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IN-DEPTH 13 November 2015
A desire for something different
Roberto Coppola considers how firms can meet the entertainment expectations of the increasingly important Chinese millennial demographic
By Roberto Coppola

Chinese born in the 1980s – also referred to within China as the “Balinghou” generation – are distinctively different. Since the death of Mao Zedong, rapid change has occurred in China, which has paved the way for new prospects and challenges that are far different from what their parents experienced at the same age. Radical disparities exist between Chinese youth and older generations.

With China’s economy being among the largest in the world, the income levels of many citizens are now high enough to be able to travel abroad. Unlike their American counterparts still mired by the after-effects of the Great Recession, Chinese millennials have seen their incomes rise nearly 35% over the past three years. In just the past year the number of Chinese outbound travellers has increased by an astonishing 20%. This has not gone unnoticed by the hoteliers, with nearly 60% of US and 80% of Asia-Pac destination-market businesses noting discernible increases in visitation by Chinese millennial guests.

A total of 90% of Chinese millennials surveyed recently by Hotels.com’s Chinese International Travel Monitor stated that “leisure” was their main reason for international travel. Gambling overseas is also a very popular vacation activity for Chinese tourists. In the last five years, the number of Chinese nationals travelling to Las Vegas has jumped by 80%, according to the Wall Street Journal. In a recent survey of mainland Chinese millennials, Las Vegas was cited as the most popular outbound destination for a leisure travel experience. The opportunity lies in understanding what this market segment is looking for in a leisure travel experience.

For businesses attempting to court Chinese millennials, there may be opportunities to convert physical environments that are static at certain times, such as a bar or lounge in the early afternoon, into transformable modules that can be converted for different types of consumers throughout the day
In many Western countries, young people socialise at cafés, bars or clubs. Although these types of venues can also be found throughout China, Chinese millennials normally favour different types of social environments. Perhaps no more universal example exists, in China and throughout Southeast Asia, than karaoke (or KTV, short for Karaoke Television), which is wildly popular across generations, including millennials.

It is a serious affair for Chinese participants. Karaoke represents one of the best ways to peel back the veneers of one’s exterior-facing persona and has a way of revealing what the true person underneath is really like. For this reason perhaps, karaoke remains an important deal-making tool among business people throughout Southeast Asia, where relationship development is typically the most critical difference between success and failure. In places like China, getting to know the 'real you' is a very important facet of personal and professional development.

Opportunities exist for Western businesses that may currently, or in the near future, seek to attract Chinese millennials by integrating both karaoke itself and also, perhaps more importantly, by extracting the compelling and applicable fragments of a karaoke experience into other business units.

For businesses attempting to court Chinese millennials, there may be opportunities to convert physical environments that are static at certain times, such as a bar or lounge in the early afternoon, into transformable modules that can be converted for different types of consumers throughout the day.

Wildly popular among Chinese millennials, hot pot chain Hai Di Lao competes in a very difficult space. The company describes its physical environment as an ideal place for social gatherings – for customers with some extra time to spare.

A 'hot pot' style of eating basically involves dipping meats and vegetables in simmering broth. The cooking concept is simple and easy for competitors to replicate. Hai Di Lao has become one of China’s most successful hot pot brands, largely by focusing on experiential components of the dining (and pre-dining) environment. The restaurant chain has a strong reputation for customer and employee loyalty, which are both atypical for Chinese hospitality businesses.

The experiential element of Hai Di Lao undoubtedly plays an important role in the chain’s success. Customer satisfaction is actually increased while patrons are waiting (sometimes hours) for their tables, because the restaurant has so many entertainment and leisure options available, including free WiFi, shoe shines, mobile phone repair, manicures and hand massages. This type of creative queuing system opens many possibilities for other types of leisure and hospitality businesses to tap into the unique phases of a particular experience, beginning with the wait for the experience to begin.

American millennial views on the correlation between money and happiness overwhelmingly lean toward spending money on experiences over things. Chinese millennials seem to want both.

Chinese millennials will be the demographic force behind revenue growth for businesses in leisure verticals
Younger Chinese are focused on experience and individualism. Over the course of the next several years, Chinese millennials will be the demographic force behind revenue growth for businesses in leisure verticals. The demands of this consumer set are complex and steeped in juxtaposition with their parents, thousands of years of history and the outside world they are so eager to explore. For global corporations doing business in China, there is added opportunity (and risk) in attempting to woo Chinese millennials.

Two years ago the Volkswagen Group, a German multinational, made interesting strides in tapping into the unique attributes of younger Chinese consumers as part of a print and television ad campaign. China is Volkswagen’s most important sales region; the company sold nearly 3.3 million cars there in 2013 alone, more than double VW’s sales in Germany. Porsche and Bentley, both owned by Volkswagen, also point to China as their top sales market.

Volkswagen’s “Fun. Don’t leave it too late” Beetle campaign of 2013 was squarely aimed at Chinese millennials. The advertisement is set against a backdrop of elders having fun in their attempts to recapture their youth in various ways – such as raving, skateboarding and tagging the side of a building with spray paint – that are clearly beyond the rational limits of their physical ability.

The campaign sets out to present Volkswagen’s globally established laid back hipster brand messaging to a younger Chinese audience in a way that reinforces an iconic automobile that is also innovative, modern and enjoyable to drive. The goal is to make a connection with younger Chinese consumers who want to have fun now before opportunities to let loose pass them by.

Attracting Chinese millennials to a physical product, or a physical space, requires an acknowledgement that what has worked in the past will likely not work with them.

It would be a significant miscalculation, for example, to assume they will respond to what (and how) their parents consume. Chinese millennials definitely want material things. But they also want to express themselves in ways they are comfortable with, which appeal to their desire to really know who they are hanging out with in their quest for deep and meaningful relationships with other people.

Investment in a consumer insights study geared toward the specific goals of a development project that seeks to attract Chinese millennials would be worthwhile for any business looking to tap into this enormous potential revenue stream.

For leisure and interconnected businesses this means developing beyond a small, singular, localised element within a designated environment. The larger experience – driven by a desire for something different, unique and genuine – should also be contemplated in ways that reflect and even encourage the blurring of cultural lines to that place where discovery of something 'new' is likely always the experience for someone in the room.

Excerpt from whitepaper 'The $264b Dragon Baby: Your Next Most Important Customer', written by YWS global director of market research, Roberto Coppola. For a copy, email [email protected]

With over 15 years of market research experience, Roberto Coppola brings a diverse skill set to the YWS team. By combining market-driven design and owner vision, YWS delivers world-class leisure properties and turn-key design solutions. YWS specialises in designing hospitality, gaming, retail, dining and entertainment environments. Founded in 2001, the firm is headquartered in Las Vegas and has a presence in Tulsa, its Native American services hub, Singapore and Macau.
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