While the consumption upgrading in China – people are looking for high-end products of premium quality, consumption downgrade is happening at the same time. It is about looking for the most reasonable price, paying for the most appropriate product, spending rationally, and living smartly.

This evolution is especially evident among 2 groups within the population: young consumers with limited financial resources and utility-driven consumers living outside the 1st tier cities. These people tend to buy cellphones from the domestic brand Xiao Mi (小米) with only 1/3 of the price of an iPhone, workout using training APPs such as Keep instead of paying for a personal trainer in an actual gym, and use group shopping APPs such as Pin Duo Duo (拼多多) to get a good bargain by joining more people they know into buying the same product.

Pin Duo Duo (拼多多, “joining more and more”), one of the most popular social network-based group shopping APPs in China. It is used by 0.3 billon of Chinese and sells products at incredibly low prices.

Downgrading one’s consumption can certainly release the financial pressure of living in the mega cities. At the same time, consumption downgrade is facilitated by innovative solutions: websites and APPs for resource sharing, discount finding, and social networking. Most importantly, consumption downgrade can be seen as another type of consumption upgrade: achieving a better life quality through purchasing value-for-money products rather than the high-end ones.

There are 2 major implications regarding this upgrade driven by downgrade: