Mark Tanner says there are plenty of Chinese consumers prioritising price. But there are also tens of millions who are willing to pay more for products they perceive to be safer, better, or more 'emotionally resonant'

By Mark Tanner*

Much has been written about China’s “consumption downgrade” and “deflationary pressures.” It is true that China hasn’t experienced significant inflation like in the West – average sales prices have remained flat, and prices in some sub-categories have even declined. Chinese consumers are also becoming more price-conscious, moving on from the days when buying the most expensive product was equated with buying the best. But just looking at the headlines around price drops only tells half the story.

Those familiar with military strategy will recognise the pincer movement, a tactic where both flanks of an enemy are attacked simultaneously, leaving them surrounded. We’re seeing something similar play out in China’s consumer market. Brands that occupy mid-range price points are being squeezed from both sides: undercut by budget competitors and outshone by premium innovators.

After years of aggressive discounting and price competition, especially across ecommerce platforms, we’re starting to see more brands shifting their focus to the premium flank, buoyed by a modest uplift in consumer confidence.

This is represented by the humble loaf of bread. Premium-priced bread is booming again in China. The same trend is happening in beverages: after years of price wars, HeyTea is doubling down on premium positioning, using product innovation and elevated brand experience to justify higher price tags.

The affordable indulgences of bread and bubble tea offer consumers a way to treat themselves without breaking the bank. But even less-accessible luxury brands are steering away from big discounts. Not a single Balenciaga item was discounted on Tmall in Q1 or during the Singles Day shopping festival, compared to an average 41% discount during the same periods last year. Versace reduced prices on just 3% of its products in Q1, down from 12% in 2024. Valentino offered no discounts at all in February and March, compared with 40% and 30% discounts, respectively, during those months in the previous year.

The willingness to pay a premium for quality is also clear in the parenting category. Those who choose to have children are investing heavily in their health and wellbeing. Spending on children's supplements has continued to grow at double-digit rates annually since the pandemic, despite declining birthrates. In baby care, P&G is seeing growth driven by its premium and super-premium lines, which now make up over half of China’s diaper market.

This premium preference plays out across other categories, too. Homegrown premium beauty brand Mao Geping Cosmetics grew sales by 34.6% last year – despite price points far higher than local competitors. Lululemon grew 41% in 2024, thriving amongst a sea of cheaper sportswear alternatives. In smartphones, Huawei posted 37% growth, powered largely by demand for high-end models.

So yes, there are plenty of Chinese consumers prioritising price. But there are also tens of millions who are willing to pay more for products they perceive to be safer, better, or more emotionally resonant. For foreign brands, who will always find it difficult to compete sustainably on price, this is a critical point. Success in China hinges on proving that your premium is worth it.

*Mark Tanner is the CEO of China Skinny, a marketing consultancy in Shanghai. This article was first published here, and is re-posted with permission.