According to Goldman Sachs, China has a working population of 770.4 million, a population larger than the US and Europe combined. With rising incomes, this working population is contributing significantly to the formation of a new hierarchy of consumer classes in China. In Goldman Sachs’ latest macroeconomic insight report titled “The Rise of China’s New Consumer Class”, China’s social classes have been divided into four tiers of classes based on income levels: Movers and Shakers, Urban Middle, Urban Mass, and Rural Workers.
The report further broke down each class’s consumer desires into 7 main categories, including looking more beautiful, eating better, improving one’s home, increased mobility and connectivity, having more fun, well-being, and luxury.
To find out a more personal side of the story, Social Brand Watch sent writer Yun Qiao to interview individuals of each consumer class, asking them what they spent on and what they cared about when spending, as an indication of what they might care about in years to come. Turns out, each individual regardless of social class, had his or her own personal ambition to pursue. Every person had their own ladder to climb. Read on to find out more about each of China’s new consumer classes and where their hopes and ambitions lie.
Tier 1: The Movers & Shakers
Making up 1.4 million people of the total population,the Movers and Shakers boast an average household annual income of 500,000 USD per capita. As the wealthiest consumer demographic, the movers and shakers make up a sizable share of the global luxury market and frequently travel to exotic destinations around the world. Many of them have multiple passports and have lived abroad for several years. Many of them fall into the category of overseas returnee Chinese, or 海龟 “hai gui”, which translates to “sea turtle.”
- Name: Julia Wang
- Age: 30
- Hometown: Shanghai
- Perceived Social Class: Middle Upper (Movers and Shakers)
- Profession: Media Sales
- Monthly Expendable Income: Prefers not to say
Having lived long term in both Germany and France over a period of 3 and a half years, this Shanghai native ranks travel, food, and fashion as her top priority expenditures. A cultured woman of many hobbies and interests, Julia has traveled to over 35 countries including London, Australia, California, and Greece and is a collector of niche perfumes such as Penhaligon, Dyptique, and Serge Lutin.
“I travel when I can and I love doing sports, especially dancing (Salsa bachata). I often splurge on shoes, but I don’t really see it as luxury per say. I really like Christian Louboutins but so far, it’s still too expensive for me. When I have extra money and time I really love to travel to new places around the world. So far, my favorite countries are Thailand and Greece.”
Julia describes her fashion style as “sexy and sporty” naming Lululemon and Victoria’s Secret as some of her favorite brands. You might find Julia at posh places in downtown Shanghai like the Nest, Unico, Mercato, and Flask.
Julia tells Social Brand Watch that although luxury goods are nice, she ranks having positive experiences as her number one priority.
“Luxury goods don’t matter as much as the unique experiences we have in life”.
Tier 2: Urban Middle
The next tier is the Urban Middle class, defined by Goldman Sachs as having an annual income of 11,733 USD per a capita. This growing demographic of 146 million people consists of financially comfortable office workers and those with government jobs on public payroll. This will be the main focus of marketers down the line, as the middle class consumer tastes are still developing and their salaries are on the rise.
- Name: Jia Jia
- Age: 35
- Hometown: Shanghai
- Perceived Social Class: Upper Middle
- Profession: Senior Accountant
- Monthly Expendable Income: 9,000 RMB
A Shanghainese senior accountant and a mother to a four year old daughter, Jia Jia, 35, spends the majority of her 9000 RMB monthly expendable income on saving for her child’s education, clothing, eating out, traveling, electronics, and a few luxury good items.
“Saving for my daughter’s education and dining out are what I care about the most” says Jia Jia.
A working mom with a demanding job, Jia Jia finds new and dynamic ways to shop for the family online.
“I buy clothing from online fashion retailers which provide a variety of foreign brands for a discount. I also spend money on gourmet food from online grocery sites, most of which also have mobile APPs. The delivery is fast and the quality is very good ”
Technologically savvy online shoppers like Jia Jia are one reason the online B to C business model is thriving in China’s larger cities.
