Liu Pingting, CBNWeekly
(Yicai Global) Jan. 20 -- Li Lin, a bank employee in China's central province of Henan, earns CNY6,000 (USD873) a month after tax. Despite having just CNY2,200 left after paying his housing loan, he splashed out CNY1,800 for one of Panasonic Corp.'s intelligent toilet seats two months ago.
"As soon as I have the money, I get what I want," Li said. "I spend all my cash on improving my life quality."
In the past year, he bought a pair of Audio-Technica earphones worth CNY1,300 and a Philishave priced at CNY1,200. The Panasonic toilet seat choice came after painstaking research on the internet. Li, who graduated two years ago, is typical of Chinese young people now living through a time when consumers are looking to upgrade what they buy.
Some 79 percent of Chinese born post-1990s and 80 percent born post-1980s bought daily necessities worth over a fifth of their monthly income at least once in the past year, according to a survey of 1,648 young people conducted by CBNWeekly.
China's young are more inclined to buy products that are not just more expensive, but are better designed and have superior functions. They buy them to feel good, not because they necessarily need them. It gives them a sense of middle-class lifestyle.
For the love of toothbrushes
Phillips electric toothbrushes and Dyson vacuum cleaners are representative of the kinds of goods young people covet. When released in 2011, China was not a key market for the CNY1,999 toothbrush. But sales took off two years later after one appeared in a popular South Korean drama 'My Love From the Star.'
"Chinese consumers surprise us all the time," said Shen Tianhong, a senior director in Phillips' healthcare business in Greater China. "There was no significant promotion for the product then."
Though Phillips does not reveal detailed sales data, its electric toothbrush is one of the fastest-selling healthcare products.
Born to consume
Young people in China today hatched in a time of rapid economic growth, and so are true born shoppers. Because they are recent university graduates, they may be deemed 'three-withouts' (without deposits, mortgage and children). These youngsters, who can independently decide how to spend their income, buy whatever they want.
Zhang Yixuan, who has worked for over a year now and lives in Shanghai, has no more than CNY5,000 available for daily expenses after paying rent. Nevertheless, over the past year, she has bought a FOREO face cleanser and a Hitachi beauty device priced at over CNY1,000 that are popular on the internet.
Every time she buys such widgets she feels shame at wasting so much money and flies into her parents' arms for comfort. Far from scolding her, however, her folks view her consumption as a reward for her hard work in the city far from her home, and urge her not to stint.
Transparentized information on social networks also further spurs these youngsters' compulsive consumption. Each young man keen on shopping is familiar with the Weibo accounts of numerous fashion bloggers. By reading product descriptions and usage instructions their manufacturers provide, and after personal experience of products, bloggers post their brand recommendations, and offer tips on distinguishing counterfeits in both text and pictures, and may also append before-and-after pictures showing the difference after use, saying, 'Look, this one really gives a bang for your buck!'
Twenty-seven-year-old Zhao Yang sighed, saying "Hold on to your wallet and stay away from beauty bloggers." She lives in Yangzhou, a third-tier city in southeastern China's Jiangsu province, where she lacks access to a wide range of high-priced niche products in her local retail outlets. Beauty bloggers have thus become an important information portal from which she gleans her shopping intelligence.
In our survey, 39.8 percent of post-90s consumers and 48.5 percent of post-80s consumers opt to buy high-priced daily necessities after experiencing them in physical stores. "A physical outlet is an important channel for the consumer experience, and does not just serve a retail function," Shen Tianhong said. In the future, Philips will speed up the pace of building brick-and-mortar stores.
Beauty is in the eye of the blogger
"Beauty bloggers often recommend expensive but effective, low-profile, and I want to try them all," Zhao said. Before following such bloggers, Zhao considered Estee Lauder and SK-II high-end brands, but now she will only consider skin care products priced below CNY1,000."
Min Yangyang is a fashion blogger who enrolled 1.1 million fans in under two years. As product releases in China lag behind other countries, she often browses YouTube and foreign-brand websites in her spare time. "You have to buy at the earliest chance and report your true experience. This is the only way to win fans' trust," Zhao advised.
When purchasing pricey daily necessities, young buyers are less trend-conscious and consume more rationally. They have set priorities that they value strongly. Liao Luqi, who has worked in Shanghai for three years, is very particular about the brands she purchases, and considers a product's quality, cost versus value and follow-up maintenance costs before buying.
She bought a Dyson vacuum cleaner on Nov. 11 Singles' Day last year. Before that, she'd only seen pictures of the product on her friends' WeChat moments and was attracted to it by reports she read. "I didn't believe a vacuum could be priced so high," she said. Liao decided to purchase the vacuum when she saw it on display at a shopping mall, having tested one there and at her friend's home.
Installment plans allow young buyers to purchase life-improving products sooner, said Zhao. "You can use and enjoy it earlier, but you need to control your spending."
Zhao Yang bought a CNY6,000 Casio camera on a 12-month interest-free plan. Every month after payday, she pays off the installment so it doesn't significantly impact her life. A lump-sum payment would have been much more difficult for her.
For sellers, young people's pursuit of quality products is the force driving their continued development efforts. Shen Tianhong uses Korean dramas to push toothbrush sales and encourage repurchases.
Philips sent a team of professionals to survey dentists and a small group of oral health-conscious consumers to create and educate their market. After the campaign's success, Philips surveyed consumers in China, Japan and South Korea and tailored black, pink and purple electric toothbrushes to suit their tastes.
Beauty bloggers loom large in product growth. In September 2015, Philips introduced a new product range and sent one to Min Yangyang, asking her to evaluate and blog about the product. "Many consumers do not know the true effect of a new product launched by brand companies. Bloggers help us promote them," said Shen Tianhong.
Bricks and mortar makes mouths water
To connect with young consumers, Philips exploits glamor to tout its products. It invited Miss World, Zhang Zilin, to endorse its toothbrushes, modernized its physical stores and created a customer experience platform.
Shopping malls introduce membership systems to inform customers of upcoming events, which is particularly useful for promoting high-end products in third- and fourth-tier cities, where consumers are rarely exposed to innovative products.
In our survey, 39.8 percent of people under 27 and 48.5 percent of people under 37 decided to buy costly daily necessities after experiencing them in brick-and-mortar shops. "Physical stores are an important channel for the consumer experience, not only retail functions," Shen said. Philips plans to up the speed with which it builds off-line stores.
(At the interviewees' request, Zhao Yang and Zhang Yixuan are pseudonyms.)