Whenever one is trying to talk about the consuming ability of Chinese people, the capability of Chinese expenditure should be familiarized by most of the world. If you try to go to Paris, Milan and step into any luxurious shops, it is of high chance that you can see Chinese people around you.
Due to the immature market environment, the Chinese consumer behaviors are sometimes being criticized as it shows a certain special characteristics. However, the side that we always see about this group of consumers does not represent the whole population of Chinese. Indeed, the traditional Chinese culture has formed its unique consumer characteristics, and the distinctions between different generations show big differences between these gaps.
When it comes to consumer behavior, Maslow’s hierarchy of needs theory is always being mentioned. These hierarchies of five different levels of demand are the minimum to meet their basic physiological needs, followed by the security needs, social needs, esteem needs, and lastly self-realization.
Reflected in this hierarchy of needs theory is a universal condition, but in the actual market behavior, especially in the Chinese market, the environment is quite complex, and different phenomena under this model varies between generations. The consuming behaviors, life styles and habits between different generations show an obvious distinction.
Chinese towards expenditure are usually divided into four generations and distinct by the general level of economic development during their growth stage, which shape their primary characteristic.
- 1st : Born on or before 1945, which have come along with the war
- 2nd : Born between 1946 to 1965, which is the generation of baby bomb
- 3rd : Born between 1966 to 1980, the Generation X
- 4th : Born after 1981, includes the Post-80s and Post-90s
The 4th generation always represents the most developed consumer groups, while the 1st generation is often on behalf of the least developed consumers. These different groups of consumers are grown in different environment in specific period of times. The economic status and the development of consumer market surrounding shapes different specific behaviors of them.
The 1st generation grows in more or less a poor environment as they have experienced war in their lifetime. Basic physiological need is the core value of their consuming behavior. They tends to have a strong family values and the value of money expenditure tends to be more pence-pinching. They will usually compare prices before making a purchase and the preference goes to the cheaper product. Only necessities and essential products would be on their list of purchase. Luxurious products would not attract this group of consumers.
The 2nd generation is the generation of the baby bombers. The consumer market in China expands a lot in the growth stage of this group of people, in order to suit the dramatically expanding market of consumption. Upon the stable growth of post-war economy, there are more choices and varieties of products available in the market. Thus, this group of people tends to pay more attention to product safety and reliability from the varieties. They will conduct careful planning and research before buying any products.
The 3rd generation is what we called “Generation X”. This generation follows the powerful baby bomber generation. “X” described the lack of identity that members of Generation X felt — they didn’t know where they belonged, but knew for sure that they weren’t a part of the overbearing generation of Baby Boomers. With the shocking growth of the economic status during Baby bombers stage, the parents of Generation X would be able to provide better environment for their child. The identification problem together with the better economy has created the starts of needs for self-esteem and self-actualization. The concept of luxury products starts to grow in this stage, as different products seems to be able to provide this group of people different identity. Fashion trends and brand-name goods start to be an important concern of this group of peoples’ buying behavior.
The 4th generation is called Post-80s and Post-90s in China. Post-80s and 90s are colloquial terms which refer to the generation whose members were born after 1980 in Mainland China, after the introduction of the One-child policy. This generation currently aged below 32, making up a major portion of China’s young adult and teenager demography. In this generation, the One-Child-Policy started to launch and the effects of this policy is significant. With the fastest-ever growing of Chinese economy and the restriction of child in family, they are sometimes being referred as “Little Emperors” at home. In many Chinese families the 4-2-1 format, 4 grandparents, 2 parents, one child, takes place, resulting with a child which receives love and attention and has no siblings to compete with. The spending habits and buying behavior of this generation is very significant as their parents tends to encourage them on spending if this makes them feel happier. The concept of luxurious products is very important to this generation and they are willing to spend a lot on buying expensive products to treat themselves.
I have conducted a skype interview towards different family members of mine who live in China, including my grandma, uncle, auntie and their daughter, my cousin, to understand their consuming behavior. To make the interview easier, I have picked up an example of product: Mobile Phone, as they all have one and it’s easier to analyses their behavior.
Grandma /71 years old / Retired person/ Nokia 8310
Uncle /48 years old/ Logistic Manager/ Blackberry 8520
Auntie /39 years old/ Housewife/ iPhone 3GS
Cousin/16 years old/ Student/ iPhone 4S
Question 1: Why do you think you will need a mobile phone?
Grandma: Indeed I do not need a mobile phone, but my son is not living with me currently. They buy me a phone so that they can find me anytime even I am not at home.
Uncle: I need a mobile phone to contact my family as well as use this in working purposes.
Auntie: Obviously everyone needs a mobile phone in this generation. I need to contact my friends and family. There’s no reason for not having a mobile phone for everyone live in town in China now.
Cousin: I need the phone to contact my friends and play games. I also need it for listening music and watch movies.
Question 2: Why did you choose your current phone?
Grandma: My son wants me to have a phone but I really don’t need one. So I just take his old phone to use.
Uncle: Blackberry is good for organizing my stuffs at work. It facilitates my working process. It is very useful.
Auntie: iPhone is very trendy and popular now. The shape and the functions of it are perfect. I feel good for using iPhone that it gives me a luxurious feeling. But my phone is out of fashion now, I am going to ask your uncle to change a new iPhone4S for me soon.
Cousin: This is nonsense of asking why people use iPhone! Everyone knows that iPhone is the best. You are going to use iPhone to do everything. The best thing is that people jealous when you are holding it!
Question 3: How do you find the price of your phone?
Grandma: I don’t know the price of it, but I am sure that it must be high. My son needs to get a new phone for work so give this old one to me. However, it can still function well and I think it’s kind of waste to give it to me. I try to give it to my granddaughter but she refused to use this.
Uncle: I think it is reasonable. The price matches the functions and it eases my workload in certain extents.
Auntie: I think the price is high but It is still reasonable. The price is a bit high as compare to other phones. But as long as it is trendy people are willing to give money to them.
Cousin: The price is not expensive at all. This gives every functions that you can use and it worth more that it cost.
Question 4: Will you get a new mobile phone in the coming period?
Grandma: No. I am happy with this one.
Uncle: Not in this period until it’s not functioning. This one matches all my need of a mobile phone.
Auntie: Yes. I want to get an iPhone 4S. But maybe my daughter is going to get a new phone soon. So I may get hers if she is getting a new one.
Cousin: Probably. I heard that the new iPhone 5 is launching soon and I want to get that one. It would be the trendiest and people would envy about it. I think mobile phone should always be changing due to current trends.
I hope the results would give you more clues on the difference between generations in consumer behaviors. These gaps in a single family actually represent majority of these groups in China. And I believe this is worth to understand.