China’s beauty market is booming, steadily moving towards becoming a global leader in cosmetics; predicted to reach an unprecedented 564.4 billion yuan by 2025, making it one of the most profitable markets for investments. This potential has already attracted numerous cosmetic brands eager to gain entry and make their mark on China’s flourishing industry.
But what is often forgotten about the China market is that 70% of the netizens are still living in China’s lower-tier cities and rural areas. The lower-tier markets are experiencing a big consumption growth and this is where the eyes of luxury brands are now.
Why brands should focus on China’s lower-tier cities?
Chinese lower-tier cities are those cities that always have been overlooked by foreign brands, that were focusing their marketing strategies on higher-tier cities, like Shanghai and Beijing, where most of the luxury consumers live. Lower-tier cities are those with the population under 3 million people, for example; Changde, Lanzhou, Guilin, Foshan etc.
It’s no surprise that companies were focusing on the major cities of China, as it was always the safest choice. To put it in perspective; the population of Shanghai almost equals the whole population of Australia, so having stores and marketing strategy focused on a city like this was always profitable.
But the situation is changing. Lower-tier cities represent over 70% of the whole Chinese population and more than half of those people are under 34 years old. This means, that they are equally connected to social media platforms and e-commerce marketplaces as their counterparts in China’s megacities.
As the consumption in lower-tier cities is expected to rise up to $8.4 trillion by 2030, it’s about time to understand this market and its consumers.
Higher disposable income
Pre-pandemic, lower tier cities were experiencing a surge in economic success. Notably, Chengdu saw an impressive growth rate that exceeded those of well-known hubs like Beijing and Shenzhen. This rise not only resulted in increased wealth generation within the city but also brought about greater prosperity for its people as reflected by ever higher income levels over recent years.
Consumers in smaller cities have more free time
There is less white-collar young workers in lower-tier cities than in the main ones, with more young people being self-employed or working in service industries. They also spend less time in transportation, having more time for themselves. Their jobs are also more stable, which makes them more sure about purchases.
Increased accessibility
Althouh when it comes to luxury stores, the majority of domestic and foreign brands is available only in the biggest metropolis, thanks to the improvement in transportation, the delivery system became more effective.
The internet, online payment systems and e-commerce have created an unprecedented opportunity for customers in lower tier cities to access products they were previously unable to purchase. This digital penetration has enabled them to enjoy the benefits of goods and services that had been out of reach until now.
Who are lower-tier city consumers?
Chinese consumers in lower-tier cities with more disposable income are becoming more and more interested in luxury goods. They engage in online shopping even more than their counterparts in big cities, as many of the offline sales channels are not available in second-tier or lower. They spend 6h online every day, looking for luxury products on online channels and Chinese social media platforms.
Thanks to platforms focusing on consumers living in second-tier and lower (like Kuaishou), there are many very engage
Looking for help? Our cosmetics marketing in China can support your brand’s entry into China.
