'Coupon generation' wields consumer power in China

By Chi-chi Zhang

Associated Press

Published: Sunday, Jan. 2 2011 12:00 a.m. MST

In this Nov. 24, 2010 photo, people use a row of coupon machines near a supermarket entrance in Beijing, China. More than a craze, discount shopping is becoming a way of life for young Chinese. Known as the "coupon generation," they are changing the way business is done in the world's second largest economy.

Alexander F. Yuan, Associated Press

BEIJING — Ding Can is obsessed with bargains. Her purse is crammed with more than 30 shopper discount cards and dozens of coupons. Her apartment is packed with freebies, from cosmetic samples to key chains. She often lines up before dawn for tickets to discounted movies.

Her yen for savings isn't out of necessity. The 32-year-old software testing engineer is relatively well off. She says, simply, "I've never come across a good deal I didn't like."

More than a craze, discount shopping is becoming a way of life for young Chinese. Known as the "coupon generation," they are changing the way business is done in the world's second largest economy.

Companies as global as Nike and as local as the Yonghe fast food chain are courting the bargain hunters. The eagerness for deals has spawned discount clubs, online group buying and sidewalk kiosks that dispense coupons.

A planned three-week campaign by Mercedes-Benz for its two-seat Smart car ended in a day when the more than 200 cars were snapped up in less than four hours at about 135,000 yuan ($20,000) each, a 20 percent discount, on China's most popular online retailer.

It's a relatively new and youth-oriented phenomenon in China, where consumerism has taken off only as the country has shifted from central planning to capitalism and started to grow.

Americans, of course, have been clipping coupons for years — Coca-Cola Co. began offering discounts around the turn of the last century. But in China, the trend has implications for the global economy.

The spending habits of 350 million Chinese aged 18 to 35 are seen as crucial to boosting the world's recovery from recession and to one day vaulting China past the U.S. as the world's largest consumer market. That could come as early as 2020, according to Goldman Sachs, the investment banking giant.

"This isn't your grandma or a housewife cutting out Sunday coupons in her kitchen, because they are the future," said Leeon Zhu, a senior planner at the advertising firm Young and Rubicam's Shanghai office. "And they're at the forefront of retail consumption growth in this country."

Ding and other members of "Discounts for Singles," an online forum, traded war stories at a spicy Chinese restaurant on a recent evening.

Ding showed off a free sports watch she earned by taking photos of herself in front of a Lenovo computer store during a promotional event. A dining partner regaled the others with her latest steal: two dozen half-priced cartons of fruit juice at 4 yuan (60 cents) a carton.

"How are you going to drink all the juice?" one asked.

"I'll give it away to friends and family as gifts," said Shan Yunfei, who makes about $500 a month as an administrative assistant at an architecture firm. "They love it when I bring home new products."

Even the dinner is free. New eateries looking for publicity offer meals to people such as Ding and Shan, who are frequent reviewers on Dianping.com, China's most popular restaurant listing site.

Frugality is highly valued in China, a legacy of generations of poverty that only ended with the free-market reforms of the past 30 years. Savvy consumers are applauded by friends and family. TV shows such as Beijing's popular "Managing Money" air interviews with Chinese who saved big through group-buying events and promotional deals.

The biggest target is the 18-35 age bracket, born after the chaos of radical Maoism. They have largely only known steadily rising incomes.

"Young Chinese consumers love to spend and rarely save because they are optimistic that they'll always have money," said Fu Guoqun, a marketing professor at Beijing University.

Shan, 23, concedes that discounts get her to consume more than she would otherwise. Her bag is stuffed with McDonald's coupons and other discount cards.

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