The overseas Chinese consumer market represents a dynamic and diverse segment that is increasingly influential in the global economy. With millions of Chinese expatriates residing in various countries, understanding their unique demographics, psychographics, and spending behaviours is crucial for businesses aiming to tap into this lucrative market.
Who are they? Understanding the profiles of overseas Chinese
The overseas Chinese community is a mosaic of individuals from different backgrounds, age groups, and professional sectors. Predominantly found in countries like the United States, Canada, Australia, Japan, South Korea and Southeast Asia, these expatriates range from blue-collar workers to highly educated professionals and international students.
For instance, in the USA alone, there are approximately 5.4 million overseas Chinese, with 2.5 million being non-American-born. In Japan, the number of overseas Chinese is estimated to be between 348,000 and 400,000, while Australia hosts around 597,440 Chinese-born people. This demographic diversity is essential for marketers to consider.
Research indicates that a significant portion of overseas Chinese hold at least a bachelor’s degree, with many arriving as international students or skilled workers. Pew Research Center's 2021 report on Asian Americans found that 54% of Chinese immigrants aged 25 and older in the U.S. hold a bachelor’s degree or higher, compared to 33% of the overall U.S. population. OECD's 2022 Education at a Glance report noted that Chinese students are among the most highly educated immigrant groups in OECD countries, with over 60% enrolled in tertiary education programs.
Cultural values at the heart of financial aspirations
Cultural values play a pivotal role in shaping the financial aspirations of overseas Chinese.
Many of them migrate to foreign countries in search of higher income and opportunities. Despite being in a new and unfamiliar environment, they often settle in clusters with others from the same village, striving to make a living. Deeply rooted in Chinese culture, family support and kinship have always been a core value, driving many to send remittances back home to support their immediate family. This cultural inclination towards familial responsibility translates into financial behaviours, such as prioritising savings and investments, as well as being disciplined in expenditure.
Moreover, having not enjoyed a wealthy upbringing, the desire for financial security and upward mobility is prevalent among this diaspora demographic. Many overseas Chinese aspire to invest in properties, start small businesses, or establish savings plans for their children's education, reflecting a strong emphasis on long-term financial planning.
Segmenting overseas Chinese crowds by mindset and behaviour
Understanding the overseas Chinese market requires more than just demographic data; it necessitates a nuanced approach to segmenting the audience by mindset and behaviour.
Labour Workers: They primarily use remittance services to support their families back in China, sending money regularly in smaller amounts, typically coinciding with each salary pay-out interval. This group may not be highly educated or tech-savvy, and as a result, they often prioritise safety and reliability when choosing a remittance service.
International Students: In contrast, instead of sending money back to China, many international students rely on financial support from their families in China to cover their daily expenses and tuition fees abroad. This support often comes in the form of larger sums of money remitted each time. To manage these funds, students are not only seeking competitive exchange rates from remittance services but also increasingly turning to cross-border digital wallets, such as Alipay and WeChat Pay, which are interconnected with local banking networks.
White-Collar Professionals: This segment is more digitally savvy and often looks for innovative financial solutions, such as fintech platforms that offer seamless transactions and better exchange rates. Platform friendliness and intuitive interfaces are some of their deciding factors.
By recognizing these preferences, marketers in the financial sector can tailor their strategies to meet the specific needs of each group.
Spending habits of the global Chinese community
The spending habits of the overseas Chinese diaspora are shaped by a unique blend of traditional values and modern financial practices.
On one hand, many prioritise spending on family support, intergenerational wealth transfer, property ownership, education, and investments, reflecting a strong cultural emphasis on prudence and long-term planning.
On the other hand, a significant portion of this group, who have achieved wealth in a relatively short period of time, are also prone to indulging in luxury spending and high-stakes investments.
This seeming paradox is driven by a desire to enjoy the fruits of their labour and further grow their wealth. To truly understand the financial decisions of the overseas Chinese, it is essential to appreciate the complex interplay between cultural values, socio-economic factors, and personal aspirations that shape their spending habits.
As overseas Chinese become more and more financially literate, there is a growing interest in investment opportunities. This includes real estate, stocks, and other financial instruments.
Marketers can capitalise on this trend by offering tailored investment products that cater to the unique needs of overseas Chinese. For example, financial services that facilitate cross-border transactions can attract this audience.
According to the latest figures for the Australian market, Chinese investors remain the largest foreign buyer group of Australian homes, with $700 million worth of residential investment proposals approved between July 1 and September 30, 2023. Although this represents a significant decline compared to previous years, such as in 2017 when Chinese buyers were responsible for $15.4 billion in purchases, the 523 approved dwellings, averaging $1.34 million each, still constitute a substantial investment in 2023.
