The implications of the changing geopolitical situation from a macroeconomic perspective are somewhat well appreciated – deglobalisation or rearranging of supply chains, its inflationary effects and interest rates. However, this article in The Conversation suggests there are implications from a microeconomic perspective as well, such as changing consumer preferences and hence how businesses should think about product designs. Specifically, it highlights the booming Gen Z generation in China whose consumption preferences reflect rising nationalism.
“Like their western peers, China’s “gen Z” consumers are avid users of social media, but that is where the similarities end. This generation has grown up during China’s rapid economic development in the 2000s and 2010s, which is a marked contrast to their peers in the west, who came of age in the shadow of the 2008 financial crisis. As a result, they have been characterised as being more confident and better educated than previous generations.
Another notable characteristic of this generation has been its size, being one of the largest generations since the baby boomers in Europe and North America. The parallels between the two have been readily apparent with both enjoying significant cultural, economic and political influence, with China’s gen Z being labelled as the next “baby boomers”.
As a result, China’s young adults are well placed to influence future decisions, which will be based on their world view.”
And the influence is via their consumption habits:
“One of the most notable signs of this has been in the rise of guochao (国潮), roughly translated as “national wave”. Brands from this movement have sought to combine Chinese traditions with modern designs.
Guochao’s success has been illustrative of several developments within China. Firstly, it shows how consumer habits have changed, with more younger consumers wanting to see their culture incorporated into consumer goods, favouring local brands over foreign ones.
This reflects a different view of Chinese identity among gen Z and millennials for whom China has always been a strong nation that rivals the western world. Guochao’s efforts to redefine the meaning of “Made in China” strikes a chord as it aims to move away from its association with cheap, poor-quality products that were the hallmark of the early days of China’s development.
As a result, the consumer habits of younger Chinese have not only shaped China’s perceived identity but has presented a notable challenge for foreign brands.
Another development that has illustrated the influence of younger Chinese consumers has been the popularity of traditional clothing, most notably the traditional long sleeved robe, the hanfu (汉服). The market for the costume has grown significantly and is expected to be worth US$1.85 billion (£1.54 billion) in 2022.”
This presents challenges to global consumer companies keen on tapping growing Chinese demand:
“The most obvious challenge posed by young Chinese consumers has been in how they favour domestic brands over foreign ones. This has often been interpreted as a form of “consumer nationalism”, most notably in the boycotts against Nike and Adidas in 2021 over their decision not to use cotton from Xinjiang province. The fact that neither brand has fully recovered its position in the Chinese market illustrates the potency of this.
Coincidentally, it was this backlash that would see Chinese brands such as Anta and Li Ning Co outpace their western rivals) for the first time since their entry to the Chinese market.”
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