Gen-Z in Asia

In the dynamic landscape of consumer goods, few segments have garnered as much attention as Gen-Z consumers in Asia, particularly in the realm of cosmetics. This article delves into the consumption patterns, trends, and challenges posed by Gen-Z in Asia, while exploring strategies that brands can adopt to successfully engage this strategic segment. 

Gen-Z includes those born between the late 1990s to early 2010s. In Asia, this generation is set to make up at least a quarter of the population by 2025 according to Labbrand. This is almost equivalent to the number of Millennials in the region. This generation has grown up in a context of economic progress, with a revolution in modern technologies. Consequently, like their western counterparts, Gen-Z in Asia is often more tech-savvy and confident in spending than their predecessors. Asia's Gen-Z population, spanning countries such as China, Hong Kong, Singapore, and Japan, commands significant attention due to its size and potential market influence.  

China 

According to data from the Chinese National Bureau of Statistics, the Zoomer population has surged to 233 million individuals. Resulting from the One-Child Policy, they represent 16.5% of China’s population according to Statista. Their consumption capacity also witnessed substantial growth, with a consumption scale amounting to 4.94 trillion Yuan in 2021. This expenditure accounted for approximately 11.2% of the total consumption across China during the same year. Additionally, the expenditure patterns of Chinese Gen-Z consumers, as indicated by both direct and indirect spending, constitute a notable 13% of household expenditure.

This figure significantly surpasses the global average of 8%, a comparison provided by OC&C. Furthermore, the emergence of accessible credit options such as Huabei, microloans, and installment plans has contributed to an increase in disposable income among Gen-Z, with around 31% of them using such plans. Gen-Z are also more present online than previous generations; in recent years, they accounted for nearly 30% of China's online population. They spend almost 160 hours online each month, 12 hours more than the average, according to Statista. 

Hong Kong 

Gen-Z represent around 11% of the Hong-Kong population, around 830,000 people (TransUnion Hong Kong). According to auction house Christie's, in Hong Kong, Asia-Pacific youth has contributed to 21% of the total value in the first half of 2022, almost double the 11% in the first half of 2019. Like their counterparts from the Chinese mainland, young people in Hong Kong seem partial to categories such as contemporary art, Chinese art, jewellery, watches and wine. 

Singapore & Japan 

Gen-Z represents 30% of Singapore's resident population according to Singapore Business Review. Moreover, in Meta age report group, in 2022, Singaporeans from 13 to 24 years old (corresponding to Gen-Z) represented 14.6% of the Singaporean population that uses social media. In Japan, Gen-Z, also called the “Satori Generation”, represent around 14.5% of the population according to SBJ. “Satori Generation” means more precisely the “enlightened generation.” In Buddhist terms: free from material desires, focused on self-awareness and finding essential truths. 

According to Statista, the luxury market accounted for $312.6 billion in 2022, with the Asian market accounting for over a third of the total at $124.2 billion.  

The COVID-19 crisis had a strong impact on the beauty sector, causing total retail sales of beauty and personal care in Southeast Asian markets to decline by 0.6%, falling behind Asia Pacific’s aggregated growth rate of 1.6% from 2019 to 2020 (Euromonitor). Nevertheless, the beauty and personal care sector is back on the rise, with a growth prediction of 4.39% in Asia for the next 5 years (Statista). 

Gen-Z consumption habits follow major trends. There has been a notable shift in their mindset, with an increasing emphasis on authenticity, sustainability, and innovation.  

