China’s vast consumer market defies classification. And yet, amidst the mosaic of consumers divided by everything from geography to socio-economic status, one key group has more power than most – the 300 million-strong middle class, many of whom were born after the 1980s.

China’s rapid transformation over the last four decades has given rise to significant shifts in consumer behaviour. The journey began with a focus on cost, dictated by limited disposable income that led buyers to chase the lowest prices. The narrative then transitioned to prioritising value, with quality versus price considerations becoming central. Subsequently, luxury brands started to lure in consumers, becoming status symbols for the newly wealthy.

In the wake of these trends, a new class of savvy, conscientious consumers has emerged, especially in first-tier cities such as Beijing and Shanghai. These shoppers are driven by a desire for experiences and exclusivity and are adept at applying the knowledge they have gleaned from online research to find the best product at the best price.

The lure of localised offerings

While international luxury labels continue to be popular with China’s burgeoning middle class, brands are now adapting their offerings to resonate with Chinese consumers on a deeper level and appeal to the trend of China Chic – or Guochao as it is known in Chinese. Many brands are incorporating Chinese icons or elements tied to traditional festivals or stories into their products. Moreover, limited-edition items crafted exclusively for the Chinese market are gaining traction too.

This localisation extends beyond the product to the experience. Brands must establish meaningful connections with their audience through well-chosen collaborations that have cultural resonance. For example, Diageo’s Johnny Walker Blue Label launched a Forbidden City Limited Edition bottle, while British fragrance house Creed partnered with Benzo, a rapper from Chengdu, to incorporate mention of their fragrance into his music.

The review revolution

The contemporary Chinese consumer is defined by their discernment, and their willingness to seek out the opinions of their peers. When prospective buyers first start looking for a product, their first instinct is to check opinions on platforms like Xiaohongshu and Douyin. These reviews, often from other customers with a similar socio-economic profile, play a pivotal role in shaping purchase decisions.

The significance of reviews extends across borders. A stroll down London’s Bond Street or a trip to Bicester Village reveals the same pattern among Chinese shoppers – they will not hesitate to share or seek out opinions. The digital landscape has given consumers the power to scrutinise not only a product’s quality and utility, but also the customer service and refund policies offered by brands. British brands should build awareness of these behaviours into their customer service ethos both in China and in the UK.

Influencers become the architects of consumer choice

Influencers wield remarkable sway over consumer choices all over the world. In China, these opinion shapers come in various tiers. Key opinion leaders (KOLs) – usually existing celebrities (singers, actors) or influencers with a celebrity-sized following such as Li Jiaqi – are instrumental in raising product awareness among their expansive follower bases. Key opinion consumers (KOCs) cater to niche audiences, offering detailed reviews and insights. Key opinion sellers (KOSs) leverage their knowledge and influence to drive direct sales within specific demographics, often through more private spaces such as WeChat groups (limited to 500 people).

Beyond these tiers lies the average consumer, keen on sharing their purchases and experiences online. Thus, the customer journey becomes a blend of trusted reviews, peer endorsements, and celebrity influence, all of which can have an effect on a brand’s reputation and success.

Experiential shopping is transforming the retail experience

In the face of online competition, today’s bricks-and-mortar shopping experiences must transcend transactional moments; they must deliver an immersive experience. This notion holds especially true in China, where architects are reimagining shopping malls to prioritise experiences over conventional retail spaces. Simon Mitchell from renowned architecture firm Sybarite explains how malls are transforming into hubs of art installations, public spaces, green zones, and socialising spots. This change is indicative of a larger shift from shops as mere storage spaces to showrooms.

Technology is completely intertwined with this experience, with virtual reality (VR) and augmented reality (AR) empowering consumers to make more informed choices. VR and AR tools facilitate personalised interactions, allowing customers to visualise products in their lives before purchasing. British brands such as Molton Brown and Burberry have already started leveraging digital platforms to craft bespoke experiences that seamlessly merge the online and offline worlds.

Conscious consumerism: The ethical imperative

One of the newer threads running through China’s middle-class consumption trends is the growing awareness of ethics and sustainability. Young Chinese consumers are no longer just buying products; they are investing in brands with sound ethical and environmental foundations. This change has prompted companies to integrate sustainability into more aspects of their operations. Consumers demand more than symbolic corporate responsibility; they seek authenticity, transparency and community engagement.

Shaping the future of consumption

The story of China’s middle-class consumer is one of transformation, shaped by a rich tapestry of historical shifts, technological leaps and ethical considerations. This dynamic narrative continues to unfold, offering brands an unparalleled opportunity to be part of the journey that is shaping the future of consumerism in China and beyond.

