSHAVETRACKEDSIDEWAYSFORTHELASTTHREEYEARS.

RESULTSIN2023WERESOBADTHATALIBABA

CANCELLEDITSDOUBLE12SALESFESTIVAL.PARTOFTHISDECLINEISANALIBABAPROBLEMBUT

WEAKRESULTSAREALSOASIGNOFTHETIMES,WITHCONSUMEREXCITEMENTSAGGING.

ManycompanieshaveviewedDouble11,6:18andDouble12aspillarsforgrowth.Forsome,agoodDouble11canmakethedi?erence

betweenpro?tandlossfortheyear.

Brandswhohavebeenover-reliantonsalesfestivalswillneedtoreconsidersalesplanning,tofocuslessonone-o?impulse

purchasesandmoreoneveryday-lower-pricestrategies,togetherwithbetterDTCandCRMsystemsandincentives.

ALIBABAGMVONSINGLES’DAY(BILLIONSOFUSD)

One-dayeventExtendedperiod

100

-5%

80

60

40

20

$84.5

0

'11'12'13'14'15'16'17'18'19'20'21'22'23

Sources:Alibaba2022,TotemResearch2024

TARGETINGNEWGROWTHWITHCONSUMERS

Reachingdownintolowertiercitieshas

beenago-tomoveforbrandslookingtofindnewgrowthinChinaoverthepast

decade.Lowertiercities,coupledwiththeexpansionofthemiddleclasshaveofferednearendlessopportunitiesforgrowth.

Brandslookingtotapintonewsourcesofgrowthinto2024andbeyond,willneedtoadjusttacticsandfocusonamixof;

(1)incomestrata(middlevsaffluentclasses),

(2)citytiers(T1vslowertier)and

(3)generationaltiers(boomersvsGenZ).

ShouldChina’seconomiccontraction

intensify,thegrowthofthemiddleclasswillstall(andshiftintoreverse).Atthesame

time,aneconomicdownturnwillput

pressureongrowthoflowertiermarkets.

Inthiscontext,bettertargetingof

generationaltiersmaybecomemore

importantformarketplannerslookingtoexpandandimprovemarketingresults.

CHINA’SALLIMPORTANTMIDDLECLASS

THEGROWTHOFCHINA’SMIDDLECLASSHASBEENPHENOMENAL.ECONOMIC

MOMENTUM,COMBINEDWITHGOVERNMENTINITIATIVES(EG.‘COMMONPROSPERITY’)

HAVESUPPORTEDSTEADYGROWTH.

FORBRANDS,THISGROUPHASBEENANEARENDLESSSOURCEOFGROWTHPOTENTIAL.

THEYHAVEBEENAWILLINGAND

SPENDTHRIFTAUDIENCEFORNEWBRANDS.

BUT,APROLONGEDECONOMICSLOWDOWNCOULDPUTCHINA’SMIDDLECLASSATRISK.MIDDLEANDLOWERINCOMEGROUPSHAVEALREADYSHIFTEDTOACAUTIOUSSTANCE.THETOTALNUMBEROFPEOPLEINTHE

MIDDLECLASSCOULDCONTRACTQUICKLYINTHEMONTHSAHEAD.

Puttinga?rmnumberonChina’smiddleclassis

challenging.Estimatesforitssizerangefrom300-600million,withaverywiderangeincriteriafor‘whatis

middleclass.’AreasonableassumptionisthatChina’smiddleclassisnear350+millionpeople(earning

betweenUS$15,000-75,000/yr).

2025(e)

2021

2015

URBANHOUSEHOLDSBYINCOMEGROUP(MILLIONS)

MIDDLEINCOMERMB85K-160K/yr

HIGHINCOME>RMB160K/yr

LOWERINCOME<RMB85K/yr

63114209

386m

73144138

63

34

192

Source:MGIInsights

CITYCLUSTERS

HARBIN

CHANGCHUN

SHENYANG

BEIJING

TIANJIN

CITYTIERS

Netizens2022

YANTAIQINGDAO

SHIJIAZHUANG

TIER1

TIER1(New)TIER2

TIER3

220Million

130Million

LUOYANGZHENGZHOU

XI’AN

NANJING

SUZHOU

HEFEI

SHANGHAI

NINGBOHANGZHOU

CHENGDU

WUHAN

CITYCLUSTERS

BubblesizeindicatesshareofnationalGDP

CHONGQING

WUHU

GUIYANG

NANCHANG

FUZHOU

CHANGSHA

DONGGUAN

SHENZHEN

GUANGZHOU

HONGKONG

FOSHAN

TARGETINGTHERIGHTTIERS,CLUSTERS

Aprolongedeconomicslowdowncouldchangethecalculuswhenitcomestocitytiertargeting.

