Michael Stanat, author of "China's Generation Y," looks at some of the forces of change that are buffeting China and how researchers can respond to them. Published in Quirks Market Research magazine in April 2015. By Michael Stanat, SIS International Research, http://www.sisinternational.com

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China’s Millennials represent one of the largest population segments in the world, with over 300
million people. Born during unprecedented times of economic growth and development in the 1980s,
this generation now wields substantial influence on business, economic development and culture.
Unlike in Europe and America, studies show that China’s Generation Y is economically
better off than their parents. They are one of the best-educated and most affluent seg-
ments and have more English-speaking people inside the country than any generation in
the past. This young generation continues to steadily exert their influence on the world’s
second-largest superpower in society, business and culture.
For the first time in years, economic growth has begun to slow from 10 percent to rates around
7 percent annually. Some fear that declining growth, an aging population and other challenges
could further reduce economic expansion. The Chinese government recently enacted policies that
favor transitioning to a more consumption-based economy. This may challenge the sensibilities of
Chinese consumers who traditionally value saving cash over consumption.
These seismic changes will significantly impact peoples’ attitudes and behaviors in the
marketplace. For researchers, understanding consumer attitudes and behaviors in this
quickly-developing marketplace is important. Consider the following changes and trends
impacting China’s huge Gen Y demographic.
The evolving Internet culture. China has almost double the number of Internet users
than the entire U.S. population, with recent estimates putting that number at 600 million
people and growing. Gen Y is very socially engaged and represents the majority of Internet
users in China. Global research studies have shown that Millennials there spend much
more time online than their contemporaries in other developed economies. These habits
are important to marketers and researchers who aim to generate insight on attitudes and
preferences, track changing trends and uncover opportunities.
Chinese social media is diverse and expansive, featuring its own domestic social brands includ-
ing Weibo (microblogging) and WeChat (instant messaging). Internet memes, viral media and online
slang are increasingly popular among young citizens, despite Internet restrictions and occasional
Michael Stanat looks
at some of the forces
of change that are
buffeting China and
how researchers should
respond to them.
••• marketing research in china
A growing
force
The innovation generation in a changing
China
| By Michael Stanat
snapshot
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censorship crackdowns. Because social
media is vital for this generation, they
are more brand conscious than those
who have come before them. The nature
of social media, which encourages peer
review and sharing of reviews, increases
the importance of word of mouth and the
need for customer feedback.
Mobile and e-commerce innova-
tion. Every day, hundreds of millions
of people access their smartphones in
China. According to the government’s
China Internet Network Information
Center (CNNIC), 2014 was the first year
that more people accessed the Internet
by mobile than by personal computers.
It’s no surprise that the demand for
mobile devices is high. A Washington Post
report in late 2014 found that versions
of iPhone 6 were fetching over 10 times
their selling price in the U.S.
Apple and Samsung have spent years
vying for market share. Xiaomi, a new do-
mestic competitor with far less economy
of scale and marketing power, has recent-
ly threatened to significantly disrupt the
market with its affordable smartphones.
Founded in 2010 by former Google execu-
tives, Xiaomi has made industry inroads
by marketing its affordable, high-quality
products through effective online social
media campaigns. Of course, competition
in the world’s largest smartphone market
is notoriously fierce. Xiaomi’s rapid
ascent to a 14 percent market share in
2014 (according to the Wall Street Journal) is
most impressive, considering it appealed
heavily to urban Millennials and de-
signed its products with a mix of foreign
and domestic talent. The significance of
this accomplishment cannot be under-
estimated in China’s highly competitive
consumer electronics industry.
Xiaomi subsequently received glow-
ing press and praise for its successes
in Asia. In January, it announced that
it intended to expand in Brazil and it
made further waves by hinting at pos-
sible expansion to U.S markets.
E-commerce. It’s a common percep-
tion that Chinese firms are traditionally
better at imitation than innovation
but this view is now being challenged.
