Changing Demographics in China: Age Gap, Wealth Distribution, Location, Language, and Gender Roles
Part One: The Consequences of ‘NOT’ Understanding your Target Audience in China are clear. Mattel dumped millions of dollars into a flagship store that ended closing three years after entering China (2009-2012). Best Buy, Google, E-bay, Mattel, Home Depot and many more have all learned the hard way. Businesses cannot use an American (or existing) strategy in China and expect a cash cow. “China’s demographic pressures are unusual among emerging markets. It has an ageing population, a massive pool of internal migrant labor and sharp disparities in wealth and outlook across groups. Given its size and complexity, the market is likely to require new, rich ways of segmenting Chinese audiences to represent this diversity for many years to come. –WARC Briefing”
China is unique and it requires constant planning and commitment when operating a successful business here. So, how can businesses enter successfully? Planning and understanding the changing demographics in China is the first step.The next sections are to illustrate the complexities of segmenting the Chinese consumer market and should not be used as market research. These are gross simplifications and generalizations to illustrate the complexities of the changing demographics in China.
There are three distinct age groups within China. These three groups have distinct mindsets about life and duty. The first group is Pre-Cultural Revolution, individuals born before 1960. The second group is Economic Reform, individuals born between 1960 and 1985. The last group is Emerging Power, individuals born after 1985. Effectively, the three groups can be divided into three age groups +50, 49-30, and 29-below.
The Pre-Cultural Revolution mindset is one of turmoil and triumph. These individuals have lived through the creation of modern China and they are also the most heavily indoctrinated into the communist ideology. They were required to learn the nationalistic songs and carried Mao’s little red book. They are +50 years old and they were most affected by the Culture Revolution because they were born before the start.
The products that most affect them now are health care product for the aging population. They are not tech savvy and are often considered laggers. They value a traditional Chinese lifestyle and expect to be taken care of until they pass away. They are less educated than their children and they are often living or moving into urban areas.
According to the China National Committee on Aging (CNCA), “Mass urban migration is also reshaping the country’s demographics. The urban senior population is expected to grow at a much faster pace than rural areas and is expected to surpass it as early as 2020. – China Business Review“
These individuals had their hopes in dreams shot down in their early 20’s at Tiananmen. They were born during the Cultural Revolution and they were the first wave of college educated in modern China. They tried too much, too fast and they failed. They are now in their 30’s and 40’s and the age group falls between 49-30 years of age.
After their failed attempt to bring democracy to China; they joined the government and started private businesses. Their mindset is all about economic reform and economic gain. They have a get rich or die trying mentality and often define success through martial possessions. They are stuck firmly in between the old and the new.
They are expected to provide for both their parents and children, for the ones that didn’t “get rich” this is a heavy burden. Their early life and struggles taught them about their government and about hard work, which makes it difficult for them to relate to their children (who have grown up in a relatively stable environment.) They are practical and optimistic.
Emerging Power (Little Emperors, Gen 2)
The expression “Little Emperors” has been used many times to describe the Chinese children born during the mid 1980’s. One Child Policy came into effect in 1979 and families were not allowed more than one child. This created a new mindset in the children born during the mid 1980’s because families only had one child; so all the family’s resources were funneled into the child’s upbringing.
This allocation of resources has created a dual identity within these children. On one hand, they expect everything (little emperors making demands) because they have been giving everything from birth. All the family’s resources have been used to increase the child’s chances of succeeding. On the other hand, there is an enormous amount of pressure to succeed and this can be crippling for the children.
The pressure to succeed from their parents and grandparents creates an age gap that is hard to bridge. Many young adults grew up without knowing extreme hardship and this as allowed them to enjoy more freedoms and opportunities. Young adults (29-below) have very different ideas about career and life which is causing major conflicts within the family unit.
According to McKinsey & Company, “These G2 consumers today are typically teenagers and people in their early 20’s, born after the mid-1980’s and raised in a period of relative abundance. Their parents, who lived through years of shortage, focused primarily on building economic security. But many G2 consumers were born after Deng Xiaoping’s visit to the southern region—the beginning of a new era of economic reform and of China’s opening up to the world. They are confident, independent minded, and determined to display that independence through their consumption. Most of them are the only children in their families because when they were born, the government was starting to enforce its one-child policy quite strictly.”
Wealth distribution is where the changing demographic in China are the most obvious. The rise of the middle class as pulled millions out of poverty. According to McKinsey & Company, “In the decade ahead, the middle class’s continued expansion will be powered by labor-market and policy initiatives that push wages up, financial reforms that stimulate employment and income growth, and the rising role of private enterprise, which should encourage productivity and help more income accrue to households. For more, see “What’s next for China?,” January 2013. Should all this play out as expected, urban-household income will at least double by 2022.”
The greatest opportunity for marketers is creating brand loyalty. “By 2022, the upper middle class will account for 54 percent of urban households and 56 percent of urban private consumption.” This is an increase of 40%. The upper middle class will desire new products and marketers have an opportunity to create loyal consumers.
The Chinese are becoming more mobile. Migrant workers are a major factor when considering the changing demographics in China. Understanding how, why, and when they move can help marketers better prepare their campaigns and target their markets.
Language plays an important part when marketing in China. The changing demographics in China as brought about more standardization in the language but it is unwise to forget about the many dialects in China. Almost every city has its own dialect and not everyone speaks Mandarin. To put this in context think about how someone from the north, east, west or south speaks in your home country.
People in New York, Mississippi, North Dakota and California speak very differently and they have different emotional triggers based on language. Using only Mandarin in Shanghai or Beijing (or any city) is fine but if you want to go beyond fine and you want to delight you could find out what dialect is spoken by your target market.
Outside of the tier 1 and tier 2 cities, dialects start to play a more important role. Now days, Mandarin is taught in school but many old people do not speak Mandarin, they only speak the local dialect. Below is a map providing a general outline for the common dialects in China.
“Though the country has progressed economically by extraordinary leaps and bounds over the past two decades, children are still steered toward professions fitting conventional and traditional norms — and not only by parents.” – International Business Times.
When marketing in China, marketers must remember the importance of gender roles and gender inequality. Gender Roles are still firmly intact in China but recently more and more women are breaking from traditional beliefs. These women are putting off marriage and pursuing careers.
The “Leftover women” are growing, according to the LA Times, “More and more professional Chinese women say they just can’t find a man who is as accomplished as they are. Others say that after years of schooling, they want to enjoy their freedom past age 27, widely seen here as the proper time to settle down.”
The Leftover women are a small trend but an important look into the future of China. The changing demographics in China are leading to new markets but companies should not forget the overall perception that remains and the gender roles that exist.