Dark kitchens and little red books.
This article is about Chinese millennials, with some insights on how they live and shop. It was first published in April 2019 in Dutch Marketing Journal Adformatie.
Funny little differences
The differences in consumer behaviour between countries remain fascinating. We understand that Dutch lingerie is completely irrelevant in France. Beer in England is really different from the Belgium preferred taste. John Travolta in his role as Vincent Vega genuinely explains the "funny little differences" between the US and Europe in Pulp Fiction: "in Paris you can even buy a beer in McDonalds".
If, on the other hand, we compare our Western consumer behaviour with that of Chinese citizens, the differences are enormous. I visited the country a few times with sinologist and marketer Froukje de Jong. Together we've seen various retail concepts and interviewed professionals. The consumer behaviour of Chinese "millennials", especially women between 20 and 30 years old, is remarkable. I spoke with them about how they live and shop, and what they miss when they travel to Europe.
Born from start
The growth of the Chinese economy from 1990 to date is the highest in the world at an annual average of 10%. This is exactly the same period in which these millennials grew up. The group is large and very influential. With around 400 million they determine the success of almost all significant changes in technology and retail in China. Whether this concerns new "online to offline" retail, smart mobile apps or mobile payment, they are the core customers pushing these innovations forward.
Don't think life is easy in China. Millennials feel a tremendous pressure, as they are almost always the only child and therefore receive relatively much financial support from their parents. At the same time, everyone is also looking at how successful they are in the big city. Many of them work 6 days a week from 9AM to 9PM. Their housing costs are often extremely high, in some large cities even more than 50% of their income. They are also supposed to marry before the age of thirty.
The people I met were independent, articulate, and open-minded. They dress at least as fashion conscious as European millennials. Japanese Uniqlo is the most popular fashion label for this group. They are aware of the fact that they cannot use our digital platforms such as Google and Facebook, because they are blocked.
Instead, they use more advanced platforms like WeChat, which are (in)directly controlled by the government. But the idea of "big brother", as we would interpret this, is not an issue. After all, this political and economic system has given their generation so much prosperity. They say: "What would I have to hide?"
No cash in your pocket
We all know China is a cashless society. All payments go through the two leading payment platforms linked to smartphones: Alipay and WeChat Pay. There are hardly any ATMs. Sometimes they have a little bit of cash in their pocket, in case a smartphone's battery runs out. But that almost never happens to them, because every coffee shop has "power banks" for rent, from a vending machine.
When they travel to Europe, they are again confronted with credit cards, and that’s “quite a nuisance”.
Meal delivery in a fast train
They travel a lot, both within and outside of China. With 27,000 kilometers of high-speed railway, the Chinese network is the largest and most advanced in the world. Think Thalys or Eurostar but much faster and brand new. Hungry somewhere along the trip? You can order your lunch via China Railway’s app; the lunch will be picked up by the conductor at the preferred train stop on the platform. Very handy. Biking is much slower than these fast trains, but very convenient because of the several bike share options. You can grab a bike in any city via a "sharing" app, like Ofo or Mobike.
For a few Euros a month you can borrow a bike as often as you want, up to 30 minutes at a time. Uber has no presence in China, the local ride sharing platform is called Didi. They offer "long distance rides", quite handy to bridge those huge distances.
Who needs mail?
I wanted to interview Liqi, she lives in Hangzhou and I emailed a few times to schedule an appointment. There was no answer. She is VP of a large tech company and she told me that e-mail is hardly used in both private and business communication. All business communication is done via the company app, and for the rest there is the all-in-one app WeChat. "Who needs mail, René?" Contrary to e-mail, QR codes are very widely used. You can even transfer a few Yuan to a street beggar, if you could find one, by scanning his QR with your smartphone.
Douyin is addictive
What do you do if you get bored, for example, in the metro? Almost everyone I spoke to uses Douyin intensively. Douyin offers short and funny videos, not just for millennials. With 400 million users every month, it is super popular and addictive. In Europe Douyin is getting traction under the name of TikTok. Inez told me that she never listens to Spotify, because there are no Chinese or Korean songs on it. Instead she uses QQ or Wangyiyun. She prefers to sing Karaoke songs and the songs of popular Korean TV series. But there is also the Changba app; a kind of Instagram for sound, where you can sing a long.
Ordering three times per day a meal with a food (delivery) app is not an exception. Breakfast could be ordered via food delivery app ele.me. Lunch might be ordered together with friends in a café around the corner, booked through the DianPing app. DianPing is a cool and popular mix of Groupon, TripAdvisor and Yelp functionalities. Because you're booking together, there is a discount. In the evening people might order a meal at home, for example via the Hema Supermarket app. Inez even chose the location of her flat near Hema because she can have all groceries and meals delivered to her home, 24 hours a day, for free.
