Young Chinese are trading Shanghai for small cities. Brands like KFC are following them with thousands of stores.

• China's workers are migrating from megacities to smaller towns because of economic challenges.
• Big domestic and international brands, like Starbucks, are expanding in these smaller markets.
• Migrants to lower-tier cities have disposable income that they're happy to spend on pricier coffee.

China's megacities are losing their appeal with some young workers, who are leaving them behind for smaller towns. Big chains like KFC and Luckin Coffee are following them.

Shanghai and Shenzhen both saw a net outflow of people in 2023, according to data Bloomberg cited on Tuesday from MetroDataTech, a Shanghai-based consultancy. MetroDataTech did not immediately respond to Business Insider's request for data.