THE LOWER TIER CITY YONG PEOPLE GUIDE

DEMOGRAPHICS

Population: The huge number of people who live in cities that are in the third tier and lower is the source of strong consumer demand. With the development of the economy, consumer confidence in third and fourth tier cities continues to improve. This is sometimes referred to as the “sinking market” in Chinese in reference to the low tier level, not in reference to consumer demand and spending.

68.4% of people in China live in lower tier cities. The consumption trend index of third tier cities sits at 121, which is higher than first tier cities at 114 and second tier cities at 110. In fourth tier cities, the consumption trend index is 111, which is approaching that of first and second tier cities and steadily growing. 

Occupational and family composition distribution: The proportion of white collar workers in lower tier cities in China is much smaller than that of young people in the first and second tier cities. The biggest employment group for young people in lower tier cities is self-employment and service industries. The proportion of teachers, civil servants and medical personnel among young people in small cities is also higher, which means that their jobs are more stable. 

Young people in lower tier cities in China are getting married at an earlier age, with more than a third of them already married. This is a higher rate than in first and second tier cities. The proportion of young married couples with children is also higher.

Income, education distribution: The average income of 77.6% of young people in smaller cities is less than 6,000 yuan. The average monthly income is 3,938 yuan and the most common earnings bracket, with 36.6% of young people in this category, is less than 2,000 yuan. Although the undergraduate degree rate is slightly lower than that in first tier cities, young people in smaller centres still have good educational attainment. 41.81% of them have bachelor’s degrees and 17.77% have postgraduate degrees.

Gender and geographical distribution: There are more males than females in lower tier cities, and eastern China is the region with the largest proportion of lower-tier young people. Men account for 55% of young people in lower tier cities with women making up 45%.

Disposable income and leisure time: Young people in smaller cities have more disposable income and more free time. Mortgage pressures in smaller centres are significantly lower than for people in first and second tier cities. Spending on items for daily consumption takes up the largest portion of expenditures. Credit card payments, mortgage and loan payments are also much lower than in first and second tier cities.

CONSUMPTION PREFERENCES

Consumer interest preferences: Due to the low cost of living in smaller cities, the online consumption abilities of young people there is greatly enhanced and they’ve become a new force in terms of consumption upgrades. 

The consumption potential of young people in small towns is constantly tapped and their interests in online shopping, food, travel and other categories is significantly higher than that of internet users in general. Interest is highest in food (TGI 157), followed by travel (TGI 143). Social commerce is more prominent, people are more price sensitive, and the demand for second-hand goods is strong.

Purchase channel preferences: Young people in lower tier cities are spending more time shopping online and there has been a significant increase in the amount of time spent on e-commerce sites, which increased by 40 minutes per month, an increase of about 10% per month year-on-year. 

Large e-commerce platforms are the most popular chopping channel and the most popular platform is Taobao (25 million monthly active users), followed by Pinduoduo (21.22 million monthly active users). Second-hand platforms have the highest TGI at 122.7 and the preowned good app Xianyu is the most popular (13.45 million monthly active users).

Consumer preferences: The importance of quality and brands is gradually increasing for those in lower tier cities. 66.2% of young people there pay more attention to quality and 60.2% focus on brands. Big e-commerce platforms have attracted the attention of young people in small towns by constantly launching social games and enabling group shopping functions. 

They also like to find discounts and do price comparisons. Price discount apps such as Save Money Express (省钱快报) (TGI 129) and Yitao (一淘) (TGI 122) are popular with young people in lower tier cities. 

Imported and international brand preferences: Young men in lower tier cities prefer local brands, and 52.22% prefer to buy domestic brands as much as possible. Xiaomi and Huawei are the most popular domestic digital brands among young men in the lower tier cities. Young women in small towns still prefer some luxury brands when it comes to beauty and  skincare, where the most popular brands are almost all international, with Lancôme at the top of their list.

POPULAR CATEGORIES FOR LOWER TIER CITIES YOUNG PEOPLE

According to the QuestMobile 2019 Lower Tier City Young People report. 

The top 5 TGI categories : Automotive (114.6), digital products (107), sports-related products (106.9), home products (106.4), home appliances (104.4).

The top 5 TGI categories for young women: Underwear (110), women’s clothing (106.9), shoes (105.8), makeup (103.1), personal care products (101.4).

WHY DO YOU NEED CHINESE MARKETING RESEARCH AND STRATEGY?

It’s never easy to enter a new market, especially when it requires understanding the sentiment of a new group of consumers and their communication channels. By working with our agency, we offer you the following benefits:

  • Helps you understand Chin’s lower tier cities young people
  • Helps you understand your competitors targeting China’s lower tier cities population
  • Helps you to determine the positioning of your products and plan digital marketing and ecommerce strategies
  • Helps you align your offerings more accurately with the expectations of Chinese customers

WHAT ARE PEOPLE SAYING

Alarice helped us do comprehensive marketing research and create a strategy for China. The insights are extremely helpful and we are now ready to tackle China. Thanks Alarice team for the great work!

