Consumer Spending in China’s Upper and Lower Tier Cities Surprisingly Similar

Sept. 6 – Leading global market research firm Synovate recently released a comprehensive study on consumer expenditures in China’s upper and lower tier cities, revealing similar lifestyle choices and behavioral spending across the country.

The study, based on 32,922 consumer surveys over the past seven months, challenges the belief that China’s biggest spenders live in the country’s major cities. In the past, foreign brands setting up a presence in China have traditionally targeted Tier 1 cities such as Beijing and Shanghai, but the study’s results suggest it may be worthwhile to consider some lower tier cities instead.

“With the spread of wealth in China, we can see the trend that lower tier cities and rural areas are catching up to larger cities, even striving toward a metropolitan lifestyle. Companies looking to reap the immense opportunities presented in China need to be flexible and proactive in devising their media and marketing strategy to target this massive and intricate market ecosystem,” said Darryl Andres, CEO of Synovate China.

The study found, for example, that average annual spending on apparel by Chinese consumers living in Tier 1 cities is the same as those living in Tier 3 cities, at RMB3,900. Tier 4 and Tier 5 cities, meanwhile, spend only RMB300 less a year. In health and fitness spending, Chinese consumers in Tier 3 cities actually spend considerably more than those living in Tier 1 cities.

“Some spending habits are shaped by traditional culture, which has been rooted in China for almost 5,000 years. Good nutrition and keeping good health take high priority in daily life, and do not vary much across income level or overall living standard,” said Jessica Liu, media research director at Synovate China.

“All Chinese consumers are going through changes in their consumption behavior, media use and motives for spending – whilst sharing core Chinese values. Marketers need to appreciate how development is shifting consumption, whilst respecting traditional pillars which bond people together. It is critical for today’s international and domestic marketers to understand people’s minds in order to win the hearts and wallets of this massive population of consumers,” said Steve Garton, executive director of media at Synovate.