Wang Gao: There are both long-term and short-term changes in 2023. In the long term, rational cons umption is on the rise across China, particularly evident in economically developed regions. Some interpret this as "downgrading" consumption, but I don't see it as such. I regard this to be a rational progression: On one hand, there's still a demand for high-end products and brands, as purchasing power is still kind of maintained or even growing. So, the idea of "downgrading" doesn't perfectly align with overall spending capacity. On the other hand, people are now more focused on the cost-effectiveness of their daily needs, opting for what meets their needs. However, today's under-standing of "cost-effectiveness" differs from that of ten or twenty years ago. Quality takes prece-dence under the premise of assured quality. These two situations may not only apply to different groups of people but could be observed within the same group. With the long-term influence of rational consumption, China is entering a mature consumer society. In the short term, many small and medium-sized enterprises have been severely impacted by the pandemic, with some even clo-sing down. This has affected the employment environment, and short-term salary expectations might not be optimistic. Coupled with uncertainties about the future, people have become more cautious in their short-term consumption.
David Zhang: On the one hand, intangible but real experiences are gradually becoming one of the most crucial concerns for everyone. On the other hand, consumption is not only a manifestation of self-attitude but also a practical action for the public to explore a better life.
Dong Jiangbai: Consumer attitudes tend to be cautious and rational, but this does not mean giving up the pursuit of quality. From "cost-effectiveness" to "quality-price ratio”, consumers are returning to a focus on quality, safety, health, and sustainability. The evolution of value orientation determines consumer preferences and purchasing decisions, where brands satisfying these needs gain a com-petitive advantage.
Sun Lei: Opportunities and challenges coexist. On one hand, we sense the recovery of consumption post-pandemic. On the other hand, consumer decision-making becomes more rational. Global con-sumers' focus on overall health extends to skincare and makeup, driving demand for skincare and makeup products. Especially in lip makeup, "skincare effects" surpass "color" and become the stron-gest purchasing driver. Innovative trends in makeup, including the lipstick category, are transitioning from color-dominated to focusing on a combination of "color + skincare + efficacy”. This prompts companies to strengthen their internal capabilities, increase research and development investment, create products tailored to Chinese needs, win more consumer recognition, and establish unique brand advantages.
Li Chen (nic): The global economic slowdown in recent years is evident to all. I believe the overall consumption market has a relatively stable growth trend, with e-commerce being the most promi-nent. Although there are significant disparities in consumption markets in various sectors, we can see positive aspects of consumption market growth, including the recovery of offline physical econ-omies during the year of pandemic recovery.
BG: After experiencing a consumption downturn during the pandemic, it seems that the consumer market has shown clear polarization. People seem to be more certain about their consumption needs, emphasizing either quality requirements or cost-effectiveness. This polarization phenomenon will be more pronounced than before.
Wang Gao: "Difficult" and “Pressured” are probably the two most prominent feelings. As mentioned earlier, rational consumption has become a long-term trend, and in the short term, everyone's increased rationality about the future intensifies the cautiousness of consumption, making the 2023 market feel even "colder" than during the pandemic. Many people find this year particularly chal-lenging. Additionally, despite a slowdown in demand, the supply hasn't decreased, resulting in intense competition on the supply side. The situation appears “challenging”, with a notable charac-teristic being that brands and businesses are unwilling to accept this decline. Consequently, market-ing and sales expenses have sharply increased, and while the quantity of products sold may not have decreased significantly, profitability has become more challenging.
Dong Jiangbai: In the dynamic and uncertain 2023, both the demand and supply sides are in a status of “Waiting for Opportunities”, cautiously observing market dynamics and remaining agile to make rapid decisions in the face of market changes. Consumers are returning to rational consumption, while businesses innovate and develop through swift adjustments in operations and marketing strategies in this challenging year.
David Zhang: I would use the word "Seeking Progress amid Challenges". Despite the uncertainty in the overall environment, everyone is actively making their adjustments and advancements, persist-ing in doing the right things and pushing their boundaries.
Li Chen (nic): "Breakthroughs and Challenges".
Sun Lei: “Rebirth". In the past year, we witnessed the revival of national consumption and the trans-formation and upgrade of popular consumer beliefs after the end of the pandemic. Consumers increasingly value the quality-to-price ratio and brand value.
Wang Gao: The trend of rational consumption will persist, and the impact of the pandemic may diminish. While many small and medium-sized enterprises may collapse, new ones will emerge, im-proving the employment situation. People's expectations for the future should be slightly more opti-mistic. This will have a positive impact on the demand side. However, it depends on whether the situation of oversupply will change. If excess capacity remains a significant issue, sales may see growth, but profitability for businesses may not necessarily see substantial increases.
