What are sinking markets, and why should you care?

In October, UMS co-CEO, Eric Yu (Qi) was invited to speak at the AustCham Shanghai FMCG Industry Experts Webinar to provide on the ground realities and key strategies for success. During his presentation, Eric discussed what brands can learn from big Chinese players, and what they should do differently given their smaller budgets. He also noted the importance of sinking markets, and how consumption behaviour has changed during 2022.

Sinking markets are known as 3rd tier cities and below make up 2/3 of the total population in China. Interestingly, these markets are seeing a positive change in spending behaviour compared to that of tier 1 and 2 cities who have recently reduced their consumption of unnecessary goods. Despite having fewer buying channels, people living in sinking markets are starting to earn more and are interested in trying new products.

Sinking market consumers are becoming brand loyal and will research through friends, online reviews before making the final buying decision. This is very similar to the behaviour of those in tier 1 and 2 cities, but the difference lies in the number of channels available to sinking markets and therefore their ability to be exposed to and access a wide range of products.

Total consumption in these areas is estimated to reach $8.4 trillion in 2030 and is already recording a 12% year on year consumption increase. This represents a huge opportunity for international brands – so why not consider the impact this market could have on yours?

[ For more information, contact sales@umssocial.com ]