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By SMG Research Team, April 20, 2010 3:19 pm

Following up on my article about China’s Ant Tribes (click here for a refresher), groups of Chinese youth have become so fed up by the rat race and broken dreams found in Beijing and Shanghai that they are leaving and settling for smaller towns, where they being are offered a cushy start.

While the top tier cities have lured youth with projections of lucrative paychecks, career opportunities and a fast paced lifestyle, many youth are quickly discovering that the reality is nothing like what they had imagined.

Earlier this year, I conducted an in-home interview with a 25-year-old in Shanghai who moved there from his tier 3 city hometown.  Living with his girlfriend in a single room containing only a double bed (that filled 90% of the room) and a computer, their possessions were meager.  Studying in Shanghai was his dream – his first step to becoming a successful graphic designer.  In order to pay rent (and to keep his computer up-to-date) he works at a restaurant every night, including weekends.  “It’s really hard and not what I thought it would be,” he told me, “but I am staying because I have hope that it will get better.”

Youth living & working in Shanghai. Copyright - Starcom 2010

A May 2010 United Nations report stated that from 1980 to 2010, China’s urban population had more than doubled, expanding from 19% of China’s total population to 47%… and growing.

But not everyone is willing to stay and many have given up their big city dreams, seeking their fortunes elsewhere.  One of those places is Ningbo, a port city in eastern Zhejiang province (and home to the handsome beggar!), which will give housing subsidies ranging from 500,000 to 1.5 million yuan to qualified professionals.  Other growing cities like Tianjin, Dalian and Qingdao also offer flexible residency permit policies, which enable access to health care, home purchasing and education.

One reason why young and educated graduates would even consider these cities is because many companies have also discovered their appeal.  For many companies, big cities equal higher operating costs and competition, whereas smaller cities with a developed infrastructure may be just the answer.  For example, Microsoft and Boeing have both set up outsourcing delivery centres in Wuxi, Jiangsu province (a tier 2 city).

Young Chinese professionals

What this means for marketers

With the growth (and expected continued growth) of lower city tier economies – due to the modernization of city infrastructure, their appeal to major companies, and their poaching of professionals and new grads – it is absolutely crucial for marketers to place considerable resources into researching and studying lower city tiers.  We must start looking beyond tier two and three cities and venture into tier four (e.g Quan Zhou 泉州) and even tier five cities (e.g. Shan Tou 汕头).

Also, an influx of sophisticated consumers into lower city tiers may require marketers to re-evaluate their consumer messaging and campaigns, and to consider the dynamics of dual messaging within a single market.

Lower city tiers are an exciting frontier for marketers for its large and untapped consumer base, rising incomes, and consumer aspirations.  Understanding this group – their thoughts and motivations – is the challenge.

Come visit Starcom China Blog again on Thursday, where I will continue our lower city tier discussion and dig deeper into what we have learned about these consumers!

Tier 3 little one and grandfather

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By SMG Research Team, March 25, 2010 2:20 pm

Hi everyone – happy almost-Friday!

First of all, my apologies for my blogging-hiatus.  I’ve been on a one-track mind with working on an exciting research project involving 8 markets in Asia – subject and findings to be revealed soon!

But I want to continue to blog and post interesting things – so I’m going to put it down on paper now that I’m committed to 2 new posts every week.  Tuesday and Thursdays.

The rise of China’s Ant Tribe

We’ve been talking about youth and their desires and also just how much Chinese families rely on the success of their only children.  Many parents work double or triple jobs and use every penny of their life savings just to put their child into university, with the hope that they will get an education, find a good job and take care of them in their old age.

As we’ve seen through talking to youth for our Youth Surveillance research, Chinese youth are ambitious and optimistic.  They are certain they will succeed and are doing everything they can to ensure it.  Just like one of the youth I wrote about in my last blog - he saw the extreme competition during his first year job fair and decided that he needed to stand out even more.  Thus, he started reading leadership books, learning languages and trying to collect as many experiences as possible to make him a better person and more appealing to prospective employers.

This mentality is what we see in students who are still IN university.  However, what about those who have already graduated?  … What has become of them?

A recent article in the Wall Street Journal discusses the plight of some of the previously starry-eyed Chinese youth, fresh out of university, with reality crashing down hard on them.

Unemployment amongst new graduates is a very serious reality.  Many attribute this is to the country’s rapid expansion of state-controlled universities over the last decade, and dramatically increased student enrollment.

An area north of Beijing houses vast numbers of youth who call themselves the “ant tribe” (term coined by Lian Si, a professor at the University of International Business and Economics in Beijing).  This is due to their industrious, hard-working nature, but also in reference to their cramped, crowded and meager living conditions.

Xiaoyuehe, a crumbling one-street village on the north end of Beijing, is the home of several thousand migrants, who are university graduates from across China.  One member of this “ant tribe” is Zhao Lei, a 24-year-old computer science major who graduated in 2008 from Beijing Jiaotong University.  He resides in a 12-square-meter room with five others.  “For most of us who live here, we choose to live here as we have no alternatives,” Zhao said. “This is a place we could afford with our meager income when we first step into society.”

A visitor was almost moved to tears upon seeing the dismal 54 square-feet room two new-grads shared and hearing the song they composed about their tough lives.  Members of the Ant Tribe talk about how cold it gets inside their rooms due to the lack of heating, and also about their loneliness and how difficult it is to date and to start a family given their lack of money.

It is estimated that there are 100,000 university graduates living in different such ‘colonies’ on the periphery of Beijing, but the numbers are likely to be much, much higher than that.

For university students all across China, with their grand dreams and high aspirations, coupled also with the pressure of their parents’ welfare resting on their shoulders, this is a very sobering reality to have to face.

Local officials have said that they are aware of this situation and have allotted money into helping to rectify the situation, such as building low-rent high-rises to provide the college grads with better living conditions.

But I wonder what else can be done for these “ant tribes”.  Whether there’s something companies can do to make their lives just a little bit more comfortable, or to provide a save haven for them to congregate and share their thoughts, fears and experiences, and also to learn the basics of job-hunting – like resume writing, interviewing practice, and other marketable skills – to give them more confidence and a feeling that others do care for their wellbeing.

This Youku video was produced by a member of the ant tribe depicting the loneliness and alienation of a young migrant college graduate in Beijing.  It has received over a million hits.