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The way young people shop in China is changing, and it's changing fast. A new report highlights that a significant majority of young consumers are putting emotional value and personal interests at the forefront of their buying choices. We discuss this evolving landscape, find out why it's happening, and how brands can connect in this new reality. Coming to you live from Beijing, this is Roundtable, I'm Steve, and for today's show, I'm joined by Li Yi and you should, first on the program. Contemporary consumer trends, particularly within younger demographics in China, reveal a growing preference for innovative products that offer emotional well-being and align with personal interests, pretty interesting. There was a report that came out in 2024 that indicates that over 40% of young respondents prioritize emotional value and personal interests as the main drivers behind their purchasing decisions. What underlying social, economic, and cultural forces might explain this increasing emphasis on emotional value and personal interests in their consumption choices? An interesting topic indeed, and we'll find out more in just a sec. First of all, welcome back to the show, Li Yi, it has been five years since you appeared on Roundtable. I'm teasing about five months, is that right? Probably a long time no see. I mean, I see you every day in the office, but a long time no see on the show, and especially I think it's my very first show here that you host, Steve. So it's definitely exciting to be here again. Awesome, great to see you. Good afternoon to you, Yuxin as well. All right, let's dive in a little bit. I think before we talk about statistics and trends and all of that stuff, we need a pretty clear definition on what emotional consumption actually means. Oh yes, actually some experts explained emotional consumption refers to the behavior of getting psychological compensation through the emotional satisfaction and psychological comfort brought by the products. The consumers are driven by their emotions to purchase the goods or services, therefore they do not have strong practical demands for the product or service, but rather value the emotional value and resonance that these products can provide for them. And I can give you some more obvious or exact examples. Yeah, because even with that definition, right, it's still such a broad definition that it's kind of hard to understand what it means exactly. So yes, thank you. What would be some exact examples? Yeah, so take online shopping platforms as an example, according to the report of the Global Times, sales of a stress ball, squeezable toy, rabbit with a price of about 5 yuan, that's about 71 cents, surpassed 100,000 mark in 2024. Yeah, and many text based mobile phone cases, maybe writing something very encouraging and motivating and also T-shirts with emotional soothing words also became very popular last year. And what is totally different from previous market demand is that these products may not have practical uses because of their, you know, like different features and some are even just virtual products. Yeah. Oh, virtual products, too. Yeah. All right. We'll get to some of those a little bit later, but I think I understand a little bit more clearly now. So the phone case, for example, that has the encouraging words on it. It's not just about buying a phone case because you need a phone case. You're buying a phone case that can give you some sort of, I don't know, some sort of emotional boost through some encouraging words, so you read those from time to time. Yeah, or maybe just a kind of a self-expression way of having a phone case. It's not so much about the product itself. It's about what the product can do for your emotional well-being. Definitely. And, you know, actually, I'm quite curious that have you ever purchased anything only for its emotional value? Because it really, I mean, you guys really strike me as really rational consumers in most cases, but anyway, have you ever bought anything? I was thinking about this before the show and the example that came to mind, and I don't know if this qualifies or not. My dog that I used to have, Heidi, she was a mini dachshund. And one year for Halloween, I bought her a cow outfit. Oh, so cute. So I dressed the dog up as a cow. And that provided me with a lot of emotional well-being, I suppose, because it was super cute. Does that type of thing qualify for this topic? Am I contributing to the trend there? Definitely, definitely. I agree. And my example would be, I would always buy a lot of fridge magnets. Oh, yeah. Whenever I visit a new place. Oh, gosh, my wife and I do that all the time now. Our fridge is getting really heavy. And so do I. And I think that's definitely about emotional value because, you know, every time my friend visit my apartment and look at those, I mean, a whole wall of fridge magnets and she said, like, do you know, actually, you can get all of these from one place in China, right? Because probably they're all made in that supermarket. That's not the point. Not the point, because I bought those fridge magnets only for sort of like keeping and storing the beautiful memory I've got in this place. And so every time when I look at those fridge magnets, I can just think of maybe the salty breeze on the seashore or some like random walk in the ancient towns or some like very pleasant conversation with my friends during the trip. I think that's the point of buying these things. I get it. I get it now. One hundred percent. All right. So now let's get into the report. What kind of new information came from that? Oh, yeah. So one thing is the changing consumer demographic. Obviously, you know, what young consumers are after is more than just a commodity. Rather, they are looking for something to lift the negative emotions they feel in daily life as Gen Zers take over as the main demographic among consumers, and they are bringing their stronger demand for emotional satisfaction and also spiritual