As China’s consumer landscape evolves, brands are compelled to adapt or risk irrelevance. A symbiotic relationship between consumers and brands has emerged, where shared values and experiences define success. The road ahead demands ethical practices, localised offerings, immersive experiences, and a genuine commitment to community development.

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Guochao, which translates to “national trend” – or can be more eloquently translated as ‘China chic’ – encapsulates the rise of Chinese brands that celebrate and promote Chinese cultural identity. This movement gained momentum during the Covid pandemic, raising questions about whether China’s nationalistic sentiment intensified during the crisis. Now, as China gradually opens up again, is the country still embracing internationalism, and does the allure of Western brands hold strong?

China’s emergence as an economic powerhouse led to a growing sense of national pride and confidence among its citizens. This shift in attitudes paved the way for guochao, as consumers sought products and brands that reflected their Chinese identity. Domestic brands embraced this opportunity by incorporating traditional Chinese elements, symbols, and designs into their products and marketing campaigns.

Chinese consumers displayed a strong preference for locally-made products, leading to a shift away from Western brands. Chinese online celebrities or influencers, known as “wanghong”, played a crucial role in promoting guochao brands through social media and live streaming platforms. They effectively captured the attention of Chinese consumers, fostering a sense of patriotism and national unity.

The Covid pandemic further fuelled nationalistic sentiments among Chinese consumers. As the world grappled with the crisis, China’s swift response to contain the virus resonated deeply with its citizens. Combined with an inability to travel internationally and experience overseas retailers, a collective sense of resilience and pride intensified support for local brands.

Amid the pandemic, China’s focus shifted inward, emphasising self-sufficiency and reducing reliance on foreign products. Chinese consumers actively sought alternatives to Western brands, turning to domestic options for their daily needs. But this trend was not limited to essential goods; it also extended to fashion, cosmetics, and lifestyle products, where guochao brands gained significant market share.

In recent years, some Western brands have faced challenges and experienced a decline in popularity as Chinese consumers shifted their preferences towards domestic brands. Fast food brands, including KFC and McDonald’s, both saw their sales decline as Chinese consumers sought out Chinese alternatives or options that celebrated Chinese culture and traditions. Likewise, Coca-Cola, a quintessentially American brand, faced competition from Chinese beverage companies that offered products infused with Chinese herbal elements or regional flavours, appealing to the patriotic sentiments of consumers.

Whilst Western brands are still showing strong growth in the Chinese market, they have faced more fierce domestic competition and have been forced to adapt their strategies, incorporate Chinese elements into their products and marketing, and actively engage with the guochao trend to regain or maintain relevance among Chinese consumers. The key for brands is to understand and respond to the changing preferences and to strike a balance between their international identity and the local cultural context.

CBBC’s Antoaneta Becker, who recently returned from a fact-finding trip to China, notes that one of the main differences post-pandemic verses pre-pandemic is the demand for ‘China Chic’ and that ‘In China for China’ is now a prerequisite for brands to succeed in the Chinese market. “Western brands must show appreciation of Chinese heritage to relate to Chinese consumers,” she says.

Many foreign brands have successfully navigated the nationalistic branding environment and created campaigns that have resonated with Chinese consumers, managing to leverage the trend to further build their presence, with many luxury brands leading the way.

“Luxury brands are trying to make their brands more accessible and integrated into people’s lives,” says Natalie Lowe CEO and Founding Partner of The Orangeblowfish. She gives the examples of Prada – who recently opened a store in a local fruit and vegetable market in Shanghai, and Louis Vuitton, who opened a restaurant in a heritage building in Chengdu – further enabling the brands to integrate into the local community and connect with the country’s history and culture.

Apple has also emphasised its commitment to the Chinese market by launching region-specific features, offering localised services, and partnering with Chinese celebrities for endorsements. Starbucks has also incorporated Chinese elements into its store designs and limited-edition products, releasing collections featuring traditional Chinese motifs, such as the Chinese Zodiac or local landmarks, which resonated with Chinese consumers.

Meanwhile British luxury fashion brand Burberry has integrated Chinese elements into its designs, using traditional Chinese motifs like the dragon and the colour red, and also collaborated with Chinese celebrities to create exclusive collections, leveraging their influence to connect with Chinese consumers and foster a sense of cultural pride.

Josie Zhang, President of Burberry China, said that their newly launched social retail store, ‘Open Spaces’, in Shenzhen, is the company’s pride and joy. “Chinese consumers are extremely passionate about fashion, and are socially savvy and eco-conscious,” she says. “Heritage is in our DNA, but today’s consumers are setting the tone, so we spent a lot of time thinking about how to bring together heritage, fashion and modernity with classic design to fit that demand.”

