Low-tier city markets
In China, according to the city size classification standard of the State Council [1] and other factors, including economic scale, cities can be classified as:
| Cities | Urban resident population | Total GDP |
| Tier 1 cities | over 10 million | over $300 billion |
| Tier 2 cities | over 5 million but less than 10 million | over $68 billion but less than $300 billion |
| Tier 3 cities and below | less than 5 million | less than $68 billion |
Markets in tier 3 cities and below, counties, and rural areas are lower-tier city markets. These markets are large and dispersed, driven by the consumption of natives.
The economy of acquaintances
Consumption is driven by relationships between acquaintances in which purchasing recommendations, positive feedback, and testimonials are passed on by word of mouth. The economy of acquaintances is based on trust and the reputation of people. The power of a particular social circle to influence the purchasing preferences of those within the circle is an expression of the reputation of the person providing the information and also an expression of the number of people within that circle.
Group buying
Consumers come together on e-commerce platforms or social media to make bulk purchases, thereby increasing their ability to negotiate with merchants. Because the purchase volume is generally large, consumers can obtain the best price. Group buying uses the internet to organize consumers into groups to buy the same product at a discount. After spreading product information mainly through social networks, etc., consumers form buying consortiums and pay individually using platforms like Pinduoduo to handle the transactions and communications with sellers.
Referral schemes and click incentives
Consumers send product links to their contacts via social media, and if their contacts click on the links, the sender gets a better price. The more friends that click a link, the lower the price for the sender and some products can even be obtained for free. E-commerce platforms or brands use this method to gain more traffic and attention to their platforms and products.
Town youth
Young people born in the 1980s and 1990s and currently working and living in Tier 3-6 cities, towns, and villages. Their main characteristic is that they have more disposable income and greater free time.
We business
A new business model that leverages the mobile internet space, using social software as a business tool, and places the digital social circles of people at the center of the model. At present, China’s most significant We Business is on WeChat, using Friends Circles, WeChat Mini Program, and WeChat mall (Note: they are all functions on WeChat) to sell goods.
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