A tale of two cities: What divides middle-class consumer values in China?

What happened A new study published in Chinese by the Boston Consulting Group (BCG) reveals how the stark differences in China's urban economic landscape shape middle-class consumer behavior across three factors: life philosophy, consumption patterns and values. The report, based on a survey of middle class consumers, categorizes China’s urban centers as "emergent" versus "traditional" industrial cities. In emerging cities like Shenzhen, marked by rapid technological change and fast-paced lifestyles, consumers prioritize efficiency and seek immersive experiences, while the slower pace in traditionally industrial cities like Qingdao and Kunming leads to a preference for rituals and familiarity. When it comes to life philosophy, consumers in emergent cities exhibited a strong affinity for change and self-expression, resonating with terms like "innovation," "transformation," and "enterprise," while those in traditionally industrial cities are drawn to the concepts of "stability," "belonging," and "balance." How should brands adapt? The Jing Take With China’s middle class estimated to reach 40% of the population by 2030, the implications of this urban duality for brands and commerce, both domestic and international, are profound. Hyperlocalization in retail, values and commercial activities became a hot topic during the pandemic when Chinese citizens’ movements were severely restricted. It seems that localization in China will continue to be a vital theme for businesses. BCG carried out qualitative research on typical urban middle-class consumers aged 18 to 50 in China. The study focused on residents spanning three generations (X, Y and Z) from cities with populations exceeding 5 million. Respondents’ monthly disposable family incomes range from 1,325 to 4,130 (9,600 to 29,900 RMB). Cities with emerging industries such as information technology and advanced biomedicine are classified as "emerging" industry cities. Examples include Chengdu, Xi'an, Hangzhou, and Changsha. Meanwhile, "traditional" industry cities like Zhengzhou, Harbin, Changchun, and Kunming are dominated by sectors such as petroleum, steel, and manufacturing. These two categories underscore the degree to which the type of development a city follows significantly impacts consumer behavior. With consumer behavior and life philosophies contrasting between emerging and traditional industry type cities, foreign brands will have to rely more on their local teams to create targeted campaigns and activations that align with each city’s developmental conditions. Perhaps the study’s most compelling aspect is how these urban Chinese consumers perceive value. In emerging cities, where hierarchical shifts and the pace of life are more rapid and pronounced, there's a greater willingness for competition and ascension up the socio-economic ladder. Here, consumption value is often evaluated from a broader socio-economic perspective. The infusion of fresh cultural ideas and narratives also makes middle-class consumers more open to diverse values. In traditional industry cities, however, where hierarchical changes are more gradual, there’s a tendency to favor tangible, universal value metrics, reflecting more conservative consumer behavior. A broad simplification may be that emergent cities value innovation and diversity, while traditional cities favor stability and lasting value/practices. For brands hoping to expand beyond the well-trodden luxury hub cities like Beijing and Shanghai, the dichotomy in these findings provides food for thought. With China’s wealth spreading well beyond tier-1 powerhouses into lower-tier cities, alongside the establishment of new luxury centers like Chengdu and Shenzhen, which will host a Chanel runway show in November, brands should look towards key cultural and anthropological differences to tailor and optimize their multi-city China strategies. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

A tale of two cities: What divides middle-class consumer values in China?

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Published August 16, 2023

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A tale of two cities: What divides middle-class consumer values in China?