Kshitij Minglani
Co-Founder of Mindvalley Quests

Ashley, you’re living the Disney brand! Thanks for the amazingly insightful, high-energy and entertaining strategy workshops!

John Sinke
Director, Marketing at Hong Kong Disneyland

The number of room nights booked by Chinese clients has DOUBLED since November 2018. This is a great result! Our SMM and PR activities in China, run by Alarice, have been the major fuel behind this success. Thank you, Alarice team!

Anna Bolotskaya
Head of Marketing of the
Metropol Hotel

OUR RESEARCH AND STRATEGY METHODOLOGY

Our China marketing research and strategy team gives you a detailed framework that will allow you to start and grow your business in mainland China. Our methodology mix is tailored for each project. In order to identify target consumers and understand their demands and develop marketing strategy for your product in China, Alarice team will develop tailor-made proposal for your project and discuss each phase methodology with your team to guarantee results. You can find more information about or methodology approaches here.

Market Research
  1. Online Market Research
  2. Industry performance research
  3. Market sizing
  4. Competitors Benchmarking
  5.  Mystery Shopping
  6. Case Study
Brand Audit
  1. Brand SMM Audit
  2. E-commerce Audit
  3. SWOT Analysis
  4. Perceived USPs
  5. Value Perceived
Consumer Research
  1. Online Survey
  2. Consumer Panel
  3. Focus Groups
  4. In-depth interviews
  5. Offline intercepts
  6. Semantics ( usage differentiation )
  7. Social listening
  8. Ethnographic research
  9. Sentiment Analysis
  10. Sensory Analysis
  11. Consumer Journey Tracking
Strategy development
  1. Brand Positioning review
  2. Brand pricing strategy review
  3. Market channels strategy
  4. Content strategy
  5. SMM strategy
  6. KOL/Influencer strategy
  7. Roadmap timeline budget
  8. Seasonal events / campaigns
  9. Conversion funnel strategy

YOUR CHINA MARKETING TEAM

We have an unmatched ecosystem of services to help clients worldwide build their brand in China from 0 and enhance performance for those already in the market:

  • Chinese Social Media Account Set Up. Chinese social media account set up and verification are steps which seem easy to handle. However, for newcomers, it can be a challenging process, especially when interfaces are only in Chinese or the English version is very different. Our team will help you with the list of documents needed, account options and the rest of the verification process. We also do account migration, account mergers, integration and more.
  • Digital Brand Audit. We can do a full spectrum analysis of your digital marketing matrix and point out what’s effective, what’s hitting the mark, what’s missing and what needs urgent attention.
  • Chinese Social Media Marketing. With our understanding of China’s unique social media landscape, we’ll help to select the most suitable platforms for your services and products and turn them into effective marketing channels with creative content. Apart from China’s top social networks, WeChat and Weibo, we also work with niche Chinese social media platforms suitable for different industries.
  • KOL Marketing and Campaigns. Working with bloggers in China is very different from in most Western countries. In order to succeed in China, key opinion leader (KOL) marketing is not an option, it’s a necessity.
  • Chinese Brand and Product Naming. Choosing the right brand name for the China market is one of the most sensitive aspects of an entrance strategy. We help with  China brand name and slogan development.
  • Digital Online PR . We help with China PR strategy to get attention from users and visibility in the market.

As each project is unique, we also organize free consultations to discuss your projects and suggest solutions. Contact us and we’ll help you turn your business goals into real outcomes

FAQ

What are lower tier cities in China?

Lower-tier cities are defined as second-tier and below cities or prefecture-level and county-level urban centers that, under favorable economic conditions, will be the strong power to drive the next phase of consumption growth in China.

For relevant brands, this is an opportunity market that cannot be missed. If you want to enter the Chinese elderly market from scratch, we provide local branding services, including brand and product naming, logo design,product guidelines and more.

How to grasp the sinking market opportunity from the angle of market strategy?

First of all, brands need to have a full understanding of China’s sinking market and whether their products can match the needs of young people in lower tier cities. For this, we provide professional research services. Most importantly, we also provide you with marketing strategies to help you further improve the market performance or enter the Chinese market from scratch. This is our superpower. We have helped many international brands to grasp the opportunity of China’s lower tier cities.

What is the connection between young people in lower-tier cities and Chinese male consumers?

In most big cities in China, women are outnumbering men. China’s registered population represents its long-term population. Even though there are many male migrants in big cities, they are more likely to return to lower-tier cities to start a family life. There are more males than females in lower-tier cities. It can be said that youth in lower-tier cities share some common consumption characteristics with Chinese male consumers.

If you do have it, provide your Chinese business registration, the account administrator’s details and phone bills and the company’s address.

We can also do account migration, account mergers, integration and more.

GET IN TOUCH TO DISCUSS YOUR CHINA PROJECT

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