Burberry’s digitally immersive Shenzhen store merges online and offline with a high degree of localisation. The brand created special capsule collections were created for Chinese Valentine’s Day and Lunar New Year, as well as further incorporating Chinese elements into its designs.

Atul Chhaparwal, Managing Director of Diageo for Greater China, explained that entering the China market with imported spirits is a challenge when 98% of the marketplace is dominated by the domestic spirit baijiu. However, he said Diageo has a strong localisation policy and is continually innovating products to appeal to Chinese consumers whilst respecting local culture. “We produced a Forbidden City Limited edition Johnny Walker Blue Label whisky and are creating designs for Chinese festivals, including Lunar New Year,” he said.

A company’s ability to strike a balance between its international heritage and Chinese sensibilities will play a vital role in capturing the attention and loyalty of Chinese consumers going forward.

As China gradually emerges from the pandemic, the desire to consume Western products remains, but it is now imperative for those brands to have localised products and strategies for the Chinese market. Gone are the days of simply selling Western products using Western marketing techniques.

In an era of increasing global interconnectedness, it is crucial for brands operating in China to respect national policies and cultural sensitivities too. Companies must strike a delicate balance between capitalising on Chinese patriotism and embracing internationalism.

Brands must demonstrate a genuine commitment to understanding and respecting local customs, traditions, and values. Incorporating Chinese elements into marketing campaigns can still be impactful, but it should be done thoughtfully, avoiding any potential cultural appropriation or insensitivity.

Collaboration with Chinese influencers and celebrities remains a powerful tool to achieve this goal. By engaging these KOLs, brands can tap into their reach while aligning their messaging with national policies.

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1. How to travel to China in 2022

Can you travel to China right now? The short answer is yes, but there are processes in place that you need to follow. Tom Simpson, CBBC’s Managing Director of China Operations and China Chief Representative, recounted his journey to China from the UK in August 2022 and shared important tips for those looking to do the same.

Note that as China’s zero covid apparatus starts to wind down at the end of 2022, the requirements for quarantine, testing and health codes are likely to change rapidly, so be sure to check before making travel plans.

2. How does Xiaohongshu work and why is it so popular?

Often compared to Instagram or Pinterest, Xiaohongshu (or RED in English) helps users discover and buy luxury, fashion and beauty products. What is notable about Xiaohongshu is that it has created an environment that allows consumer hype to drive exposure rather than the brands themselves setting the narrative. Fans come to the platform to hear the real story on foreign fashion brands or to get the inside scoop on beauty tips and tricks with the products they use every day from people they can relate to. With the cost of media in China ever-rising, using Xiaohongshu as a sandbox to find your brand’s community in China is a savvy way to test the market in 2022 and beyond.

3. The best 2022 Beijing Winter Olympics advertising campaigns

The Winter Olympics naturally generated plenty of column inches at the start of the year, but Focus was interested in how businesses interacted with the event. For example, major brands like Coca Cola and P&G created advertising campaigns that incorporated local Chinese elements — a trend that is likely here to stay in 2023 — while others turned to brand endorsements from the biggest star of the Winter Olympics, Eileen Gu. What’s more, simmering international tensions meant that brands had to think carefully about the tone and content of their advertising, something that will continue to be a key consideration when interacting with the Chinese market. 

4. China’s real estate crisis explained

China’s real estate sector used to be a key driver of the economy, but the tide turned in 2021-2022 and now it’s starting to drag. Failure to regulate the sector in boom has left the country with limited options in bust, and as a result, in 2022, UK companies were beginning to be impacted because Chinese partners were defaulting on their payments due to cash flow issues.

In November 2022, the Chinese authorities unveiled measures to rescue the struggling real estate sector, including credit support for indebted developers; however, in the long-run, ambitious structural reforms concerning how the developers work with local government, state-owned banks, and their customers will be required.

5. Are Gen Z Chinese consumers getting tired of the guochao trend?

The term guochao (国朝), meaning ‘national trend,’ refers to a trend in which young Chinese consumers are increasingly interested in the integration of traditional Chinese culture and style with domestic brands and products. Since 2018, brands like L’Oréal, KFC and Oreo have attempted to tap into this trend by showcasing designs and collaborations inspired by Chinese culture. However, a slew of unpopular collaborations and product launches show that to successfully navigate the guochao trend going forward, brands need to showcase a deeper understanding of Chinese culture and the preferences of their target audience, rather than simply sticking Chinese design elements on product packaging.

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The term guochao (国朝), meaning ‘national trend,’ refers to the fact that young Chinese consumers are increasingly interested in the integration of traditional Chinese culture and style with domestic brands and products.

