Chinese consumers are becoming more selective in their purchases, trading up from mass to premium labels as their confidence grows.
A new McKinsey report, ?The Modernization of the Chinese Consumer,? found that a significant portion of the population would raise their spending on apparel, travel, personal care and other services if their incomes grew. Representing positive news for international companies, the preferred premium brands in categories such as cars, skincare and fashion remain foreign brands.
?The premiumization trend is even more relevant for the premium segment rather than the luxury spend (driven by the middle-class rather than the ultra-rich),? said Daniel Zipser, partner at McKinsey & Co. and co-author of the report. ?So, the question for the luxury players is how to offer a premium product, which is accessible and allows trade-up for the middle-class.? McKinsey?s 2016 China Consumer Report conducted 10,000 in-person interviews with individuals aged 18 to 65. Respondents came from 44 cities, representing China?s various regions and tier cities.
Confidence boost

As salaries rise and unemployment remains low, consumers confidence in China has improved. As a result of their positivity, volume growth in mass segments, such as food and beverages, has flatlined while premium products race ahead.
When presented with a hypothetical boost in income, the top three product categories that consumers would be likely to grow their spending on were food, apparel an...