Chinese Millennials are probably the single most important demographic on the planet today. This group, born in the 1980s and 1990s, is generally defined as those between 16-35 years old.
According to a September 8th report by Goldman Sachs analysts Joshua Lu and Anita Yiu, the Millennial generation represents around 31% of China’s total population. That is 415 million motivated consumers, more than the working population of both the United States and Western Europe. Lu and Yiu argue that Chinese Millennials are already having a major impact on consumer markets in China and abroad, and that influence will only grow over time.
More on the future impact of Chinese Millennials
The GS analysts’ model suggests that the total combined income of Chinese Millennials will increase to US$ 3 trillion by 2015, and average annual income more than double from US$ 5,900 to US$ 13,000. This increase in spending power represents more than half of the projected US $5 trillion to be added to U.S. total private consumption expenditures over the coming decade if the U.S. economy was able to maintain the 3.7% CAGR it enjoyed over the last decade.
Remember that the Millennials are the first generation of Chinese to have grown up with political stability, rapid economic growth and a growing digital connection to the rest of the world. Lu and Yiu also note that the “differences between Chinese Millennials and their parents are much starker than in the West given China’s radical transformation over the past 40 years.”
Chinese Millennials are already having a substantial impact on global consumer markets. The oldest cohort of Millennials (ages 31-35) have frequently become young parents, leading to a boom in for premium infant products in China. This generation is also rapidly are becoming the biggest buyers of property and automobiles. The middle group of Chinese Millennials (ages 20-30) are a crucial “brand-building battlefield for consumer companies.” The youngest 25% group of Millennials (ages 16-20) have had access to smartphones since childhood, and their maturation into adulthood will lead to more changes in consumer preferences and behavior.
Goldman Sachs U.S. analyst Lindsay Drucker Mann leads the Millennial Insights series. She highlights notes three defining characteristics of Chinese Millenials vs older generations:
“They (1) are digital natives, (2) are more globally aware, and (3) have an economic backdrop distinct from their parents.”
The GS team also notes that:
There are notably fewer Millennials than previous generations due to China’s one-child policy, much different than in the U.S. where Millennials outnumber older generations.
Chinese Millenials are much more educated and globally aware than the previous generation. Not surprisingly, this demographic trend is accompanied by significant changes in product preferences.
Although they typically live on limited budgets, most Chinese Millennials have close to the same digital access as their peers across the globe. Not even 5% own cars today, and the group makes close to 40% of its purchases online. This trend will continue to lead to more changes in structure in a number of Chinese industries.
Millennials in China are largely employed in white collar jobs and are focused on how “their job can fulfil their aspirations, and de-emphasizing the importance of pay or job status.” The group is also avoiding labor-intensive blue-collar jobs, which has slowed down the nation’s export manufacturing-led growth model, but is leading to important growth in industrial automation.