Here are a few trends to look out for in China 2016:

  1. Rural & Elderly Consumers: Expect to hear more about the hundreds of millions of China’s rural and elderly consumers being China’s biggest untapped opportunity. Beyond the hype, most foreign brands are likely to see little upside, with these consumers being much more price sensitive and nationalistic in their brand choices, which will see local brands reap most of the growth
  2. Lower-Tier Cities: Consumers in lower tier cities are also less open to foreign brands than their big-city cousins.  However, increased maturity and exposure to foreign cultures through online media and overseas travel – their own and their networks’ – will see more trading up from cheap to mid-priced products.  Foreign brands positioned and priced correctly, with strong distribution networks in these cities are likely to see good growth;
  3. Localising Localisation: With more companies realising that a one-size-fits-all approach for China is uncompetitive, more large to mid-sized international brands will localise for specific cities, regions and clusters;
  4. Health & Wellness: Chinese consumer habits will continue to reflect their pursuit for health, with health services growing even faster than products. Sport will get a lot of exposure this year with the Olympics and investments in football. Beijing’s increased transparency around pollution will further drive this;
  5. Precious Children: We expect the much-touted departure of the one-child policy to have a limited impact on fertility rates in the medium term.  However, there will be the usual rise of births in the Year of the Monkey as many would-be parents held out in the Sheep, which policy makers may try and spin. Even without a big rise in babies, spending on the precious only child will continue to go from strength to strength across most categories;
  6. Devalued Yuan: The continued fall of the Yuan against the US dollar will make margins tighter for imports, but we expect it to have little impact on the growth of some categories. Premium food & beverage will continue to grow due to rising incomes, food safety and health concerns; and tourism will increase, driven by improved visa processes and flight connections, particularly in lower-tier cities;
  7. Overseas Investment: A weaker Yuan will be offset by China’s volatility, seeing both individual and institutional investors seeking more stable investments overseas in property, brands and imported segments seeing strong growth from Chinese consumers.
  8. Online: Expect more integration between ecommerce, online video, social media, sport, banking, the physical world and almost everything in-between. WeChat commerce, for which services make up the majority of revenue, will see large growth in product sales, driven by individuals peddling product verticals, particularly parallel imports.

With China’s increasingly affluent consumers prepared to pay a premium for many things from wine to cars, there’ll be no shortage of opportunities in China this year.

See the full article from China Skinny here.

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