Reasons to Read

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.