PriortoCovid,lowertiercitieswereprizedasnewgrowthcenters,o?eringbrandsun-tappedpotentialwithnew

consumerswhoweregenerallymoreexuberantand

impressionable.Aseconomicexpansionshiftsintoreverse,growthoflowertiercitieswilllikelybeimpactedmorethantoptiercities.

Inthiscontext,theshareofbrandinvestmentapportionedtolowertiercitiesshouldcontract.Discountandvalue

brandswithpropositionstunedtomid-to-lowerincome

familiescouldstill?ndgrowthinlowertiermarkets.Butforluxury/leaderandvaluebrands,highertiermarketsare

likelytobemorefruitful.

Inacontractionaryenvironment,protectingthemarketsyoualready‘own,’maybemoreimportantthanventuringintoun-provenlocations.Ascautionsettlesin,consumersaremorelikelytostickwithbrands

theyknowandtrust.

It’sbettertobeatrueleaderinageographicclusterthantobea

forgettablebrandonthenationalstage.Brandswith?niteresources

shouldbeintentondefendingthegeographiestheyalready‘own’andsupportingmoregeo-speci?cstrategies.

Source:CNNIC,Totem2022

CITYTIERCONFIDENCE

DISPOSABLEINCOMEPERCAPITABYCITIES/REGIONS(PERANNUM)

INCOMEASABETTERMEASUREOFPOTENTIAL

Middle-classconsumercon?dencehasdeclinedmorequicklyinlowertiermarketsthanintoptiercities.

PriortoCovid,itwastoptierconsumersbecoming

cautious,aslowertierconsumers,boostedbyimprovedincomeandthewealthe?ectfrompropertygains,were?yinghigh.Currentdatatelladi?erentstory,with

consumersinlower-tiercitiespullingbackspendingas

propertygainshaveevaporatedandincomeisbecominglesssecure.

Goingforward,income,morethan(perceived)propertygainsmaybeagreaterdeterminantforconsumer

con?dence.Highertiercitieshavemuchhigherincome

levels,moresecurity,andmuchgreaterabilitytomaintainspendinglevels.

AccordingtoanalysisfromMcKinsey,by2020,therewere55high-incomecitiesinChina-withpercapitaincomeofmorethan

US$12,695(RMB90,000).Thisnumberofhigh-incomecitiesis

projectedtorisetoatotalof82by2025.Thesetopincomecitieswillaccountforbetween47%(in2020)to58%(in2025)ofnationalGDP.

Shanghai

Beijing

Zhejiang

Tianjin

Jiangsu

Guangdong

Fujian

Shandong

Chongqing

Liaoning

Disposableincome/capitaExpenditure/capita

10,000CNY

6.37

4

6.17

3.45

4.98

3.14

4.07

2.57

4.03

2.58

3.93

2.55

3.54

2.33

3.06

1.71

2.92

1.93

2.86

1.81

2468

Source:(China)NationalBureauofStatistics(NBS)2023

GENERATIONALTIERS

ASTHEECONOMYSLOWS,THENARRATIVEAROUNDTARGETINGISLIKELYTOSHIFT

AWAYFROMCITYTIERS,MORETOWARD

GENERATIONALTIERS.WHEREDISCOUNTANDVALUEBRANDSCANCONTINUETOPUSHINTOLOWERTIERCITIES,LEADERBRANDSWILL

NEEDTOFOCUSMOREONGENERATIONALTIERPOSITIONINGANDTARGETING.

WHILEBOOMERSANDGEN-XHAVEENJOYEDDECADESOFGROWTH,GEN-ZARE

STRUGGLINGWITHINCALCULABLEYOUTH

UNEMPLOYMENTRATES.WHILEBOOMERSARESITTINGPRETTY,GEN-ZARE‘LAYINGFLAT.’

THISPUTSGEN-XANDGEN-YASCHINA’SCORE

DRIVERSOFCONSUMPTION-ASWELLAS

BEINGTHEMOSTLIKELYTOTRADE-UPANDPREMIUMIZE.

ThesavinggraceofyoungergenerationsinChinaisthefactthatthe