Since the onset of COVID-19, China is seeing even lower consumer confidence. Real estate is the main source of many Chinese’s household investment, however, the decline of real estate markets and the bankruptcy of China’s real estate powerhouse, Evergrande, further weakened consumer spending and confidence, leading many to tighten budgets and increase saving (Ka Sing, 2024) (Liu, 2024).

Youth Unemployment in China

China is also experiencing several social issues, including an aging population and the highest youth unemployment rate of 21.3% last year for those aged between 16 and 24, leading to China’s decision to halt their publishing of new numbers (Woo & Wang, 2024).  These numbers have been accompanied by a viral wave of the ‘laying flat’ movement where some graduates have become ‘disillusioned’ by the lack of security a degree has given them (Bicker, 2024). This has caused many to give up on getting a job and are either at home to study for further education or receiving pay from parents to do chores as ‘full-time children’ (Woo & Wang, 2024). 

Gen Z Optimism

Despite this contention, many youths feel positively for China’s future which is reflected in their spending habits. McKinsey’s 2024 ConsumerWise Survey for Asia-Pacific reports that China has the second highest consumer optimism at 67% in the third quarter, with the other 33% showing pessimism primarily from Gen Xers and baby boomers. Furthermore, 60 to 80 percent are increasing spending as a whole, choosing to spend more on clothing (43%), eating out (41%), travel (37%) and footwear (32%) (Malhotra, 2024), showing a propensity to spend on experiences and fashion. In terms of saving, Chinese Gen Z make up the highest share of household spending by country at 13% compared to the UK at 3% and is among the lowest of surveyed countries for having savings at 72% compared to 89% in France (OC&C Strategy Consultants, 2019). Thus, their low savings and increase in spending for experiences and apparel show the possibility of continued growth in Gen Z consumption and reflect the optimism that the youth have for China’s future.

Gen Z’s Digital Consumer Landscape

Chinese Gen Zers are digital natives and are more likely to have public social media profiles that they check often, showing their constant online presence and desire to connect not just within their circle, but to other social media users. 

In turn, McKinsey’s insights find that traditional word of mouth has less impact on Gen Z consumers, with 51% and 44% saying that official social media accounts and bloggers or online influencers are their top three sources for product recommendations (Zhou et al., 2020). However, the limitless choices of items to buy may paralyse Gen Zers to be more selective about brands that they trust and choose to buy from, as only 6% of Gen Zers see new brands when shopping, as opposed to the 8% and 18% of Gen X and Baby Boomers respectively (OC&C Strategy Consultants, 2019). 

Despite their online presence, this group does not have an overwhelming preference for online shopping, as they also value multiple channels of buying (omnichannel buying), compared to South Korea who predominantly prefer online shopping (Malhotra, 2024).

The widespread access to the internet and demand for convenience caused e-commerce sales to reach $2.9 trillion in 2023, forming 46% of total retail sales in China (Verot, 2023).  Xiaohongshu (Little Red Book) is among the most popular platforms for Gen Z for its influencer marketing and collaborations with brands and KOLs (Key Opinion Leaders) like celebrities. Their direct links to major retailer Taobao, known for their low prices, have now made it even easier for users to buy or copy outfits from Xiaohongshu’s endless supply of content inspiration, allowing for users to connect by responding with pictures of their purchases (Bargeron, 2024). Furthermore, Gen Z prefer Taobao’s P2P or ‘peer-to-peer’ structure where they can speak directly to the vendor as it provides a level of quality assurance (Zhou et al., 2020). 

The Rise of Digital Products

Apart from physical products, digital ‘emotional value’ products have also entered the market, as Taobao released their top ten most popular products of 2023. One such product is ‘Einstein’s brain’, a virtual product that has gained popularity with students during exam season for less than 1 yuan. Interestingly, Hong Yong of the Digital Real Economies Integration Forum 50 details that the majority of Taobao’s top products are viral memes that have been made into products, outlining that the improvements in e-commerce infrastructure and supply chains have allowed smaller entrepreneurs to hop onto social trends at a lower threshold. Similarly, Wei Xiang, a research fellow at the Chinese Academy of Social Sciences, predicts that future consumers will favour physical to service products and will be attracted to the amount of emotional value a product can bring rather than cost-effectiveness (Times, 2023). 

The Future of the Consumer Experience for Gen Z

Overall, it can be seen that despite various social obstacles that cause lower consumer confidence for older generations, China’s youth still maintain optimism for the future, reflected in their positive consumer sentiments through their increase in spending on comfort-related products, like eating out or buying apparel. 

Furthermore, the simplification of communication channels, not only between consumers and vendors, but also the partnerships between platforms that influence the consumer, social media like Xiaohongshu, and retail platforms, like Taobao, make the entire buying process even easier for Gen Z. China’s acceptance of new virtual goods like ‘blockchain as a service’ or ‘Baas’ shows the possibility of streamlining and increasing the security of processes like transactions (Eligon, 2024b). Therefore, an exciting future with an increasing role of technology in the buyer experience, as well as potential shifts in consumer tastes for non-tangible products, are worth anticipating for the Gen Z consumer in China.

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