enjoyment. Also, upgrading demands is something this report is revealing. The report by People's Daily reveals that Hong Yong, associate researcher at the Ministry of Commerce Research Institute, said that the emergence of emotional consumption is the result of demand upgrading as materials become increasingly abundant. People gradually shift their focus from just basic living needs to personalized quality orient and and diversified needs. I guess I understand that. Right. And I'll stick with the phone case example. Maybe back when smartphones became a thing and phone cases became a thing, people were just looking at them more from the practical point of view. But now phone cases are everywhere. Phone case shops are everywhere. So rather than just looking at the functionality, that's what the upgrade is, I guess, that you were referencing is that people are looking for more for the product more than they used to look for. Sure. And you know, that very classic theory that we always refer to when we talk about everything that is the hierarchy of needs. I think that also applies in this consumption behavior, because just just as you should mention earlier, when you are, say, in a situation or in a period when material scarcity is one thing, of course, when you buy things, you consider is the price worthwhile? Should I just buy this stuff for five years? Do I really need it? Because you're still looking for some physiological needs, right? You need water, you need food, you need shelter. But then as things become more abundant, people no longer worry about whether they can afford things. And especially nowadays with the raising living standards globally, people just start to looking for more beyond those functionality and whether I need it or not. Yeah. I mean, that makes sense, too, right? You start looking for things once different needs, once previous needs have been satisfied. What about things like social needs or anything within the community? Is there anything from the report reference there? Oh, yeah. In the community of people with common interests and hobbies, you know, products such as blind boxes and figurines are not just toys, but also social media, helping consumers move from like solo enjoyment to group enjoyment. It's becoming a kind of social currency as well. People are interacting and communicating with each other about the products they bought and about this blind box. As we know, it's a kind of a box that has different types or different figurines, mostly, that you may know what's inside. So that's why we call it it's a blind box. And these kind of things are offering people kind of emotional value so that they can get even, I think, more than the actual value of these products, but the kind of excitement that you that you get when you opened up a blind box. I would guess, too, that loneliness is a factor. And I say that because we've talked about this in the past. In many parts of the world, post pandemic, people don't socialize as much. They rely on social media more than they used to. And you just said it's part of a community, but it's a different sense of community, isn't it? Because it's done digitally. So perhaps looking for more from products helps to add fuel to that emotional desire. I guess what I'm trying to say is the feelings that you might feel in your own personal life, maybe what you're lacking there might drive what you're going to buy when you're making a decision about your purchases, which isn't an obvious connection there. Yeah, that actually reminds me of how increasing number of young people, they're buying things in a way they called as re-parenting yourself. It's because more like compensation. So they're buying things that they're not allowed to buy when they're a little kid. So when they grow older and they become more financially independent, they will just increasingly buy those stuff, although they might not really need it anymore, but they're buying them for the little child they used to be. It's like rebelling against your parents in your adult years. Maybe that's why I'm constantly eating KFC right now. Because you weren't allowed when you were a kid? No. I found this on Harvard Business Review. Now, this is a little bit old, this is from 2015, but I still think that this applies today. What they talk about there is from a business point of view, something called emotional motivators or high impact motivators. And they researched hundreds of brands in dozens of categories. And what they found is that there is a strategy to target the feelings, this is from a business point of view, to target the feelings that drive customers' behavior. And they came up with a list of high impact emotional motivators. I'll just go through a few of these and then I wanna come back to the beginning and I wanna point out a few of the words that I noticed. One is a desire to stand out from the crowd. This is from a consumer's point of view. A desire to stand out from the crowd. Another one, have confidence in the future. A third one, enjoy sense of wellbeing. Feel a sense of freedom, feel a sense of thrill, feel a sense of belonging, protect the environment. The list is longer, but I'll stop there. Let's go back, this is what stood out to me when I looked at this list. Let's just look at the first word of the things that I just read. Stand out, have, enjoy, feel, feel, feel, right? So you can see that, can't you? This is from the Harvard Business Review from 10 years ago, but still at that time, they recognized consumers' desire to feel something and to be something when they're making their purchases. I found that to be kind of fascinating. Also, that's why I think this kind of industry is actually on the rise. Xinhua reports that, a report called The Insight Report on Emotional Economy Consumers in 2024 released by intelligent information platform, MOB taxes, paying for emotional value and interest has become the top reason for young people's consumption in 2024. That's accounting for more than 40% of the respondents. So if we look