What's Inside

China’s tier system classifies cities based on perceived level of economic development, residents’ buying power, consumer sophistication and other factors. With economic prosperity spreading deeper into the country, lower-tier cities are attracting greater attention:

• Personal consumption in lower-tier areas is growing at double the rate it is in tier-1 cities
• Internet access is high and growing, but the e-commerce penetration rate is low
• These factors plus rising incomes in these areas spell growing opportunity

But the demographics in lower-tier areas are different: The average age of an Internet user and online shopper is different, there is a preference for group buying and a number of other characteristics mean retailers need to tailor campaigns to these areas.