Unlocking county-level consumption niche

China's economic expansion is increasingly being shaped beyond its biggest cities, as county-level markets become a critical source of consumer growth and a testing ground for companies seeking the next wave of demand, industry reports said.

Consumption remained the largest contributor to the country's growth momentum in the first half, with final consumption expenditure adding 2.1 percentage points to GDP growth, according to the Ministry of Commerce.

The ministry said continued upgrades in technology, product supply and consumer services would help unlock additional spending potential, particularly among county-level markets and demographic groups such as the elderly, younger consumers and families with infants.

Among the biggest opportunities are China's counties and townships, where rising incomes and changing lifestyles are reshaping consumption patterns. Data from Meituan showed that active consumers in county-level markets increased by more than 15 percent year-on-year in 2025, while order volumes climbed by over 20 percent, significantly faster than growth in major urban markets.

The shift marks a strategic turning point for companies that have traditionally focused on China's largest cities. Consulting firm McKinsey estimates that by 2030, around two-thirds of incremental personal consumption growth in China will come from lower-tier cities, counties and townships.

For consumer brands, the opportunity is already visible. In 2025, Mixue Group's brands operated 32,000 stores in tier-3 and below cities, representing about 58 percent of their network in the country.

Yet the county opportunity is not as simple as opening more stores or offering lower prices.

A recent report about consumption in counties from NielsenIQ, also known as NIQ, highlights a growing disconnect between economic development and brand performance.

China's wealthier counties are expanding rapidly. According to the National Bureau of Statistics, the number of counties with a GDP exceeding 100 billion yuan ($14.83 billion) rose to 77 in 2025. The country's top 100 counties accounted for 10.2 percent of national GDP, with combined economic growth of 6.3 percent year-on-year, above the national average of 5 percent.

Many consumer companies have failed to capture that growth. Among the 20 leading fast-moving consumer goods manufacturers tracked by NIQ, only four recorded sales increases in county markets, while 16 saw declines.

The message for companies is clear: consumers in counties are becoming richer, but their preferences are changing faster than many brands' strategies.

The traditional view of consumers in counties being purely price-driven is becoming outdated. NIQ data show that 53 percent of consumers in counties remain sensitive to price, but the ratio is declining. Consumers are shifting from simply buying the cheapest products to seeking the best balance between price, quality and experience.

One emerging trend is "quality upgrading", where consumers maintain a value-conscious mindset but demand stronger proof of effectiveness. Spending decisions are increasingly influenced by whether a product delivers visible benefits or better experiences for each yuan spent.

A second trend is localization. The traditional "acquaintance economy", built around recommendations from family and neighbors — which still matter more to those over 40 years of age — is evolving into a stronger sense of local identity. As county economies develop and local brands gain recognition, consumers increasingly favor products and experiences connected to their communities.

This creates a unique purchasing pattern: awareness may be national, but trust remains local. Short-video platforms and online marketplaces expose consumers to national trends, but final decisions often depend on local reputation, peer reviews and in-store interaction.

For brands, the experience of consumers in counties has become geographically divided. Marketing can come from anywhere, but trust still needs to be built nearby.

Companies approaching county markets as a single category risk missing important differences. NIQ identified three major divisions shaping consumption behavior: generation, family structure and regional economic characteristics.

Younger consumers in counties increasingly resemble their urban peers. Consumers under 30 show stronger interest in aesthetics, technology and new experiences, creating opportunities for brands that can bring fresh products and trends to smaller markets.

Older consumers, particularly those above 40, place greater emphasis on reliability, practicality and trusted relationships. Their purchasing decisions are often shaped by previous experiences and local networks.

This means companies may need two separate strategies within the same county market: one designed to attract younger consumers through innovation and novelty, and another focused on building repeat purchases among older customers through service and trust.

Household structure also matters. According to NIQ, compared with large cities, counties generally have higher marriage rates, more families with children and larger living spaces. Consumption decisions are therefore often made around households rather than individuals. Large-capacity appliances, bulk household goods and practical products can outperform premium offerings that rely only on status or branding.

Geography creates another layer of complexity. The gap between two counties can sometimes exceed the difference between a county and a nearby city. Industrial strengths shape local consumption ecosystems. For example, in Zhejiang province, Yiwu's global trading economy, Cixi's appliance manufacturing base and Dongyang's film tourism sector each create different consumer environments.

County markets are therefore not one market, but hundreds of distinct regional economies.

Many brands have struggled in counties because they treated expansion as a simple transfer of urban discount strategies. Consumers in counties are not rejecting higher-quality products; they are rejecting products that fail to match their daily needs.

In fast-moving consumer goods, NIQ estimates county markets account for 43.1 percent of national FMCG consumption. Annual growth reached 2.5 percent, compared with 0.5 percent in tier-1 and tier-2 cities.

Discount snack chains illustrate the competitive intensity. More than 13,000 new stores opened in 2025, with nearly half located in counties, while 6,895 stores closed. The market is entering a filtering phase where only operators capable of responding quickly to local demand will survive.

Success requires three capabilities: speed in adopting national trends, accuracy in matching local preferences and decisiveness in securing distribution space.

The same logic applies to durable goods. According to NIQ, in 2025, lower-tier technology-related durable goods reached 700 billion yuan and represented 67.1 percent of offline retail sales. Demand is concentrated around practical upgrades — larger televisions, refrigerators and washing machines that fit bigger homes.

Price differences reveal consumer priorities. Appliance price gaps between urban and county markets can reach 40 to 50 percent, reflecting consumers' focus on functional value. For smartphones and headphones, where social visibility matters more, the gap is often only 10 to 20 percent.

For companies, the future of consumption in counties will not be built by offering a cheaper version of urban products. Instead, it will require redesigning products and services around local lifestyles.