The Times They Are a-Changin': 3 Big Trends in China for 2023

After almost 3 years of isolation, China finally opened its borders again. The streets of Shanghai are filled with life, the Dim Sum restaurants in Guangzhou are serving steamed delicacies and the elders are dancing on the squares in Wuhan. Covid brought physical life to a screeching halt in the Middle Kingdom, but now the train of innovation and progress is picking up steam again. Let’s start the year of the rabbit with an outlook of trends in China and what they mean for Swiss Companies.

Dall-E Prompt: Women live streaming under a bridge in China, ring lights in front of their faces, cyberpunk style

Middle Class growth: Leisure Time

Current estimates put the size of the Chinese middle class somewhere between 300 to 400 Million inhabitants, roughly the size of the middle class of Europe. While the percentage of the population counted as middle class is trending down in Europe over the last 30 years, it increased explosively in China. With the newly found wealth comes a plethora of new challenges for moderately affluent people: How do they spend their money and time?

While the Chinese middle class is earning relatively little in a global (western) context, their income goes a long way in China. The Chinese population, especially middle-aged and above, is notorious for its high savings rate and low willingness to spend money on leisure time activities. However, a younger generation, which did not go through any significant hardships during their lifetime, is constantly growing their disposable income - and is increasingly spending it on their families.

Very familiar to our Swiss Audience is an up-and-coming trend in China: Outdoor activities, such as hiking, camping, skiing and surfing. Winter tourism has been included in the government's development plans for some time, but the Olympic Games 2022 in Beijing seem to have boosted the general interest in skiing and snowboarding considerably and a wider audience is now willing to spend money and time to (learn to) carve downhill. What might seem weird to Swiss skiing fanatics is that roughly 25% of visitors are learning their first swings in indoor areas.

What if you are living too far away from snowy mountains? Lace your hiking boots and wander around local forests and hills. Hiking and camping have gained a loyal following, who are willing to part with their disposable income for high-quality outdoor clothes and camping gear. You wonder where people get their advice from and make their purchase?

Dall-E Prompt: Big indoor skiing resort, futuristic, full of people

Live Streaming Commerce

Live Streaming is not a new phenomenon and has seen immense growth over the last decade around the globe. However, live streaming commerce has spread like wildfire in China and now makes up almost 20% of all E-commerce sales in the country. While the characteristics of it might seem similar to the Teleshopping programmes, which air during off-peak hours on private TV channels in Europe, the entertainment value and reach of these new channels overshadow their predecessor by orders of magnitudes. 

Alibaba made their first foray into connecting streaming and e-commerce with their Taobao Live platform in 2016 and it almost immediately clicked with their viewers. Since these early days, the market has professionalized immensely and live streaming commerce is now a top priority channel for Fashion, Apparel and Beauty brands in China.

With the incredible variety of goods offered online, customers have a very hard time deciding on their purchases. Live commerce offers a helping hand for the customers, showcasing the products and give them a “real” look. Thanks to this, professional live streaming commerce companies boast conversion rates which are unheard of in the land of e-commerce. The German Retailer Douglas offers liveshows several times a week and reported conversion rates of up to 40%, more than 10 times higher than the regular e-commerce rate.

How long until Swiss E-commerce giants like Galaxus, Brack or Microspot follow suit? Maybe the Swiss Market is too small to justify the costs of setting up live streaming infrastructure, but what about another trend in China?

Utility-focused Social Media: Little Red Book

Clothes from Taobao, Food from Meituan and *Lifestyle Advice* from Xiaohungshu (小红书 - Little Red Book). While for older generations the Little Red Book referred to collected Speeches and Quotes from Mao, the millennials and Gen Z in China get their daily dose of inspiration from an app with the same name. Seeing the success of Tiktok in the Western world, might this app be the next to take the leap and land on western devices?

Xiahongshu offers an instagram-like experience and was often characterized as the Chinese answer to the picture app from Meta. However, while Instagram is almost solely focused on entertainment, XHS is used as an utility. Taking a trip to a new city? Check XHS for things to do. Don’t know what to cook or order for dinner? Let XHS inspire you. Similarly to Instagram, the demographics of the app skew heavily female, but the audience is even younger on XHS (72% below 30) and predominantly affluent and from Top-Tier Cities. 

Dall-E Prompt: Young Chinese women waiting in line in front of a restaurant, checking their smartphones, edward hopper

There is hardly a way around the app if your company is selling anything, even remotely, lifestyle-related in China. But will the app be able to find users outside of a chinese-speaking audience? Time will tell, but as of now, the company is not allocating any resources towards an expansion outside of (Greater) China.

Do you need help with finding new products or catching trends early before they come to Switzerland?

Send us a message and we’ll help you out.

Further reading:

Lilian Li’s Substack “Chinese Characteristics” Xiahongshu deep-dive: https://lillianli.substack.com/p/xiaohongshu-deep-dive