September 09, 2014
Digital Innovation Critical in Battle to Win China’s Expected $4 Trillion Spend by Lower-End Consumers by 2020
TIANJIN; Sept. 10, 2014 – The rapid adoption of digital channels by ‘low’ and ‘middle-end’ consumers in China is creating significant opportunities for companies to achieve growth and increased market share, according to analysis by Accenture (NYSE: ACN), which is attending the World Economic Forum’s Annual Meeting of New Champions (AMNC) 2014. Accenture’s analysis indicates that companies who can create value through digital innovation will be well-placed to take advantage of greatly increased spending by these consumer segments.
Chinese urban consumers in the low- and middle-end segments represent 70 percent of nationwide urban consumers in China and spent approximately $2 trillion (USD) in 2013; nearly two thirds of all mass urban consumer spending. According to Accenture’s analysis, spending by low- and middle-end consumers could reach $4 trillion (USD) by 2020.
“Online shopping is popular among lower-income Chinese consumers in small and medium-sized cities, as they can shop as conveniently as the high-end consumers in China’s biggest cities”, said Gianfranco Casati, Accenture’s Group Chief Executive for Growth Markets. “This trend, driven by the availability of affordable mobile devices, such as smartphones and tablets, is creating new opportunities for growth, particularly as it eliminates the barrier created by a lack of access to physical stores.  Successfully capturing these opportunities requires companies to place digital at the heart of their strategies, and understand and embrace the demands of the different segments of China’s digital consumers.”
Gong Li, chairman of Accenture Greater China said, “Winning digital consumers from this lower-end segment is not easy as they are both frugal and concerned with quality. Companies chasing growth amongst this segment will need to plan for the lack of business infrastructure and logistics to deliver quality products and services, difficulty generating scale and efficiency in scattered smaller cities near rural areas, and the different expectations of these digital consumers, who not only have lower incomes but also lower brand awareness and loyalty.”
Accenture has identified four key actions companies should take to build their customer-centric strategy and capitalize on these opportunities in the Chinese market:
  • Understanding the consumer: Consumer insights should be at the core of business processes. The segmentation of marketing and distribution channels, and a refocusing of sales platforms towards mobile, online, and other digital channels, will be critical for companies seeking to build momentum.
  • Personalized customer experience: Innovative processes and technology will allow companies to provide customers with a tailor-made differentiated and seamless offer in a low-cost way. Services, such as payment flexibility, improved delivery options, and the ability to check product availability online, should be considered to help create an improved customer experience and increased loyalty.
  • Omni-channel digital approach: Understand and reach customers with a fully integrated digital strategy and operations across the enterprise. Use digital and mobile technology to remove inter-departmental barriers and use integrated data from different business units to seamlessly connect internal organizations.
  • Beyond the boundaries across sectors: By mastering the new consumer market ecosystem based on big data and m-commerce platforms, companies can keep up with the growing customer demand for services, and use customer data and insights to create innovative business models, some of which may cross traditional industry boundaries.
About Accenture
Accenture is a global management consulting, technology services and outsourcing company incorporated in Ireland, with more than 293,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013.
Accenture has been operating in Greater China for more than 25 years. Today, the Greater China practice has approximately 9,300 people servicing clients across the region and has offices in Beijing, Shanghai, Dalian, Chengdu, Guangzhou, Shenzhen, Hong Kong and Taipei.
For more information about Accenture, please visit its corporate homepage and its Greater China homepage
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Yuelong Fan
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