Survey reveals untapped market in China

China's rural areas and less developed cities are quickly catching up with big cities in consumption, Darryl Andrew, CEO of Synovate China told chinadaily.com.cn on Wednesday.

Andrew based his remarks on a survey, which Synovate, the market research arm of Aegis Group plc, conducted by studying 68,000 consumers across 66 cities and rural areas in the Chinese mainland from December 2009 to February 2010.

Untapped market opportunities

"Though most attention by marketers has been on higher-tier cities, Tier 5 cities and rural areas show tremendous untapped opportunities. While there are just four cities in Tier 1 megacities, there are 494 cities in Tier 5, and half of China's population live in rural areas. The spending power of these consumers and the sheer volume across the many product categories they consume should not be underestimated," said Steve Garton, executive director of media at Synovate.

Female consumers in Tier 5 cities own about three beauty product items, such as foundation, lipstick, face mask, facial cleanser and lotion, just one less than those living in Tier 1 megacities, Garton said.

In the packaged foods category, such as biscuits, ice cream, instant noodles and various candies, the general population in Tier 5 cities consumes three of these items regularly, just slightly less than Tier 1 consumers, who consume 3.6 of these items, Garton added.

"The scale and pace of development of the China market simply demanded that we have to keep marketers abreast of the opportunities opening up, virtually on a daily basis. What we can now see is how much potential there is across all tiers of cities," said Andrew.

Mindsets of Chinese consumers across city tiers

China is commonly divided into five tiers, broadly equating to levels of economic development, and with political considerations also a factor. Tier 1 represents the most developed areas, while Tier 5 is less-developed small cities. Rural areas are villages close to Tiers 2, 3, 4, and 5 cities.

The Synovate Media Atlas China survey found that consumers living in Tier 1 cities appreciate advertising the most, and indicated that advertisements are a good way to learn about new products and services. Tier 1 consumers also keep up with fashion trends and sometimes splurge on special purchases even if they think they're expensive.

Tier 2 citizens like to buy famous brands and are more likely to believe that money is the best measure of success.

Those in Tier 3 and Tier 4 cities care a lot about safety and reliability in the products and services they consume, as they are careful in planning and researching their purchases before buying.

Consumers living in Tier 5 cities and rural areas are strongly anchored to family values and usually compare prices before deciding on a purchase.

Media habits of Chinese revealed

Synovate Media Atlas China shows that television dominates the media landscape, with almost complete saturation in viewing across the country. Mobile phone usage is close behind, with 95 percent of people in Tier 1 cities and 85 percent in rural areas using this device, which doubles as a medium for information. Newspapers, magazines and radio tend to be consumed more by those in larger cities, while close to half of the people in Tiers 1 to 4 cities enjoy life in the digital space.

Similar to many developed markets, the younger generations spend their lives in front of three screens: mobile phone (from 99 percent in Tier 1 cities to 79 percent in rural areas), television (88 percent in Tier 1 and 96 percent in rural areas), and the Internet (83 percent in Tier 1 and 43 percent in rural areas).

In contrast to the general population, where television and mobile phones are most important, the younger generations see the Internet as king. Sixty-four percent of those aged 15 to 24 indicate they cannot live without the Internet. Most youths (68 percent) say they plan to use the Internet more often, and over 70 percent feel the Internet gives them more useful information in addition to being the best source of entertainment.