Recently, Chinese firms have made bold
strides in e-commerce. One example is the
Alibaba Group, which recently launched
one of the world’s largest IPOs, surprising
investment analysts around the globe.
The growth of e-commerce in China
is unprecedented. A decade ago, Chinese
consumers were wary of online trans-
actions. They tended to prefer face-to-
face buying, customer service and cash
transactions. These elements were the
key drivers of product quality.
The rise of e-commerce in China is
doubly surprising because the red tape
of importing and exporting products
there can be extremely challenging.
China places significant tariffs and cus-
toms restrictions on foreign imports.
Statistically, China ranks 90th out of
180 countries in the World Bank’s Ease
of Doing Business reports.
Alibaba’s online portfolio of Web sites
has proven to be tremendously successful.
Tao Bao is an online marketplace where
consumers and businesses can buy and
sell goods. T Mall, operated by Alibaba,
provides online storefronts for manu-
facturers. This B2C platform has enabled
Western multinationals to more easily
export to China, bridging cultural gaps and
allowing businesses to successfully enter
this burgeoning new marketplace and to
reassure Chinese consumers regarding the
affordability and quality of their products.
Travel and tourism. The rise of
the middle class has enabled a growing
segment of the population to travel
internationally. Chinese tourism is
on the rise and it is reaching beyond
Hong Kong, Macau, Japan and South
Korea. Increasingly, these tourists are
heading to Europe and to the U.S.
While Chinese consumers’ interna-
tional tourism habits have traditionally
focused on sightseeing in capitals and
large cities, Millennial tourism is broad-
ening to leisure, beach travel, backpack-
ing and other recreational tourism.
Our firm has conducted in-depth
research among Chinese leisure and
business travelers, journeying inbound
to and outbound from China. There are
important factors influencing the prefer-
ences of Chinese travelers. Additionally,
Chinese culture tends to strongly value
relationships and word of mouth. As a
result, group travel is popular. Feedback
from friends and family is important in
decision-making when choosing destina-
tions and hotels. For international travel,
customized hospitality and amenities that
make them feel comfortable and at home
are viewed positively. Chinese-language
service and food service are also helpful in
improving the travel experience.
Wine, beer and spirits market.
China is already one of the world’s largest
wine markets and is the largest red wine
market, surpassing the U.S. and France.
Western wines, beers and liquors are
quickly becoming popular.
Interestingly, wine and beer are sta-
tus symbols among urban young people
and have become signs of China’s growing
middle class. In my experience research-
ing China’s Millennials, premium alcohol
brands can serve as a form of conspicuous
consumption to communicate status in
a hierarchical society. Relationships and
guanxi, or one’s status and social network,
remain very important cultural values.
In addition, gifting is an important
cultural value and driver of wine sales,
particularly during the holidays.
Innovation is already happening in
packaging, digital marketing and logis-
tics. It may be some time before Chinese
wines become an export to Europe and
the U.S., but in Africa and other emerg-
ing markets where China’s influence is
rising, that day could come soon.
Recommended research approaches
In terms of recommended research ap-
proaches to make sense of this evolving
landscape, hybrid methods can be helpful
when researching dynamic subjects.
Ethnography, both in-person and online,
can be useful in understanding lifestyles,
values, norms and buyer experience. It
can convey visually how people view the
world and the changes happening in it.
Focus groups and in-depth interviews can
provide deep insight to changing trends
and perspectives. Quantitative methods
can test and measure findings. Given the
rise of many customer touchpoints, new
online methods can be implemented in
places where Internet users congregate.
Much is changing for Chinese
Millennials – their economy, technology,
business, culture and attitudes. The sky-
lines of Chinese cities are changing, as are
the fundamental ways people communi-
cate. Who better to help businesses as they
take stock of the opportunities and chal-
lenges presented by Chinese Millennials
than researchers? No one is better suited
to adding value by guiding organizations
in their understanding of the evolving at-
titudes, opinions, habits and preferences
of this powerful group of consumers.
Michael Stanat is global marketing
director at SIS International Research,
New York.
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