Marketing pathways: Where overseas Chinese seek financial guidance
Overseas Chinese navigate a unique digital landscape, switching between Chinese and Western platforms. This hybrid approach allows them to stay connected with their cultural roots as well as new surroundings. It reflects the dual ecosystem that overseas Chinese often engage with. New migrants, in particular, blend Chinese and Western social media platforms to stay informed, accessing news and information from both sides of the world in their native Chinese language.
The digital behaviour of overseas Chinese consumers is significantly influenced by in-language media and culturally-inclusive content. According to a Nielsen survey in 2023, 61.9% of Chinese American consumers prefer brands that advertise in programs reflecting their culture, while 60.4% pay attention to ads in their preferred language. This highlights the importance of tailored marketing strategies for brands aiming to build trust and impact purchase decisions within this demographic.
The overseas Chinese often use a mix of Chinese platforms (e.g., WeChat, Xiaohongshu, Douyin) and Western platforms (e.g., WhatsApp, Facebook, Instagram) to stay connected with both their home country and their host country.
The rise of Rednote (XiaoHongShu)
While Xiaohongshu does not release official figures, estimates suggest that 10-15% of its user base are overseas Chinese.
Platforms like Rednote (XiaoHongShu) play a crucial role in shaping consumer behaviour, particularly among younger Chinese-speaking audiences, with approximately 80% of its users under 38 years old and highly educated. The platform's focus on user-generated content fosters an engaging community, where the rise of Key Opinion Consumers (KOCs) can sway consumer preferences. Unlike celebrities, KOCs are more relatable and authentic, with a smaller following of a few hundred to thousands of fans. This makes their recommendations more genuine and trustworthy, especially when it comes to products or service endorsements.
A quick search on the RED platform reveals there are 24.9 million views of articles related to cross-border remittance, for example.
The platform's unique blend of e-commerce and word-of-mouth marketing creates a distinct shopping experience tailored to the needs and preferences of overseas Chinese consumers. Overseas Chinese consumers often retain cultural preferences from their home country, including a preference for social commerce and integrated payments. Such social media platforms are better equipped to cater to these preferences compared to Western platforms, which focus more on individual shopping experiences, brand loyalty, and data privacy.
Currently, a growing portion of users are utilising XiaoHongShu as a search tool. Research indicates that 90% of users habitually seek product reviews before finalizing purchase choices.
As an algorithm-centric platform, XiaoHongShu's content performance is significantly impacted by search volume and user engagement. To thrive on XiaoHongShu's search engine, it’s important to optimize your content in accordance with the platform's algorithm.
Fundamentally, there are 5 main SEO strategies that enable brands to raise search engine ranking effectively, which are:
- Identify Target Keywords: To enhance XiaoHongShu SEO and improve search rankings, identify popular search terms related to your brand and products that are natural, relevant, and have high search volumes through keyword research.
- Maintain Keyword Integration: After identifying keywords, incorporate them into your note titles, content, and tags without keyword stuffing to maintain a natural content flow for user and platform approval.
- Ensure Content is King: XiaoHongShu is a decentralized platform, quality content dictates distribution and search rankings. Authentic, resonant content is favoured by XiaoHongShu users over impersonal ads.
- Cultivate a High-Interaction Environment: Interaction data, notably comments, influences search rankings. Notes garnering comments tend to rank higher, especially those with more comments than likes. Brands should prompt user engagement by encouraging comments, questions, and discussions. Being actively engaged yields better results. Promptly responding to user comments is crucial.
- Utilise Tags and Topics Effectively: Tags and topics can boost search rankings, the very same ones in the first point. By using relevant tags, your notes will appear in related search results and topic pages. Select tags that match your content, engage in trending topics, and participate in discussions to boost exposure.
Note that brands in financial services face tighter scrutiny, necessitating adherence to compliance and best practices to avoid penalties and an understanding of XiaoHongShu’s strict guidelines and data storage policies.
Implications for marketers
To effectively target Chinese demographics in a foreign host country, marketers must avoid wasting media dollars on the vast mainland China population. Instead, they can leverage advanced ad targeting capabilities, such as 3rd party data packs, search keywords, location data, and spending data. Identifying and partnering with KOCs who create content relevant to daily life in the foreign country can also help reach a highly engaged audience. Additionally, utilising niche Chinese platforms and media channels that cater to the local Chinese community living internationally can ensure a targeted and resonant message via Mandarin/Cantonese support.
As the overseas Chinese market continues to grow and evolve, marketers must be prepared to adapt and innovate to stay ahead of the curve. By understanding the unique demographics, cultural values, and financial aspirations of this diverse audience, businesses can build trust, foster lasting relationships, and ultimately drive business growth in this increasingly influential sub-market.
Published by WARC in October 2024
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