They Look For A Unique And Personalized Style To Express Their Identity

Gen-Z expects personalization. They tend to look for products that can be personalized and customized, for exclusive or limited-edition products, and brand collaborations. According to a McCann Worldgroup study, 69% of Gen-Z in the APAC region say that they are always “looking for the next cool thing” versus 60% globally. These young consumers seek out products that allow them to express their uniqueness. For Gen-Z, a luxury item doesn't have to be the rarest or most expensive. "It must be able to express the owner's style, character or identity," says Julia Hu, Bonhams' managing director for Asia. "What matters most for them is being able to acquire something that speaks for their vibe." Gen-Z buyers care less about what's creating a buzz and are more likely to trust the judgment of their inner circle, remarks Ashley Dudarenok, a China marketing expert, and founder of the agencies Alarice and ChoZan. "Gen-Z's realize the demands of being different from others through personalization and customization," she adds. "They value convenience, intelligence and fun." 

As Digital Natives, Gen-z Consumes Online Content for Decision-making and Entertainment

At least a third of Gen-Z in Asia spend more than 6 hours per day on average on their phones, and spend more time on social media than any other generations in the region. Constantly being online makes them natural experts who take full advantage of what digital platforms have to offer – browsing and finding information quickly, across multiple channels - when they make informed decisions as to which brands to engage with. A recent study by the Center for Generational Kinetics reveals that 86% of Gen-Z consumers reportedly read reviews online before making a first-time purchase, and 68% read at least 3 reviews online before they shop.  

In countries like South Korea and China, at least half of the Gen-Z population conduct thorough research before they make purchases. They rely on community recommendations and word-of-mouth of peers or KOLs on platforms like WeChat, Weibo, Little Red Book or Douyin.  As well-informed, well-educated, and discerning digital natives, they consult the most relevant resources before making a purchase, and they expect brands to meet them where they are.  

For entertainment, Gen-Z people expect inspiring, insightful stories to engage with. They become engaged with brands through live streaming or mobile games.  

In terms of digital content, they are fond of Web3 content. According to a recent study led by Yahoo, 66% of APAC Millennials and Gen-Z look forward to the metaverse — making up the “Metaverse Generation.” The study also highlights that user groups diverge in how they imagine the metaverse and what they expect from it.  

Gen-Z in general is looking forward to building social connections in the metaverse (different to their circles in real life), the chance to break the rules, become rich and make their personal dreams come true. They show their uniqueness thanks to their avatar and look for freedom to create and personalize their world in line with their dream identity.  

Equity and diversity are important for this group, which believes that everyone has equal opportunities in the metaverse. Contrary to millennials who will enhance real-life hobbies in the Metaverse, Gen-Z will develop new hobbies directly in the Metaverse without necessarily doing it in real-life. The metaverse generation has also strong interest in NFTs. The Yahoo report shows that one-third of Millennials and Gen-Z in APAC have embraced virtual collectables — 31% have already studied NFTs, and 9% have purchased NFTs. Consumers in Hong Kong and Singapore are most likely to be interested in NFTs, compared to other APAC countries — half of the metaverse generation in Hong Kong have researched NFTs, and 14% have made NFT purchases. NFTs enable them to become a member of a group or access a certain community with exclusive content. 

They Look for Brands and Products Aligned With Their Personal Values

Sustainability and environmental footprint are a major concern for Gen-Z due to their upbringing during the global discourse around climate change. This generation, inherently eco-conscious, places importance on ethical consumption and upholds the belief that brands are responsible for their environmental influence.  

A 2018 global survey conducted by Nielsen confirms this, revealing that 80% of Gen-Z believes that companies should contribute to environmental welfare. This sentiment echoes within the APAC region, particularly Southeast Asia, where 82% of Gen-Z individuals express their preference for products originating from conscientious brands. 

According to Vogue Business in China, over 39% of Gen-Z consumers in China are willing to pay a premium for “Sustainable” and “Recyclable” products. China is entering the era of secondhand with dedicated mobile apps like Plum and influencer endorsements. Key Opinion Leader, Viya, shared her purchase of a secondhand luxury bag asking, “who will see the difference between a brand-new Louis Vuitton bag and a secondhand one?” Chinese Gen-Z and Millennials are more sensitive to the impact of the fashion industry on the planet: secondhand is a trend to watch.  