at some of the innovative or perhaps creative products out there that help to release stress and bring happiness and provide that emotional value, what are some other examples we can look at? We've actually set or listed some of these, and one thing that I could think of is the thing that you can release your pressure. A university student surname, Lee, brought a bouncy ball linked with a handband through a stretch rope. Can you imagine that? What's that? It sounds like a yo-yo, but yeah, but it's maybe just a bounce ball, not a yo-yo itself. When he is anxious, he will wear this handband and hit the ball to release the pressure. Ah, and then it comes back. Oh, yes, and I think the enjoyment as you can always catch the ball because maybe that's kind of a sense of... Game. Yeah, kind of that. I also want to offer another example. I think we actually talked about this on round table show that it's the wooden mou yu, or electric mou yu. It's actually the electric wooden fish because traditionally the wooden fish is a wooden instrument where monks used to strike it during chanting to maybe acquire peace and focus, but increasingly you can find some very modern wooden fish, which I personally have one in the office, in the shape of a keyboard button. And on top of the button, there is word like gong de, jia yi, means gong de plus one or virtual plus one. So that means when every time I press the keyboard button, I accumulate my virtual or merit. That's really stress relieving to me personally because every time you just need to focus, maybe write long reports, you always need something to play in your hands. That's definitely stress relieving on your other hand. In the meantime, you just feel this emotional relief because you feel like you're virtually accumulating your virtual, so that's a really interesting case. Not everything is a handheld object or something that you put on your desk at home, or what did we talk about before as well? Those banana trees? Oh yeah. Oh yeah. That people put on their desk for anxiety release. What about companion services? Does this apply here? This is something we've discussed on the show before as well. There are many online interesting virtual services. Even some are quite abstract, I would say, providing emotional comfort for consumers. Some listen to what consumers say to help them release their negative emotions and some chat with consumers to form an online interpersonal communication channel, and some just praise the customers to provide their emotional support and recognition. Just praise them. Just praise them. Really? I actually can get that, and I think that makes sense. Some people, or as humans, a lot of times, we need... Positive feedback. Yes, and at that time, these kind of services, of course, it's like a cold machine that you can just get through online, but yeah, magically, when you are getting that kind of information and saying, oh, you're doing so good, you're acting so positively right now, that makes you feel positive, actually. I'm sorry, do you know some more details about this? I'm curious, do you send them information about yourself and then they use that information to give you compliments, or is it just kind of vague compliments that could apply to anyone? I think that could be highly personalized. You can give them your information and maybe they will customize the compliments they will give you, and they can just, if you don't give them anything, they can just give you a compliment right away. Something like you deserve to have a KFC all the time, Peter. I should call them after a round table every day. Good job, Steve. Thanks, AI Bot. This goes back, I think, this is all connected to loneliness somehow. Don't you feel that way, right? Because if we're not getting that type of feedback in our regular lives enough, probably because we're not interacting with other people, that's where those compliments will come from, then maybe there's some connection there as well. I guess when we're talking about the emotional consumption trend in China and how young people are looking for more from their purchases, there still are challenges that remain in this phenomenon, I would guess, right? Especially when we're talking about things like emotional satisfaction. I think one major challenge, especially popular in this market, is that when you see a lot of complaints from consumers, they're saying that I bought this stuff for emotional value, of course, but when they really get these products back home, they feel like the quality is not really as good as they imagined, it's really disappointing. So quality management is definitely one challenge in this market. And meantime, the privacy is also a major concern because- Privacy, why? Yeah, because as we just mentioned, AI and modern technology is increasingly involved here. So you might be talking to an AI chat bot. Well, you might also, you know, at risk of, you know, privacy leak, of course. So people are also worried about this sort of risk. So meantime, people are also looking for more regulated or well-established markets, especially when it comes to relevant laws or regulations. They are saying that some laws and regulations should really be introduced in time to clarify the legal boundaries of emotional consumer goods. Because when consumers are paying for this, they are not only looking for emotional value, but also quality surveys and safe surveys as well. Yeah, and if emotional value is the driving point and you don't feel satisfied emotionally, then you're going to be disappointed, right? Whereas if you're just buying a product for its functionality, as long as it functions properly, the odds of you being disappointed are pretty low, right? Regulations, supervision, anything else on that list? Another thing is about, I think, safety concerns, you know? And that leads to another example that I would like to list, an example of companionship services. That's called like travel companionship. That's quite popular recently because we have a lot of among young