The guochao movement rose to particular prominence in 2018 following Chinese sportswear behemoth Li Ning’s debut on the international fashion circuit at New York Fashion Week. Showcasing men’s streetwear collections imprinted with colour palettes and slogans popular in China in the early 20th century, Li Ning’s catwalk made Chinese nationalism a trendy fashion statement, tapping into a rising sense of cultural confidence among Gen Z Chinese.

While the guochao movement has been most notable for boosting domestic Chinese brands like Li Ning and Anta, the emerging consumer trend also prompted savvy brands to tap into the country’s growing cultural self-esteem. Many brands have come up with their own guochao-inspired creations through collaborations with important Chinese cultural institutions such as The Palace Museum (aka the Forbidden City). From beauty brand L’Oréal to biscuit maker Oreo, marketers from around the globe have sought to package themselves with so-called cultural IPs in a bid to win over the lucrative Gen Z demographic.

As China-proud narratives have flooded the market, some have been praised for showing respect to the local culture, while others have incurred a backlash from disappointed consumers. American chocolate maker Dove and Chinese alcopop brand Rio were among the latter.

Dove chocolate’s 2020 Lunar New Year collaboration with The Forbidden City

Internet users were disappointed by Dove’s customised Lunar New Year 2020 gift box in collaboration with the Forbidden City. Comments noted that the special-edition boxes looked no different from any other candy boxes due to the limited application of elements from The Palace Museum, with only a small logo printed on one corner of the box.

Alcopop brand Rio’s collaboration with insect repellant Liushen Florida Water

Rio’s ‘insect repellent-flavoured’ cocktail also got given the cold shoulder. It was a bold move to partner with a household name like Liushen Florida Water, China’s favourite brand of mosquito repellent, and the campaign sparked fevered buying when it first launched among consumers intrigued by the bizarre flavour and the creative packaging that replicated Liushen Florida Water’s distinctive bottle design. However, once consumers actually tasted the drink they quickly took to the internet to express their disappointment.

Collaborations that are deemed superficial or adopt inappropriate cultural elements not only fail to resonate with the target audience but also put the brand’s image at risk, ultimately resulting in a loss of consumer interest. The unenthusiastic consumer reactions to campaigns like those from Dove and Rio have started to sour guochao-themed campaigns overall, suggesting that some Chinese consumers are starting to experience ‘guochao fatigue.’

However, recent consumer research led by Aurora Mobile (a Nasdaq-listed Chinese big data solutions platform) found that guochao consumption in China is yet to reach its peak. While 70% of China’s post-1990s generation are regular buyers of homegrown brands, the figure rises to nearly 80% among the younger post-2000s demographic. Moreover, consumer interest has been expanding to lower-tier markets after successfully penetrating markets in major first and second tier Chinese cities. It has been reported that domestic brands are the go-to choice for approximately 66% of the population in first tier cities, with more than 80% of consumers from China’s tier three or lower-tier regions embracing national brands. This can be attributed to improved quality that satisfies consumers’ demand for functional, good value products, but also because products and brands are fulfilling an emotional need for national pride.

L’Oréal produced a series of five limited-edition lipsticks in collaboration with The Palace Museum, which were well-received by consumers

Meanwhile, products that incorporate Chinese elements still seem to be appealing to China’s younger generations, with 83.5% of post-1990s consumers showing a strong interest in these offerings. Of these, nearly 30% have turned that interest into an actual purchase, with the same percentages rising to 88.1% and 40% respectively for the post-2000s generation. Furthermore, rather than losing its appeal, the guochao trend is believed to have entered a new era, with the so-called New Chinese Style emerging to drive quality up. Continuing the principle of infusing modern designs with Chinese culture, the new trend appears to be bolder in adapting Western aesthetics and has been penetrating markets such as interior design and fashion, with the latter gaining significant popularity among China’s Gen Z.

It is worth noting that the standards applied to guochao products are being driven continuously upwards by savvy Chinese consumers, who reject collaborations and designs that simply borrow a traditional feature without an effective connection to the brand’s own products. Brands that can create synergy between their own specialisation and the enthusiasm for the guochao movement, on the other hand, can stand out from the crowd and make themselves favoured brands. For marketers who want to capitalise on the guochao trend, this shows the importance of thorough research and well thought out campaigns.

So are consumers getting tired of the guochao trend? The answer, at least for the moment, is probably not. When consumers turn their back on guochao-inspired offerings, it is not because of a lack of interest, but rather because they disagree with the approach brands are taking.

While consumer interest in guochao is still very much present, it has become more sophisticated. The time when putting an existing product in Chinese-style packaging could win a round of applause is long gone. To remain competitive in the battle for successful guochao marketing campaigns, brands need to deepen their understanding of their target audience as well as the culture they exist in.

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