China's Gen-Z affects brands in every aspect

GENERATION Z: DRIVING BRAND PREFERENCE SHIFTS IN CHINA

Generation Z is changing the brand landscape in China in every possible way. From product positioning to retail strategy to marketing, people under 30 are the major decision-makers shifting brand preference in China.

For example, take Three Squirrels. While the name might seem strange (except to certain Campaign staffers) the brand increased its brand ranking by 43 spots and made it to the top 100 brands in China this year. Three Squirrels is a popular nut-snack seller in China. Founded in 2012, it started as a small Taobao store. It soon caught people's attention with its cute packaging and user-friendly service. According to Three Squirrels, about 62% of its customers are aged between 21 and 30—mostly working women in top-tier cities. These people don't like the old style of purchasing snacks offline. They want a fast and customized service that makes them feel valued. They also want to be on top of trends.

Three Squirrels

Three Squirrels has put its products into a number of popular TV series and invests heavily on social media—where young people spend most of their time.

"For marketers, trend movements help to highlight the most promising audience segments in China—namely Gen Z, small-town youth and the middle class," said Claire Zhao, vice president of strategy for China at Essence. "These segments are typically classified as core targets for most brands, and this is reflected in the media channels that brands choose to utilise when promoting campaigns." 

Generation Z can also rejuvenate old brands. Li Ning is an example. It is the seventh strongest local brand this year in China. Li Ning used to bear the stereotype of "outdated sportswear". But it recently became a trendy superstar among young people. With new designs that fit the post-modern trend, Li Ning's several debuts on Paris and New York fashion week rebranded it as fashionable and young. This is a trend welcomed by Gen Z, and Li Ning is part of a China-centric design trend across all local brands, known as 'China chic'.

Li Ning

"China-chic is not a trend that stands alone as something unique to China," said Zhao. "Its rise is the combined outcome of the global nostalgia or retro trend reflected in local style and design elements, as well as the uptick in China’s economy. This is similar to the demand for ‘Made in Japan’ goods in China, which has been sustained by the rise of cross-border purchases via e-commerce platforms."

For campaigns communicating China chic products, brands usually focus on social media, e-commerce, livestreaming and key opinion leaders (KOL) to generate buzz quickly. "For newer brands, this approach can potentially help them to overtake existing big players quickly," said Zhao.

Gen Z consumers increasingly favour domestic brands. Favouring local brands reflects the changing mindset of consumers in recent years, as Zhao observed. Covid-19 and the economic downturn have reinforced the pursuit of value for money, rather than brand fame and a premium feeling. Choosing local brands is now seen as a smart choice, instead of merely picking the more affordable replacements of international brands; it's something consumers publicly express and brag about on social media.

"Given the advantages in domestic manufacturing, local brands can also offer an always-on renewal of products and produce an extensive variety of products tailor-made for local consumers on time," Zhao said. "Additionally, local brands are generally more familiar with local tastes and can be quicker in adapting to changing trends. This is particularly well-received by many young consumers who care more about style and speed rather than the origin of brands, and hence, likely demonstrate a higher affinity towards local brands than previous generations."

So we are not that surprised to see more and more brands starting their livestreaming and social media pages to do a better job of talking to young people. Everyone wants to grab the main consumption power in China, that is the future.