Tier 3: Urban Mass
The Urban Mass is made up of 236 million blue-collared workers and migrant workers with an annual income per capita of 5,858 USD. Their income has the biggest potential to rise in the next few years, which will enable them to spend on more than basic survival goods.
Jin Hui Tao
- Name: Jin Hui Tao
- Age: 20
- Hometown: Henan Province
- Perceived Social Class: Lower Middle (Urban Mass)
- Profession: Baker
- Monthly Expendable Income: 3,000 RMB
Jin Hui Tao is a 20-year-old baker is from Henan province, who now as a commis chef in a five-star hotel in Pudong. He is also a part time worker for a bakery that sells cakes through WeChat moments. With both jobs he earns around 3000 RMB expendable income each month. Jin does not need to pay rent since the hotel provides dorms for the workers to sleep in. This is a very attractive condition for young, urban mass migrant workers since rent in Shanghai can be extremely expensive.
“My money goes into savings, friends’ birthday parties, food–mostly snacks because I eat at the hotel kitchen, clothing, and traveling within China. What I care about is whatever I spend on.”
A graduate from a well-established charity baking school, his work starts at 4 AM and ends at 1PM each workday, but he files no complaints.
“I’m used to it now. I get up at 3 AM and take a nap after work.” Said Jin Hui Tao with an air of ease,” I hope I can learn new things and progress my career in the future.”
It’s amazing how people of the lower classes still manage to have smartphones and use mobile technologies like Wechat moments. Marketers should keep this in mind over the next few years, as even people with lower expendable income will find their way onto Wechat, as it is China’s primary platform for communication.
Tier 4: Rural Workers
Approximately half of China’s workers still live in rural areas. This demographic of 387 million low-income workers make less than 2000 USD per year, with spending concentrated on survival needs like food and housing. Many rural workers travel to the bigger cities to find jobs, joining the urban mass, or to sell their rural produce on the streets.
Bai Da Shun
- Name: Bai Da Shun
- Age: 28
- Hometown: Fuyang, Anhui Province
- Perceived Social Class: Rural class
- Profession: Fruit Vendor
- Monthly Expendable Income: 1,000 RMB
Bai Da Shun, a young fruit vendor from Fuyang, Anhui province, is the main bread winner for a family of three. He sits by the road side most days with a truck full of tangerines, heading to the city to sell.
“I pick and buy fruits directly from the fields and sell them at the markets,” What if there’s no fruit in the season? “I would go for vegetables instead then. But in fact, there are only a few months when there are no fruits to pick, from about late November to the Chinese New Year. In spring there are strawberries.”
Father to a one-year-old baby, he said after paying rent, fuel, and maintenance of the vehicle, most of the expendable income goes to baby diapers, clothing, food, and household supplies, which totals approximately 1000 RMB per month.
“Things I care about most? Well, they are the same things I spend on. Saving? Yes, I wish I could save, but it’s hard with my current income and family expenses. I have a baby, you know.”
Although Bai is a blue-collared laborer, he appeared to be relatively tech-savvy as he was playing video games on his mobile phone.
It goes to show that even the lowest classes still find time for entertainment and find ways to be connected via mobile phones in China.
Chinese of all social strata are climbing the ladder towards their dreams
Everyone, no matter what social strata or occupation seems to be climbing a ladder to the next step.
Whether it be luxury goods, international plane flights, e-shopping, or mobile video games, Chinese people of all social strata are finding ways to entertain themselves and improve their quality of life.
For more information on how brands are marketing to these emerging social classes, download Resonance China’s China Social Branding Reports.
Article edited by Cristina McComic.
Yun Qiao is a freelance writer based in Shanghai. She received her BA in Economics from the Institute of International Relations in Beijing and her Masters in International Relations from University of Aberdeen in Scotland. Aside from working as a freelance writer and translator, Yun Qiao is actively involved in charities and non-profits, particularly with Shanghai Young Bakers. Contact Yun Qiao at yqiao0214 [at]gmail.com.