How Gen Z is shaping China’s digital landscape

2021/11/23 | 6 mins

China’s digital landscape is in a constant state of flux. Everything in the country has become literally at one’s fingertips, whether it’s on a mobile device or through a click of a desktop mouse. Gen Z was born into this evolving landscape and is the global demographic of people born between 1997 and 2010 – the generation succeeding Millennials. The unique characteristic of Gen Z is they are digital natives. As of 2020, they were estimated at a population of 2.47 billion people worldwide.

However, with this comfortable life comes high-maintenance lifestyles and a preference towards convenience. There's also pressure on most Gen Zs to meet their family's expectations because they've been given the resources to get ahead in life. Most of them are competitive and are used to a stressful life that revolves around school and subsequently, work. Interestingly, this mix of good and bad has influenced Gen Z’s consumer behavior and subsequently, China's overall digital landscape.

Gen Z’s digital consumption

Gen Z is naturally tech-savvy since they’ve grown up in a world of mobile devices and apps; they know how social media works. This innate tech-savviness makes information more accessible to them, beyond the confines of traditional school. In China, a study found that Gen Z consumers are as mature as older generations when it comes to consuming luxury and fashion items. They do not believe that a high price point is the sole determining factor of a luxury brand. Instead, to be considered a luxury item it must have high quality and good aesthetics.

To get a full picture of how Gen Z spends, it’s important to look at what drives digital consumerism in China. Among the factors affecting consumption are retail integration, also known as the rise of omni channels. More than 50% of China’s economic growth is attributed to this. In the midst of the pandemic, even big retail brands shifted online to continue their business. These days, it’s common for consumers to either look online and buy in person, or look at retail in person and make the final decision to buy online. For some, it’s a matter of price discounts, while others it’s a matter of convenience.

Social media is also a driving force behind China’s consumerism. Aside from traditional celebrities seen in movies and television, China has experienced growth in key online influencers whose popularity boomed from social media platforms. This unlikely rise to stardom has influenced even traditional celebrities to grow their influence online as well to take advantage of this digital reach.

Smart cities expanding in China also contribute to consumer behavior. This endeavor has shed light on the need for sustainable products and also made services available digitally. These days, it’s common for app services to employ a holistic approach. Now tech has allowed people to live and work in the comfort of their own homes. Consequently, delivery services have seen rapid growth to keep up with growing demand.

How Gen Z spends

Despite their maturity in recognizing brands, Gen Zs aren’t the thriftiest. They are impulsive buyers, mainly because it’s very easy to access what they want online. Businesses, especially those that operate DTC (direct-to-consumer), are allowing more personalization of products and services. Gen Z consumers eager to express their own creativity aren’t hesitating to spend on whatever they desire.

In L Catterton’s 2021 consumer insights report on China, they found that even though Gen Z’s population in China is only 17% of the total population, 25% of the total expenditure on new brands in the country come from this generation. They are largely interested in “made in China” products, thus driving the growth of homegrown brands such as Pop Mart (toys) and Perfect Diary (cosmetics). Gen Zs are driving the growth of “made in China” products especially in retail and fashion.

Gen Z account for 17% of the population but 25% of spending on new brands

In another study done by McKinsey, Gen Zs were found to be relatively more comfortable owing money. Even university students with no credit histories have access to financial products that enable them to buy what they want. They’ve been referred to as the “moonlight clan,” which in Chinese culture is a reference to lunar cycles. Most of them value good brands and are comfortable with loans just to be able to live the life they want. Perhaps due to their upbringing, this generation also has gained the confidence to live this way because of their education. They are confident they will always find a job to sustain their lifestyle.

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How to reach Gen Z buyers

Since the Gen Z generation are digital natives – as an online business, you need to know which of the latest technologies and trends you should use to reach them. Here are some insights you might consider to target Gen Z customers:

Online credit systems
As mentioned previously, Gen Z consumers have a tendency to be impulse buyers. This is mainly because they know financing options are available for them online. Among these are Ant Financial’s Huabei virtual credit card, which draws a quarter of its user base from consumers aged 25 years and younger. Another popular alternative is JD.com’s Baitiao card, which enables customers to buy now and pay later, as well as a multitude of other financial products. Gen Zs are not afraid of spending on credit. This is why they also indulge in luxury items and are often living paycheck-to-paycheck.

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Social media apps
Social media has evolved from being a mere platform of expression. Now it has become a marketplace for sales and promotions, which has been accelerated by the pandemic. Generation Z are prolific with social media and tend to have more profiles, check their accounts more frequently, and spend longer amounts of time browsing. With this type of behavior, Gen Zs are more likely to be influenced by friends and celebrities which could result in them following brands and finding purchase inspirations to influence their transactions.

Source: McKinsey & Company

In one study done by McKinsey (November 2020) on Gen Z’s spending habits, they found that 51% of Gen Z consumers consider official brand social media accounts as one of their top three sources of influence, while 44% of them counted bloggers and online influencers as part of their top three sources of influence when making a purchase. Douyin (parent of tiktok) is top of mind when it comes to social media apps as well as Dianping and Meituan because they offer reviews, discussion forums, and group buying options.

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Personalized approach
Gen Zs are also particular with their individuality. They prefer brands that allow them to stand out and brands that offer a personal connection. For example, the Genki Forest’s slogan,“Zero Sugar, Zero Fat, Zero Calorie” was built from an online-first approach to marketing which also underscores Gen Z's health-conscious values. The brand's attractive packaging and focus on natural premium ingredients directly addresses Gen Zs' demand for high quality products.

Since they are also tech-savvy, Gen Zs have no problem expressing themselves online. They are among the groups driving the use of Weibo and WeChat moments. Thus, it is important to provide a business that doesn’t give them a one-size-fits-all type of product. The McKinsey study (November 2020) also found that more than 50% of China’s Gen Z consumers prefer brands that offer customized products, while another 53% opted for brands that provide tailored services. To experiment with these findings, luxury brands like YSL launched a unique line of lipsticks that allow consumers to engrave personal messages onto the case, which also taps into China’s unique gift-giving culture.

As the most visible online and perhaps also the tech savviest members of China’s digital economy, Gen Z is a very important class of consumers that are worth the investment. You should be excited to learn how their online habits can shape and transform your business, especially if you are an e-commerce site. Therefore, website testing should be an essential part of your business strategy so you can gain insights about the buying behaviors of this influential and dynamic consumer demographic.

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