Furthermore, the rise of social media and digital connectivity intensified their exposure to global trends, leading to a desire for products that reflect international styles and aesthetics. However, this is balanced by a growing appreciation for local culture and heritage, showcasing a nuanced blend of global and local influences. For example, in China, an increasing wave of patriotic sentiment is taking root within the consumer base, commonly referred to as Guochao (国潮) or the “national tide”. In 2020 China Youth Daily surveyed 998 college students from various regions and found that 79.8% of participants expressed willingness to endorse domestic products. 

To captivate the Gen-Z audience in Asia, brands must adopt a multi-faceted approach that resonates with their values, aspirations, and evolving preferences.  

Here are several strategies that brands can leverage: 

• Unique Style and Personalized Experience: Gen-Z consumers seek products that cater to their individuality. Brands like Innisfree and Shiseido have capitalized on this trend by offering personalized skincare solutions, allowing consumers to curate routines based on their specific needs. Moreover, South Korean brand Sulwhasoo offers personalized skincare solutions based on traditional Korean herbal ingredients, allowing consumers to tailor their routines according to their skin needs. 

• Web3 and Digital Engagement: The integration of Web3 technologies, such as NFTs and virtual reality, can create immersive brand experiences. Dior launched a virtual try-on feature for its makeup products, enabling users to see how different products look on their faces through augmented reality, enhancing the online shopping experience. 

• Art and Collaboration: Partnerships with emerging artists and influencers resonate with Gen-Z's appreciation for creativity and self-expression. Cosmetics brand MAC collaborated with Chinese visual artist Chen Man for a limited-edition makeup collection that blended Chen Man's vibrant artistry with MAC's makeup expertise. 

• Social Media: Platforms like TikTok, Instagram, and Weibo are pivotal for reaching Gen-Z in Asia. Brands that master the art of crafting relatable and engaging content find success in cultivating a dedicated following. In the present landscape, it is important for brands to establish a resilient digital footprint. They must guarantee brand recognition within the digital realm, but also integrate digital interactions into the user experience. Moreover, active engagement with audiences across diverse social platforms is indispensable. To effectively resonate and harmonize with the global Gen-Z audience, brands must master digital strategies and navigate the digital sphere. Fenty Beauty, founded by Rihanna, created viral TikTok challenges that encouraged users to showcase their makeup skills using Fenty products, fostering a strong online community. 

• Diversity and Inclusion: Gen-Z values inclusivity and diversity. Shiseido expanded its foundation shade range to cater to a diverse array of Asian skin tones, emphasizing inclusivity within the luxury cosmetics sector. Moreover, Fenty Beauty set a benchmark by offering an extensive range of shades that cater to various skin tones. 

• Positive Environmental Impact: Sustainability remains a significant concern. South Korean brand Innisfree adopted eco-friendly packaging and offered recycling initiatives, aligning with Gen-Z's concern for environmental sustainability. Luxury brand Guerlain launched initiatives to protect bees and promote sustainable beekeeping, following Gen-Z's interest in brands which contribute positively to environmental causes. 

• Patriotic Consumption and Heritage: Embracing local traditions and heritage allows brands to tap into Gen-Z's pride for their culture. Japanese brand SK-II celebrated its heritage with the "Art of Pitera" campaign, blending traditional Japanese elements with modern storytelling to resonate with local and global audiences. 

These examples illustrate how brands can successfully engage with Gen-Z in Asia by catering to their unique preferences, values, and consumption behaviors. By embracing personalization, sustainability, digital innovation, and cultural appreciation, these brands can establish lasting connections and thrive in the evolving beauty market. 

Gen-Z in Asia presents both a challenge and an opportunity for brands. By understanding their unique mindset, values, and consumption behaviors, brands can tailor their strategies to engage with this segment successfully. Through personalization, innovation, digital engagement, and social responsibility, brands can establish a strong connection with Gen-Z in Asia, securing their loyalty and future growth in the process.