Coffee is gaining ground in the tea dominated China. Millennials like to go to market leader Starbucks, with 3,300 outlets the dominant player. Fast growing challenger Luckin Coffee does it slightly different: with lower price points, hardly any waiting and less seats. In the Luckin Coffee shop you can only order coffee with your app. And of course they also deliver to your office, very convenient.
The number of "dark kitchens" is growing fast in large cities. Staff is preparing and cooking meals that you can order via the Meituan app. "Dark" because you simply cannot go there to sit at a table or to take away.
Gucci is not Guggi
More than 40% of all e-commerce in the world takes place in China. So the dominance of China in e-commerce is immense: the number of transactions is greater than that of France, Germany, Japan, UK and the US combined. That’s happening in all categories, but beauty and luxury items are growing remarkably fast. Chinese consumers are more occupied with where they can buy what: on which platform, or then again in the mall? Taobao and JD have opened specific online platforms with which they want to reduce the chance of counterfeit brands. Consumers scan the reviews well and view the product photos. After all, a Gucci is not a Guggi. The higher the price point, the more customers want to be convinced of the authenticity. Then the mall is a perfect alternative. High end luxury malls are fine, but there are also some shopping centers where you might be less convinced whether it is all genuine. And then online shopping is better again.
The little red book
Confidence in online platform Xiaohongshu (Little Red Book) is high. It once started as a kind of Pinterest but it is now an important e-commerce platform for fashion conscious women, with a lot of user generated content. Users look closely at what "KOL’s" (key opinion leaders or influencers) "like" and "prefer." But just like in Europe, there are many Chinese consumers who have doubts about the authenticity of KOL’s. Cai Hong said: "I no longer believe their sales pitch".
I spoke to someone who regularly stays both in Europe and China, and she buys a lot online in both continents, here in Europe at Amazon and in China at JD or Tmall. She had noticed that in China product recommendations and in-app suggestions were much better tailored and personal than in Europe. She found the online experience in China more relevant than in Europe. The eco-system in China might connect more data, the data pool is much larger anyway and therefore more intelligent, or the quality of the learning algorithms is better. "Who knows ..."
Jing feels no constraints with e-commerce delivery orders and returns. Many apartment blocks have a wall behind the front door with lockers in which all e-commerce packages are deposited by the delivery man. You can take it out yourself later with an app.
She was recently in Amsterdam in a new apartment block and she was really surprised that there were no locker walls for e-commerce orders.
Do the laundry with an app
If you work long days, as people do in China, it is nice that stores are open 7 days a week, and also until 10 PM. In large cities, some convenience shops are open 24/7 and that also applies to certain restaurants. When Liu is in Europe she finds the opening hours of Dutch stores, from 9 AM to 6 PM, much too short. In France and Germany, almost all stores are closed on Sundays, “very inconvenient”. Of course, there are apps for the small time-consuming things. Laundry service is available via the Edaixi app. For just over 1 Euro the laundry is being picked up and returned 72 hours later. Deposited in the locker wall.
Vivo or Oppo
A young woman sat next to me in a restaurant. Her phone was from Oppo, a local brand. I asked: "why not Apple?" "No way, maybe in the past, but certainly not now”. Apple's model X costs more than twice as much as the local brands, with fewer functions. Brands such as Oppo, Vivo and Huawei have looked at Apple for a long time, and perhaps a little too well. But in the meantime, they are taking over pole position. Xiaomi also belongs to the same set of very successful local brands. But in addition, the Chinese can not only buy telephones in Xiaomi's stores (Mi stores) but also other household and lifestyle products. All perfectly designed in a mix of Muji and IKEA design signature.
Young Chinese women are picky when it comes to getting married. They want a man who is at least as smart as they are. Not getting married would cause a lot of hassle with the parents. Dating apps such as Zhenai (video app with "blind dating") and Tantan (sort of Tinder) solve that problem. But in a number of large cities there are marriage markets, the most traditional "trade" platform I've seen in China. Mothers promote their unmarried son or daughter through a sheet of paper on a brightly coloured umbrella. Hoping to find a partner.
But many young women are proving that turning into 30, being happy and being single is also possible in China, as in Europe. So finally some similarities. But when it comes to (online) shopping and using apps, the differences with Europe are bigger than the similarities, Chinese millennials are way ahead.
Thanks Jing, Liqi, Inez and others for sharing your insights and stories with me.