Know thy field: China’s new consumerist ethos

Changes are afoot in the psyche of China’s consumers. The country’s economic miracle created a vast middle class that enthusiastically chased the status symbols associated with foreign luxury goods. Five years ago, a Chinese upper-middle-class car owner would have been embarrassed to switch from a German luxury car to a premium sedan from a domestic brand. But today, bragging about one’s Audi would be considered amateur and passé. The status boost instead comes from a perceived shrewdness in acquiring products that boast top performance at much lower prices.

This phenomenon has a name: “ping ti culture”, in which Chinese consumers seek out “affordable alternative” (“pingjia tidai”) products that offer similar quality or functionality to high-end brands at a fraction of the price. From cars and gadgets, to jewellery and beauty, ping ti consumption has taken China by storm. This shift may well have its roots in the country’s economic slowdown since the covid-19 pandemic. But it has since evolved rapidly from a trend of budget workarounds into a cardinal change in Chinese consumers’ thinking and behaviour.

European policymakers and industry figures have long grappled with the question of why Chinese companies are so competitive. Answers abound at the level of macro policies and figures. But a closer look at ping ti culture adds an extra layer to such analyses—and could offer European decision-makers more clarity on how to respond.

The multi-squeeze

China’s aspirational middle class helped propel the global expansion of European companies as diverse as L’Oréal and Volkswagen. But European firms are now being displaced in the Chinese market by fierce domestic competitors, which have risen to dominance with astonishing swiftness. Take cars, the pride and joy of European manufacturing: in just five years, the market share of German automakers in China shrunk from 24.2% (2019) to 14.6% (2024), while Chinese brands increased their market share from 39.2% to 65.2% over the same period. The same pattern is evident in other sectors. For instance, 2024-2025 saw French luxury conglomerate LVMH Moët Hennessy Louis Vuitton SE suffer notable revenue drops in China; meanwhile, Chinese jewellery brands are experiencing surging demand.

Many factors are contributing to the squeeze of European companies in the Chinese market. But Europeans should not discount the sociocultural layer as part of the explanation. Ping ti is about value for money, and how Chinese consumers perceive that value. Expressions such as “cost-effectiveness” and “rational consumption” have become the mantra by which many Chinese middle class folk live. Social perceptions of a budget-conscious lifestyle have shifted from stingy and unfashionable to sensible and trendy. And this is taking place in a social climate where frugality is mainstream, and luxury is simply not the done thing.

Indeed, a new generation of Chinese middle class is emerging that embraces “consumption downgrading” as a badge of rationality. One 2024 survey of 1,200 consumers in 15 Chinese cities found that 57.2% of respondents preferred cheaper goods whose quality and functionality were comparable to those of well-known brands (that is, ping ti products). The preference was even stronger among younger generations: 69.3% of those born after 1990 and 72.7% of those born after 2000 favoured ping ti goods. This suggests Chinese millennials and Gen Z are the main drivers of ping ti culture. And they will become the backbone of China’s economy over the next decade.

China’s economic model revolves around manufacturing and exports, meaning Chinese manufacturers and white-label producers are set to be the big winners in ping ti consumption

China’s economic model revolves around manufacturing and exports, meaning Chinese manufacturers and white-label producers are set to be the big winners in ping ti consumption. Chinese consumers increasingly believe that elaborate branding and marketing inflate product prices artificially; and that longer supply chains just mean unnecessary extra costs. Consumers are flocking instead to lesser-known domestic labels that supposedly share the same supply chains and use equivalent raw materials, or employ similar technologies to high-end foreign brands.

Many consumers rely on social media to uncover the “true value” of products and pursue added value for their purchases. Internet-savvy shoppers research ingredients, watch in-factory livestreams, scout reviews and compare price-performance ratios across multiple platforms. As part of the hunt for the best deal, netizens form communities to share their experiences—which creates more emotional value for the low-prestige ping ti brands. In these communities, social credibility and relatability come from flaunting good bargains rather than big splurges. That they are supporting domestic companies is an extra bonus for some of China’s more patriotic consumers.

What is more, social media and e-commerce are deeply integrated in China. This has opened up many new retail channels where domestic manufacturers can show off their strengths. Livestreamed e-commerce, for example—in which manufacturers or influencers demonstrate products and interact with consumers, bypassing the barriers of distributors and retailers—enables direct communication between suppliers and a massive consumer base at very low cost. For smaller Chinese companies with lean assets and production models, this format significantly lowers distribution costs, and they pass this on to consumers. Crucially, it also shortens market feedback chains and permits rapid research and development cycles tailored to changing customer needs.

What this means for European competitiveness

It is difficult for globalised corporations with complex supply chains and rigid production structures to compete with this level of responsiveness and adaptability. Beijing has sent strong political signals that it aims to curb low-price competition in certain industries and vowed to turn the country into a “consumption powerhouse”. But to defend their positions in the increasingly demanding Chinese market, European manufacturers need to compete with China’s myriad domestic alternatives at myriad levels. European firms will have to consider price and quality, but also aspects such as practicality, user experience, emotional appeal and social relatability. Price wars are merely the base layer of growing competitive pressure in China.

Most importantly, European businesses will have to swallow the bitter pill of reality: China is no longer a land of endless opportunity where “easy money” awaits. It is a cut-throat arena in which international brand recognition no longer automatically puts one ahead of the curve. To survive, they need to make substantial efforts to stay current with Chinese consumers, who tend to adjust their views of value and expectations in consumption dynamically in a relatively opaque market.

Moreover, battle-tested Chinese manufacturers will continue to seek exports despite increasing trade tensions, as this permits some breathing room away from domestic ping ti strain. European companies will therefore continue to come up against highly competitive Chinese firms in both home and third markets. The logical step would be to prioritise securing a foothold in the markets of like-minded countries, where European businesses can better attune themselves to consumer needs and afford greater adaptability in production and pricing thanks to more accessible value chains and transparent regulations.

Another question is whether ping ti culture will remain uniquely Chinese. As economic uncertainties grow in more corners of the world, other big spenders may also start to rethink their established perception of value versus price. After all, when DeepSeek—proudly dubbed by Chinese netizens as the “ping ti of ChatGPT”—shocked the global AI market by offering industry-leading LLM performance on a “shoestring budget”, investors in US tech giants began to ask themselves: am I paying for something expensive, or something overpriced?

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.

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