Orient Securities has released a research report indicating that individual consumers aged 20-35 are emerging as a pivotal force in China's changing consumption landscape. Their preferences are being reshaped around three core principles: functional cost reduction, internal value enhancement, and external quality improvement. Functional spending now prioritizes practical value and cost-effectiveness, while personal budgets increasingly flow toward physical well-being and identity expression. Relationship needs are also shifting from high-burden, long-term maintenance toward lighter connections and high-quality experiences.
Artificial intelligence is lowering the costs associated with cognitive tasks and basic emotional services, which will drive the large-scale expansion of smart devices, efficient retail, and AI-powered companionship offerings. Conversely, professional physical services, original intellectual property, design-led brands, and participatory experiences are expected to command a reverse premium due to their resistance to AI replication.
Where to begin understanding this shift? The demographic foundation is substantial. In 2020, the population aged 15-29 stood at approximately 239 million, which by 2026 will largely correspond to those aged 21-35, providing a sizeable base for new consumer demand. This cohort is entering a phase of employment, income independence, and preference solidification. Career earnings are beginning to accrue, while long-term family obligations such as housing, marriage, and parenting continue to be deferred, granting greater personal discretion over incremental income.
At the same time, abundant material conditions, digital-native upbringings, and higher education levels have strengthened their decision-making autonomy. However, employment competition and work pressure have compressed discretionary time, and shrinking household sizes have reduced daily relationship support. These combined factors have given rise to a consumption structure that emphasizes value-for-money in functional purchases, directs more personal budget toward health and identity, and shifts relationship spending from burdensome upkeep to lightweight, high-quality interactions.
The historical pattern of technological disruption offers a framework for analyzing AI's impact on industry. The industrial revolution used mechanized production to lower manufacturing costs, making standardized goods widely accessible while simultaneously raising the relative value of handcrafted skills, unique designs, and non-standard products. Similarly, mobile internet, through e-commerce, mobile payments, and logistics systems, reduced information, distribution, and transaction costs, propelling China's online retail sales from RMB 3.88 trillion in 2015 to RMB 15.52 trillion in 2024, while making authentic trial experiences, professional services, and offline interaction more scarce.
Both transformations followed the same evolutionary logic: technology first reduces the cost of satisfying demand, moving once-expensive capabilities toward standardization and scale. As supply increases, existing information asymmetries and channel premiums are compressed, and consumers' willingness to pay shifts further toward value that new technologies cannot easily replicate. This historical commonality serves as the foundational framework for assessing AI-era industrial development, starting with the costs AI is reducing, then identifying the large-scale opportunities created by capability diffusion, and finally determining the direction of reverse premiums formed by emerging scarcity.
In the AI era, the consumption needs of the "individualized consumer" will evolve along two main trajectories: leveraging AI to reduce living costs and paying for real value that AI cannot replace. AI lowers the costs of information processing, consumption decisions, and basic relationship maintenance, helping individual consumers save time and energy, reduce functional expenditures, and access low-burden companionship. Experiments show that when digital assistants suggest lower-priced alternatives, the probability of consumers overpaying drops by 63%, reflecting AI's role in compressing information gaps and marketing premiums in functional goods. Globally, revenue from AI companionship applications has expanded more than twelvefold compared to the same period in 2023, indicating that basic emotional services are accelerating their productization.
Consequently, personal agent demand will spur the growth of smart devices, functional consumption's de-premiumization will drive efficient retail development, and the need for low-burden companionship will give rise to AI partners, AI toys, and smart pets. Meanwhile, genuine physical improvement still relies on professionals and in-person operations, identity expression still requires original content and stable community recognition, and authentic experiences are built on bodily participation and human interaction. Therefore, professional physical services, original IP and design brands, and participatory experiences will form new reverse premiums due to their difficulty in being mass-replicated by AI.
Risk factors include macroeconomic conditions and consumer demand recovery falling short of expectations, slower-than-anticipated AI technology development and commercialization progress, intensifying industry competition, and regulatory policy changes.