Déjà Vu in China?

America in the 1980s is often portrayed as the yuppified, “greed is good” decade. Yet, for all the narcissism it evokes, the decade brought vigor, optimism and enthusiasm to an increasingly prosperous Baby-Boom populace.

History does have a knack for repeating itself, and a sense of ’80s renewal is playing out today in what may be the world’s hottest economy – China. And U.S. retailers are well-positioned to benefit.

Like their U.S. counterparts did a quarter century ago, 20- and 30-something Chinese are making a rapid transition into relatively high-paying jobs in the developing service and technologies sectors. While large parts of China remain poor and rural, the nation’s increasingly sophisticated cities are home to more than 380 million consumers in the coveted 18- to 34-year-old demographic who are exhibiting a strong appetite for luxury goods, electronics and fashion.

They want all the same life-defining big-ticket items – computers, jewelry, TVs and vacation travel, according to the China Quarterly, a BIGresearch compendium that monitors the economic outlook, lifestyle, media consumption and purchasing behavior of the Chinese consumer.

“A lot of the young people are going through college or have access to the Internet or they are going to work in high-tech jobs and work for multi-nationals,” says BIGresearch analyst Phil Rist. “They are young professionals making money and buying things to show they are making money.”

Young Chinese consumers were confident and expectant about their country’s economic prospects in the second quarter of 2007, when the China Quarterly data was compiled. Approximately 92 percent of the Chinese consumers surveyed expressed a high degree of confidence in their economy – nearly double the rate (47.7 percent) of their U.S. counterparts.

Consequently, they are more inclined to say they will purchase big-ticket consumables in the short term: 39 percent planned to purchase vacation travel, 35 percent indicated they will buy a digital camera and 29 percent will opt for jewelry or watches over the ensuing six months.

Looking for brand names
U.S. retailers seeking inroads into China can be heartened that young Chinese consumers want products with well-known brands – but they will need to push harder to get their brands recognized. Nearly 72 percent of young Chinese (compared with 55 percent of young Americans) said products with familiar labels are appealing.

As the Chinese economy continues to develop, U.S. marketers will need to take steps to ensure their brands remain popular: Compared with earlier China Quarterly surveys, Chinese consumers are showing an increased propensity toward selecting domestic brands.

For instance, preference for U.S. music brands decreased from 44.4 percent in the second quarter of 2006 to 28.8 percent this year, with preference for Chinese music rising about 10 percent during the same period. U.S. clothing brand preference also declined more than 19 percent year-over-year, and preferences for U.S. grocery and beverage brands are also down.

Interestingly, while nearly 80 percent of young Americans seek sale prices when shopping for clothing and apparel, only 53 percent of Chinese consumers say sales are important. Chinese men in the survey said they are even less price-sensitive when buying.

Young Chinese are fully engaged in the digital world, the China Quarterly reports, and are more likely than young American consumers to surf the Internet, e-mail, blog or instant message in their leisure time.

Young Chinese women listed their top five leisure-time activities as surfing the Internet, shopping, listening to music, reading books and traveling: Nearly 87 percent of these women described the Internet as their favorite activity. Young American women, on the other hand, ranked their top five leisure-time activities as watching television, eating out, listening to music, going to the movies and shopping. The same general parallels also apply among men.

With their growing appetites for consumables, young Chinese are generally more eager to research products online than young Americans. About 55 percent of young Chinese consumers regularly research products online before buying them in a store, compared with 50 percent of American consumers, and their searches are often triggered by Internet, cell phone and magazine advertising.

In fact, the China Quarterly surveys highlight that the young Chinese are enamored of advertising – both online and traditional – as a novelty. Advertising is a relatively new concept in China, and these young consumers may not yet be as skeptical of the role of persuasion in consumer buying, BIGresearch notes.