Chinese consumers are increasingly craving premium-tier products to underscore their success, says Nielsen China.
The market research company defines premium-tier products as items that cost at least 20 per cent more than the average price for the category.
The global information company’s retail sales data, which covers major retail chains, shows that factors on both the supply and demand side are driving the growth of the premium segment in China.
And in a Nielsen survey, 56 per cent of Chinese said they buy premium products in order to feel successful or show their success to others.
Also, 48 per cent of consumers said they are willing to pay a premium for electronics, followed by clothing and cosmetics (both 38 per cent).
Many consumers have greater buying power than ever before, with purchasing power growing from 7 to 9 per cent annually in China.
“With increasing affluence, consumers are craving products that offer an enhanced, premium experience,” says Nielsen China MD Vishal Bali. “Beyond basic needs and benefits, Chinese consumers are making purchase decisions based on how products make them feel.”
In its study, 65 per cent of online respondents in China said they will try a new and innovative premium product based on the recommendations of friends and family. Additionally, 60 per cent said of respondents said they are “very willing” to pay for premium products with high quality and safety standards.
Electronics favoured
Chinese consumers are most willing to pay a premium for electronics, says the study. Globally, 42 per cent of consumers say they are willing to pay a premium price for electronics, while in China the number reaches 48 per cent.
Apart from electronics, 38 per cent of respondents in China said they are willing to pay for a premium offering in clothing and cosmetics. Globally however, 39 per cent are willing to buy premium clothing while only 33 per cent say they would buy a premium offering in cosmetics.
Other key categories where Chinese consumers are willing to pay a premium include dairy products (37 per cent), cars (32 per cent), oral care (31 per cent) and meat and seafood (30 per cent).
Status is also a more important consideration for consumers in China compared to the rest of the world, with 54 per cent of respondents saying they buy premium products because these items show other people that they have good taste. Premium products are also regarded as an important indicator of accomplishment, with 56 per cent of Chinese respondents saying they buy premium products because it makes them feel successful or (also 56 per cent) shows other people that they are successful.
“Emotional motivation is a key factor for Chinese consumers, and we see premium products driving this trend,” says Bali. “Consumers want unique experiences they can share with their friends. They want products that express their individual taste while also projecting a positive image of success and status.”
