China’s millennial sector is one of the richest and largest spending groups in the world and Australian businesses need to start focusing on this export market with quality Australian luxury items. Forget stuffed kangaroos and shiny boomerangs, China’s millennials want luxury personal items that they can wear, show off and enjoy.
Chinese millennials are different to other generations of Chinese. Aged between nine and 35, they are part of the “one child policy” era. They grew up in homes where they were the centre of attention. Their parents viewed education as a status symbol and they were sent to the best schools and universities. Their parents didn’t want them to have to grow up and live with the burden of education debt or a mortgage so they paid for all their education costs and needs.
Even Chinese students sent to other countries to study where the “international fees” were exorbitant, would have all of their tuition and living expenses paid for by their parents. Naturally, this placed a lot of pressure on students to perform well academically to meet their parents’ high expectations. As a result, Chinese millennials enjoy a high degree of financial freedom. They are cashed up and happy to spend money and they value quality, luxury and travel. They also use spending as a form of stress relief and seek personal connections with the products they buy.
Chinese already place a high value on Australian products. Our country is highly regarded in China for our quality produce and highly regulated manufacturing environment. It makes sense that Australian businesses should be capitalising on this market segment and identifying what type of products appeal to Chinese millennials and start targeting this sector. It is a huge area of opportunity.
Some of the key areas of high spending for Chinese millennials include skin care, hair care, clothing, accessories, bags, cosmetics, and shoes. Chinese millennials value quality and uniqueness and they are far more brand loyal than western shoppers. They have grown up in a digital environment so they rely heavily on online trends and reviews. Australia’s positive reputation for quality products means Australian businesses should be leveraging this where possible to sell to the Chinese millennial sector.
Bain & Co recently reported that spending on luxury within China grew by 20 per cent in 2017 due to millennial spending on items such as women’s wear, jewellery and cosmetics. In the longer term, millennials are expected to keep driving sales. Boston Consulting Group estimates that consumers aged 35 and younger will make up 65 per cent of China’ consumption growth through to 2020.
So far, unfortunately a lot of Australian businesses just don’t get the millennial sector – here or anywhere else. We really need to see a shift in thinking in Australian businesses and an improved understanding of the extraordinary opportunities available through export to China’s cashed up millennial sector.
I strongly encourage more Australian businesses to employ Chinese millennials to help them better understand and create products and marketing messages which are designed to appeal to China’s millennial sector. It is a huge market and we are in a good position to benefit from exporting to this market but we had better hurry because every other country is trying to do the same thing.
Luckily we are in a good position. The Chinese value our products.
David Thomas, Founder and President, The Australia China SME Association