people, there is a kind of a trend of seeking daz or companions, they will just maybe buy a service like that to have a kind of, I would say, acquaintance to be the company with you. So where do you go with your travel companion? Are you talking about within a city, if you're going to go to, I don't know, Summer Palace one day and you don't want to go by yourself then they'll go with you? Are you talking about like going somewhere away for the weekend? Both. Yes, both. And more. And like whenever you want, actually. And they are not, I think, not like a tour guide. Maybe they will not have the professional knowledge of the tour guide, but they can offer you emotional support and they can maybe take pictures for you and have fun with you, maybe have dinner with you, but that's all about giving you the emotional support. Maybe even dressing up like a cartoon character that you like, that could be a travel companionship as well, yeah. And in this case, experts suggest that these, both platforms and regulatory authorities should strengthen background checks and training for these kind of travel companions and provide necessary safety measures for consumers because this is not some very, I think, legit service that you can get from a travel agency is probably just to use post a social media post and people think they're interested in this kind of thing and you can just basically hire them to be your companion. Yeah, this- There's gotta be safety issues there. Yeah, if it's becoming an industry, then it's gotta be more regulations about that. Huh, yeah, because of course, it's like when we talked about the medical services, Lee, I don't know if you were here for that episode or not, it was a while ago, but we were talking about medical services available and the same issue came up, right? You want those people to be vetted before they're invited into your home. Now, in this case, you're not exactly or necessarily inviting a person into your home, a stranger into your home, but at the same time, you are traveling around with them somewhere, somehow. So you would absolutely want to know who that person is and what their background is so that you could feel safe and secure. And that's just good for everyone involved. That's safe for the customer, it's safe for the person who's providing the service and for the platform that the service is being provided. What about AI in this scenario? Because AI is becoming increasingly, you know, talk about emotional companionship, it's becoming increasingly involved. Is there any danger of depending too much on AI when we're talking about emotional needs being meant consumer-wise? Oh yeah, definitely. I think there's a trend that people are using AI excessively, especially among this group of younger consumers, they might just rely on this AI, say chat box or some like services provided by AI because it's really instant and responsive so pleasant, it's always pleasant. It never angers you, it never disappoints you. But meantime, there's also a danger. First of all, are people becoming too reliable or dependent on modern technology, especially something like AI? Because that could be a little bit dangerous because when you rely too much on these connections built on online world, which is not really in the real world, people might just have this illusion that I can just live well with all this maybe fake but really comforting connections. That could be dangerous for the maturity or the growth of young people. Yeah, I agree. And also, yeah. There's an associate professor by the name of Zhang Ya from the School of Psychology and Cognitive Science at East China Normal University. And this was an interesting term that I learned from the professor. AI emotional companionship can create an emotional cocoon that keeps users in their psychological comfort zone. And I think that's exactly what you were talking about there, Lee, is that you'll always get the answer you're looking for, right? You'll always get that emotional support, the service that you were talking about where you can get compliments from them. If you're doing this consistently and you rely on that consistently for your emotional well-being, what happens when you interact with people who don't provide you with that kind of feedback? That's dangerous, isn't it? Yeah, a study shows that among respondents who have used virtual emotional services, 49% believe that it can only be temporarily relieved and also 31% admit that they feel even emptier after that. Oh, so completely defeating the purpose of what you set out to do in the first place. Exactly, and also that can also be a little bit dangerous for brands as well, especially when you're looking at a lot of brands that are building their products or marketing strategy based on storytelling, which is largely related to emotional value. And they are selling their products and they're launching their new products to attract people with this sort of, oh, you can really acquire a huge amount of emotional value if you buy our products. But meantime, are there services where their products worth that price? And does this marketing strategy really can be sustainable because consumers are always smart. When they buy your stuff and they have really high expectation, especially when they're buying things with price that is over, that is worth much more than the value it actually have, they would just hire expectation. But meantime, do your products or do your services actually worth that price? And can you always sell their products based on that storytelling strategy? That can also be a question mark. Sounds like business is a lot more complicated now than it used to be. Exactly. Because you don't just need a good product, you need to worry about the emotional satisfaction of the customer as well. Well, it doesn't matter what we think about it because that is the obvious trend, that's how young people are doing their shopping these days. And Leah, you make a great point, businesses need to keep up with the trends. That we know for sure.