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The New Chinese Consumers

Table of Contents

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3

A New Playground for Consumerism

A New Relationship with Brands

A New Breed of Workforce

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3 3

A New Playground for Consumerism

New Wealth

Affluent Middle Class

Common Folks

Top Tier

• RMB 500K + • 9,740,000 cards • (1% of card population)

• RMB 200-500K • 20, 390,000 cards • (2% of card population)

• RMB 100-200K • 33,050,000 cards • (3% of card population)

• RMB below 100K • 1,020,820,000 cards • (94% of card population)

Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

Basic Segmentation of Credit/Debit Card Owners

• Based On Spending Levels Per Annum

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Chinese People’s Spending on Luxury

• In 2014, the Chinese economy reached 123 trillion RMB

• By 2015, China will represent 1/3 of global luxury spending

33%

67%

China Rest of the globe

Source: McKinsey & Co.

China 2014 Entire globe 2000

Nearly three times the economic output of the entire globe in 2000

123 trillion

RMB

followed by Conrad (105%) and Indigo (45%)

Keen Interest in Travel

• Domestic travel (including business) grows by

• Overseas travel also grows by

75% • Hyatt is China’s top choice – business up by

203%

137%

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Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

287.1%

Chinese Tourists Now Buy the World

• Phenomenal outbound consumption growth

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Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

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Growth of Sending Kids Abroad to Study

• Number of Chinese studying abroad from 1978 to 2012

0

10

20

30

40

50

60

1978 1989 1992 1998 2001 2004 2007 2010 2012

By

10

,00

0

Source: The Chinese Luxury Consumer White Paper 2012

High Spending Power in Tier 2 cities

• Top 10 ranking by spending levels

Shenzhen replaces Beijing as the top spending city in 2014.

Watch out for Zhengzhou, Nanjing, Wuhan, Chengdu and Chongqing. They are

now in the top 10 !

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Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

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A New Relationship with Brands

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A Love or Hate Relationship?

• LV grows by 45.7%, with continued strong appeal across segments

45.7% (Top Tier : 66%, New Wealthy: 65%. Affluent Middle Class: 64% and even common folks at 16%)

Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

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Smaller Brands are also Growing

• Givenchy up by 131.2%, with preferences amongst all segments

131.2%

( Top tier : +145%, New Wealthy : + 183%, Affluent Middle Class + 123%, even common folks at 78% growth) Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

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Overview of Luxury Brands’ Growth

Source: UnionPay data based on 1,084,000,000 credit and debit cards in 2014

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Lack of Trust in Brands in China

• When it comes to make buying decisions, Chinese rely on people they know more than any marketing or sales channel

90%

74%

Word-of-mouth Information from people I know (family, friends, co-workers)

Social Media Such as Weibo, WeChat, Renren

Online reviews Expert review sites, forums, or product comparison

Usage Importance in decision

77%

39%

70%

44%

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Faith in Brands with Social Responsibility

• Chinese consumers strongly believe in brands with social responsibility

53.9% of Chinese consumers think companies have the responsibility of creating a sustainable society

58.6% of Chinese consumers state that they are willing to buy products from a company with more social responsibility

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Aspirations to Foreign Brands in General

• China is adept at decoding countries as brands

• Imported products are regarded as superior and trustworthy

• Brands are now tapping into the positive impressions and emotions they associate with the country

Romantic & Artistic Enthusiastic Strong & Innovative Friendly, Leisurely &

Quiet

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A New Breed of Workforce

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37.3%

41.1% 40.9%

44.8%

50.0%

54.8%

56.9%

60.3%

58.4% 58.4% 57.5% 57.8%

35%

40%

45%

50%

55%

60%

65%

Creativity Collaboration Adaptability Customer focus

80s' Base=1756

70s' Base=416

60s' Base=308

Gen-Y regard their companies perform worst in “creativity” and then

“Collaboration” and “Adaptability”. Gen-Y state that their companies perform best

in “customer focus” but they in fact aspire to “customer focus” least

Attitude towards Corporate Culture

of Current Company

Q3:What do you think about your company performance on below segments? 1 – very bad, 5 – very good.

Source: N Dynamic IBM Generation Y study 2012

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Thank You!

N-Dynamic Market Research & Consultancy Ltd. www.n-dynamic.com

Contact: Priscilla Sze priscillasze@n-dynamic.com