Rise of "emotional economy" reflects new trends, dynamics in China's consumption

During this year's "Double 11" shopping festival, the burgeoning "emotional economy," especially among younger generations, revealed a major shift in the Chinese consumer market.

More than 40 percent of young consumers now prioritize "emotional value" when making purchasing decisions, according to a recent report from social platform Soul App. Products that may not necessarily serve a functional purpose but offer the buyer emotional fulfillment -- such as companionship dolls and blind boxes -- have become central to the purchasing logic of Generation Z.

Starting in mid-October, major e-commerce platforms, including Tmall and JD.com, kicked off their annual weeks-long promotional campaigns. The shopping spree, which has been held for over a decade, has become a key window for observing evolving consumer trends.

In recent years, changes in purchasing habits and attitudes, particularly among younger shoppers, have reshaped the retail landscape.

The pursuit of emotional value and experiences has become a prominent trend, said Dong Jizhou, analyst of China consumer and property research at Nomura.

Products like toys from British brand Jellycat and various creative cultural events are becoming highly popular among the younger demographic.

Spending on "joyful consumption" during this year's "Double 11" included significant portions going towards travel-related products, gaming, and cultural and entertainment activities like music festivals and comedy shows, as well as trendy collectibles such as blind boxes, the Soul App report showed.

"Consumers are spending money not just for necessity but to fulfill emotional needs. These emotional values can vary widely as sometimes it's about pleasing oneself, or simply trying something new, like cultural tourism or niche fashion choices. Young consumers are increasingly driven by these desires," Dong said.

Some of the sensational sellers might seem bizarre to traditional consumers, with such products including green bananas with "no anxiety" tags (in Chinese, the words for "anxiety" and "green bananas" have the same pronunciation "jiao lv"), plush toys shaped like hairy crabs, a highly popular delicacy in China, and "Brain of Einstein," a hilarious virtual product at an extremely low price, with the seller claiming that buyers of this product will automatically gain extraordinary wisdom.

While some critics tie the rise of emotional spending to economic downturns or forced consumption downgrades, experts offer a different perspective.

"These seemingly unconventional products are saleable because they resonate with the emotional needs of young people," said a report released by Premia Partners, a Hong Kong-based ETFs issuer.

Gloria Liu and Simon Say Boon Lim, co-authors of the report, highlighted Chinese people's pursuit of high-quality lifestyle and the long-term, positive development of society as GDP per capita moves up and people seek higher level demand according to Maslow's hierarchy of needs.

"Chinese consumers are becoming more confident. They no longer feel the need to wear luxury brands to showcase their social status or identity, particularly among the younger generation," said Dong.

Apart from serving individuals, emotional consumption could mean much more to the economy. Wang Yuanliang, a researcher at Henan Academy of Social Sciences, believes that it can evolve into a powerful consumption force.

Expanding domestic demand has become an important strategy in the efforts of the Chinese government to shore up the country's economy. This year, China introduced an array of measures to encourage consumption, including initiatives for cultivating new consumption scenes and dynamics, and a large-scale program that promotes replacing old consumer goods with new ones.

For businesses, leveraging the rise of emotional consumption could be crucial to staying competitive.

Wang suggested that companies should more vigorously tap into the emotional value behind their products, infuse new attributes and cultural elements, and create unique consumer experiences through innovation. Emerging sectors such as pets, camping, blind boxes and nostalgia-driven products will be key to fueling further growth.

Analysts said the emotional economy has emerged as a new opportunity in China for both domestic companies and international brands.

"It's not so much about where a brand comes from. But it's more about how quickly brands can adapt to local consumer demands, offer relevant products, and connect with consumers on an emotional level," Dong said.