Dong Jiangbai: The competition in China's consumer market in 2024 will become even more intense, with both domestic and international brands innovating and rising. Brands need to continuously achieve high-quality innovation in consumer insights, product structure, brand building, and market expansion. By meeting consumers' diverse value demands for functionality and emotion, they can gain a competitive advantage and lock in growth opportunities amidst uncertain market changes.
Sun Lei: Today, technology has become the underlying force for the next step in industry develop-ment. This poses higher requirements for every company in the field. Those who can create more innovative, technologically advanced products that can better align with users' unique values will garner more market favor. In November 2023, Yatsen Group officially announced the "Yatsen Tech-nology Roadmap" strategy, encompassing a global advanced beauty factory, three global indepen-dent research and development centers, four empowerment areas, six co-built laboratories, and 20+ joint projects. In 2024, we will adhere to our strategy of independent innovation and research, em-powering the development of brands under the group, including Perfect Diary, to bring consumers more surprising and technologically advanced products.
Li Chen (nic): In the e-commerce industry that I’ve been working in, breaking through traditional operational thinking and using innovative content as a multidimensional way to recommend more quality products to consumers is essential. In an environment where consumer downgrading is a trend, how to cope with the changing and evolving consumer attitudes and preferences is a crucial aspect. While offline industries are recovering, integrating online and offline efforts may be a promis-ing direction.
BG: As mentioned earlier, due to the clear differentiation in the consumer market, there will be many opportunities in highly segmented markets. However, digging into subsegments within established markets is a challenging thing in itself, with increasingly stringent standards set by the consumer market.
David Zhang: In the future, there will be higher demands for product quality, strategic flexibility and efficiency, and how to systematically present brand value propositions to resonate with consumers. Looking ahead, OATLY is also actively taking action for future development.
David Zhang: Achieving balance requires two crucial elements: firstly, adopting a "long-term" perspective, focusing on the future to comprehend the entire cycle and innovate accordingly; secondly, returning to the "original intention" when facing a complex macro environment, emphasizing innovation that aligns with one's situation. Cross-industry collaboration is one of OATLY's specialties. Joining forces with industry partners is essential for creating new plant-based categories. By leveraging the resources of quality partners, OATLY can expand into broader consumer scenes and chan-nels. Cross-industry collaboration also brings us closer to Chinese consumers and the consumer market.
Wang Gao: Achieving balance can be viewed from two perspectives. First, from "what enterprises can offer to consumers”, identifying consumer trends is crucial, even in the inevitable trend of rational consumption. As long as you can understand what consumers like, including fashion and emotional consumption, people will still be willing to pay for it. If just continuously and mechanically supplying products without any novelty, companies will find themselves stuck in a dilemma. Second, from the perspective of the enterprise itself, especially for leading brands and companies, head enterprises should be relatively rational in the "war" of marketing expenses. Leading companies need to become leaders in rational competition, instead of leaders in vicious or wildly fierce competition. Otherwise, the future of enterprises will remain challenging. Cross-industry collaboration and brand collaboration are innovative ways, but absolute conclusions should not be drawn here. With numerous cross-industry collaborations happening now, enterprises need to create genuinely innovative collaborations that can have a synergistic effect on consumers. Only this kind of innovation truly has the potential.
BG: It might not necessarily be “innovation", but more of a return to the essence of building a brand. As we have always advocated, using clothing as a medium to express and convey. We hope that when consumers purchase our products, it is not just a material consumption but an identification with a certain identity and the satisfaction of certain spiritual needs. This is also a crucial aspect in our brand construction, emphasizing brand expression and the thoughts conveyed by the brand, not just the functionality of clothing. Cross-industry collaboration and brand collaboration are all just forms of innovation, but what matters is not the form but what they express. In my view, conveying brand messages effectively and making consumers understand "consumption" from a different perspective is the key to striking a balance between the present and the future.
Dong Jiangbai: Faced with the ever-changing and upgrading consumer demands, continuous high-quality output is the key for brands to strive for in the future Chinese consumer market. ECCO will continuously delve into product technology and service innovation to enhance brand core competitiveness. We’ll also actively practice the concept of sustainable fashion. Through innovation in design, research and development, production, packaging, transportation, and sales, we aim to reduce the impact on the ecological environment along the entire value chain, meeting society's and consumers' expectations for high quality and high environmental protection.
David Zhang: Quality consumption and experience consumption will become the core concerns. OATLY, in its 5 years in China, has shown good adaptability in the face of a complex market environment. In the future, we remain optimistic about the development potential of new plant-based products represented by oat milk in the Chinese market. We will continue to focus on consumers, emphasizing flexibility and efficiency, and prioritizing value and quality to provide consumers with a high-quality plant-based dietary experience.
