Chinese students a major market force
BEIJING - Zhang Jie, 21, a junior student at Xi'an University of Finance and Economics in the capital of northwestern China's Shaanxi province, spends more than 5,000 yuan (US$604) every semester. "The tuition fee is about 3,200 yuan and other expenses are around 400-500 yuan [$48-60] a month," said Zhang. Her annual consumption is in fact higher than the average disposable income of Chinese urban residents, which is 8,472 yuan a year.
Chinese urban undergraduates like Zhang have huge purchasing power, concludes a report released last week by Sinomonitor, a Sino-Japanese independent market monitoring company, and China Youth Zeitgeist Cultural Co Ltd, a domestic media firm specializing in university students. The report is based on a sample survey conducted among 10,000 students of 126 colleges and universities in 34 major cities from June to September last year. The study, called "Consumption and Lifestyle Study on 21st Century Chinese Undergraduates", covers more than 30 kinds of products and services, as well as undergraduates' ideas about brands, fashion, media and lifestyles. Among those surveyed, 62.7% are male students and 58.2% are from cities.
"This is very important research, and so far the only one specializing in Chinese university students," said Zhang Zhongliang, director of the China Economic Monitoring Center affiliated to the National Bureau of Statistics. According to Zhang, domestic consumption is the most important factor in supporting the country's economic development, and university students are a key player in this. On one hand, university students are potentially big consumers after they graduate, on the other they affect consumption trends in the domestic market, Zhang said.
Statistics indicate that the number of university students in China has increased rapidly in recent years, from 1.08 million in 1998 to over 17 million in 2003. As the country continues to enlarge its recruitment for higher education, the figure will keep growing. Though they are still a small part of the total Chinese population of over a billion, university students are big consumers and comprise a group that will possibly command the highest purchasing power in the near future.
According to the survey, the average disposable income for current undergraduates is 4,919 yuan per semester, says Ma Qiji, deputy general manager of Sinomonitor. Of their total earnings, 44% is from family funds, 17.4% is from grants and loans, and 10% earned by themselves. The students spend almost all their incomes, the study shows. Like Zhang, tuition fees and study-related expenses account for a chunk of their spending. The average figure around the country is about 1,801 yuan ($218) per term, according to the survey. The second-biggest amount is for food, drinks and cigarettes. Despite their basic living expenditures and study costs, current undergraduates pay more for Internet connections, telecommunications, after-course training, tourism and networking activities. Most students are reasonable about their consumption. About 67% of the surveyed could make ends meet while 22.4% had deposits in banks.
But as the awareness of credit consumption becomes more widespread in Chinese society and banks provide convenient services to university students, more and more students are borrowing even for their daily consumption. The study shows that 10.5% of the students often take loans from banks. Some students believe they can use the money they will earn in future to help realize their current dreams. Other students use loans to support their basic living and studies.
A small proportion that pursues fashionable items use loans to purchase high-tech products, books and goods in fashion. "An important reason for credit consumption is that university students have relatively higher and ideal expectations for their future and are full of confidence about their ability to repay loans," said Ma. However, their consumption is restricted by their economic power though they strongly desire high-end products.
The study shows students who have savings spend more on after-course training and IT or digital products. "This proves that irrational consumption among undergraduates is not as serious a problem as people imagine," Ma said. Many Chinese believe that university students have the habit of purchasing fashionable goods that are beyond their means. Another feature thrown up by the study is that students are becoming increasingly independent. Of their total income, 18%, or 865 yuan, is earned by themselves through part-time jobs. Some 70% of the students surveyed have part-time jobs, either teaching or working for companies, to support part of their expenses. "Earning money is not the only purpose for their working. The other important reason is to build up themselves and improve their future competitiveness," the study states.
Despite their limited income, university students spend an average of 4.3% of their expenditure on high-tech products. Some 27% of the students have personal computers, 19.6% have personal digital aids (PDAs), 11.9% have MP3 music players and 11.8% have portable CD (compact disc) players. Expenditure on Internet surfing and mobile telecommunications also reflects current students' pursuit of high-tech products. About 83% of the students have surfed the Internet this term though their expenditure on Internet connection, mail box and online games is not huge - around 66 yuan per month. And, more than 60% of the students have mobile phones.
"Brands are important for university students when they choose high-tech products," said Ma. The study finds that students are more loyal to foreign brands than domestic ones. About half of the surveyed think the most suitable price for a mobile phone is between 1,000 and 2,000 yuan, 85.38% of those who have foreign-branded mobile phones are loyal to their products. On the contrary, among those who have locally made mobile phones, 79% prefer foreign brands.
In the fast moving consumer goods category, including cosmetics, foods, beverages and sports goods, brand names as well as suitable prices and product function are the most important factors influencing students' purchases. Fashion, attractive packaging and other factors do not have as much influence as people imagine. However, advertisements have a relatively important influence on their choices as it does for other consumer groups. More than 48% of the surveyed believe brands which have advertising promotion are relatively reliable, 49.4% think advertisements are necessary in our daily life and only 24.6% say watching advertisements is a waste of time.
Sinomonitor ranked the most competitive brands among university students according to students' preferences, which shows foreign brands are relatively more competitive, especially in high-end consumer goods. These brands are M-Zone in telecommunication sector, Nokia in mobile phones, Lenovo in personal computers, IBM in laptops, Sony in digital cameras, and Netease as an Internet portal. Master Kong, Yili, Huiyuan, Nestle, Pepsi Cola are the most competitive brands in the food and beverage sector. Little Nurse, Rejoice and Adidas star in cosmetics, shampoo and sports goods.
"As the first study specializing in university students, it is helpful to find out the changes in the values of Chinese students, and the spending trend of China's potential core consumers," said Ma.
(Asia Pulse/XIC)
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