TIANJIN - While the Chinese economy is changing gear, its consumption market is experiencing an even bigger shift: Enter the new class of savvy consumers -- the millennials.

"The millennials are a very different generation. They were born and bred at a time when China's economy and wealth were growing rapidly, so most have no memory of the hunger and instability experienced by their parents," said Zhang Lifen, a journalism professor at Shanghai's Fudan University and former editor-in-chief at FTChinese.com, at a meeting at the World Economic Forum, which began Sunday.

These young people born after 1980 now account for 40 percent of China's population aged between 15 - 70. They account for around 45 percent of consumption, and this share is expected to reach 53 percent in five years, according to Boston Consulting Group (BCG).

"The force driving consumption has completely changed. The younger generation will become the biggest spenders, contributing two thirds of consumption growth going forward," said Carol Liao, greater China president at Boston Consulting Group.

Unlike their thrifty parents, who lived through challenging economic and social times and chose to save and limit consumption, the younger generation are spending more generously and demonstrating more individualized preferences.

According to BCG, consumption among the younger generation is expected to grow twice as much as their parents, at 14 percent annually. The upper middle class among millennials spend 40 percent more across a number of consumer goods than the same cohort in their parents' generation.

The generation gap is equally evident in factors shaping respective consumption habits of the millennials and their parents. Twenty-five percent of Chinese millennials hold a bachelor's degree or higher, compared to 3 percent for their parents generation. The younger generation can recognize 20 cosmetic brands on average, compared to just 7 for the older generation, a BCG study finds.

"The things they find interesting, and the services they need are drastically different from the previous generation," said Xiao Hong, CEO of Chinese gaming company Perfect World during a panel discussion on Chinese millennials at the WEF meeting in Tianjin on Sunday.

"What you see on the market are hundreds of niche brands in everything from cosmetics to snacks catering to various demands of the Millennials. While none of the smaller players can rival established brands on their own, together they are chipping away at the dominance of big brands, which are reticent to change."

While this is a challenge for established brands, this could give an edge to startups founded by millennials and firms where products design and market are placed in the hands of their peers.

"Many game developers at our company are in their 20s and the stuff they make will eventually be consumed by their peers," said Perfect World's Xiao, who was born in the 1960s.

It also takes a very different approach to managing millennials, Xiao said.

"They are not afraid of challenging authority," he said, "When they don't agree with you, they say it outright. At the end of the day, they are the ones who know what their peers want."

"If consumer-facing companies want to be part of China's consumption growth story in the coming years, they must find a way to better engage with the younger generation," said Carol Liao.

The millennials are not just consumers to be won over, but also a key asset when companies design, innovate and sell products in the market, she said.