I lived in China for four years between 2006 and 2010. It was a rare opportunity to witness the mega-changes pre and post 2008 Beijing Olympics.
In 2017, I visited Beijing and Shanghai. I caught up with many local Chinese friends and ex-colleagues. Most of them are aged between early 30s to early 40’s. I haven’t seen them for 7 years. In China, things change rapidly within 7 months, let alone 7 years.
Here’s the first part of what I learned from my 10 days.
Gen X are ready to retire
China property prices took off from between 2003 until 2012 as per chart below.
During this period, the age group of Gen X, defined as those born between 1960 to 1979, made a windfall in the property market.
In 2003, Gen X would age between 24 and 43. This was the prime age to enter the property market when prices were low. Many scooped up cheap property whilst still living with parents, or combine dual income to move in as a young couple, or as a young family.
In 2012, Gen X would age between 33 and 52. Over the period of 10 years, property prices in Beijing and Shanghai increased up to 4 times its original value and created massive wealth for property owners.
When the property prices started to lose its steam, the smarter investors started to look at overseas property. In fact, one of my friends sold some of his Shanghai properties and organised a group of friends to go to places like Thailand, Japan, and Malaysia to buy a whole block of quality residential apartments with a solid yield that can sustain basic living expenses back in China.
The Gen X are now ready to retire. It’s a question of which country they want to retire in.
Gen Y are mentally preparing for retirement
China introduced one-child policy in 1979 and abolished that rule in 2015. That means Gen Y, defined as those born between 1980 – 2000, in urban China are the only child in the family.
The oldest Gen Y’s enter the workforce at the average age of 25, ie around 2002. By the time property prices reached its peak around 2012, the oldest Gen Y would only be 33, with many still studying.
Their hopes of getting into Beijing and Shanghai property market are next to impossible.
Yet, when you look at the consumers in the large shopping malls, in fancy new restaurants, most of them are Gen Y.
So what’s going on here? Shouldn’t they be saving up for their first home?
Not quite. As I talked to many of my Gen Y friends in Beijing and Shanghai, they shared with me something intriguing yet logical.
You see, many Gen Y have Gen X parents, and have Baby Boomer grandparents. Gen Y is not concerned at all about his or her future, because being the only child in the family, all of the Gen X and Baby Boomer’s wealth will one day be inherited by Gen Y anyway.
So in Gen Y’s head “Why bother working so hard to buy my own property when I’ll get my parents’ one day anyway?”
And hence you see the strange phenomenon of young Chinese spending all their monthly income (aka 月光族) splurging on the 3F’s: fashion, food, and fun.
The Gen Y who are born into urban China already have a safety net for their future. Their main challenge now is finding a meaningful way to reach the psychological and intrinsic steps in Maslow’s Hierarchy of Needs.
By now, I’m sure everyone would be familiar with the super app WeChat. But to actually witness it in action is quite another experience. My friends and I would walk into certain restaurants, and there’ll be absolutely minimal staff. We’ll be greeted by a maître d and the rest is all done on WeChat and delivered via robotics, from ordering food, to topping up drinks and making payments. There is a floor marker that guides cheap looking robots to bring out all the dishes and drinks.
In the financial industry, China Merchants Bank is leading the innovation trend by introducing the first DIY wealth management product for those with RMB200,000/USD32,000 and above. Features include:
1. Access to over 9 different asset classes in China and Hong Kong based on your risk profile
2. Freedom to move funds across the asset classes 24/7
3. Daily return calculation
And check out their self-service wealth management terminal with full camera capability for human assistance from a remote location.
In the mobile phone space, new players like Hammer is a testament to continuous customer-centric innovation. They started out with durable phones and soon realised that Chinese consumers always carry two phones and a power bank. Rather than producing a phone vying for the primary phone position, Hammer marketed their phone as the secondary phone, but one that also functions as a charger. And guess who is now following this trend of phone that charges another phone? Check out the Huawei Mate 10 Pro that can be used to charge your iPhone or any Android phone.
Emerging trend that is uniquely China
The final interesting discovery of my trip is the monetization of livestreaming, where females (and males) broadcast themselves to China internet waves legally and they earn online coins which can be exchanged for real cash and gifts. They are addressing an emerging problem in the market following 36 years of one child policy – loneliness. According to forecasts from the Chinese Academy of Social Sciences, one in five men will be unable to find a wife by 2020.
Live streaming is a fascinating USD$4.3b industry that is uniquely China and it’s only just starting. In a few years, this industry would create its own ecosystem of studios, glam squads, gadgets, fashion, and a sea of product ambassador for corporate sector to choose from. Success stories include Adidas boosting its brand affinity and Maybelline tapping into KOL’s to sell 10,000 lipsticks in two hours.
I was lucky to actually see one of the male broadcaster in action at a shopping mall in the evening. Does anyone know who he is?
To learn about this live stream industry, check out the clip below by Vice.
If you’re looking where the world is heading, drop by to China to get a glimpse of the future. The economy powerhouse is now also an innovation powerhouse. It is writing the blueprint for how we shop, how we invest, how we eat, and how anyone with a mobile phone can thrive in the digital age.
Eric Chuah is the founder of Cultural Connections, a multicultural research and consulting firm working with government, NGO’s, and private sectors. Eric specialises in consumer trends and insights to help clients develop business strategies, policies, and NPS. He is currently serving as Independent Advisor for Multicultural New Zealand; Board Trustee for Auckland Regional Migrant Services; and Ethnic Media Advisor for New Zealand Human Rights Commission.