New era of consumption

By Ma Jingjing and Huang Ge Source:Global Times Published: 2018/2/7 17:58:39

Chinese people change up selection of gifts ahead of lunar new year


Beijing residents shop for Chinese lunar new year decorations on Monday. Photo: VCG



People are busy shopping for the Chinese lunar new year, which falls on February 16 this year. But their choices for New Year's gifts are different from previous years thanks to the improvement in living standards and upgrading of consumption structures. China's consumer market boasts a strong growth impetus driven by spending on education, culture, travel, innovation and luxury products, which are enjoying increasing popularity. Experts said that stable consumption growth will continue to drive the country's sustainable economic development in the future.

 



Chinese consumers are driving a shift in New Year's gift trends, mirroring the great growth of the country's consumption market.

"I bought some cosmetic products as festival gifts for ladies in my family this year, and for men, I will give them electronic devices such as e-bracelets," said Wang Ao, a 20-something white-collar worker living in Beijing.

"In previous years, my family always gave each other snacks like chocolate, nuts and fruits as festival gifts, but those products are now quite normal in daily life," Wang told the Global Times on Tuesday.

He said that products like cosmetics and e-bracelets are quite useful because nowadays, people are more likely to focus on a healthy lifestyle.

"I recently bought a waist watch for my husband and I plan to buy a bag for myself. One of my colleagues also wants to buy beeswax and gold," said Zhang Can, a 32-year-old resident of Shijiazhuang, North China's Hebei Province, on Tuesday.

However, Zhang said that many people around her who wish to buy luxury goods do not wait until specific holidays.

"With the lift in living standards, we can purchase expensive things whenever we want to," she said.

Besides gifts, another obvious change for the Chinese lunar new year is the food, Zhang said.

"Our family is a big one, so we used to buy more than 50 kilograms of pork, beef and mutton. But for this year, we bought more varieties of food. For example, we bought more seafood," she said.

According to a report released by the Suning Financial Research Center on Monday, unlike 10 or 20 years ago, consumers no longer look forward to new clothes; instead, cosmetics, smartphones and home appliances have become people's favorites during the traditional festival.

During the first quarters of 2015, 2016 and 2017, the sales shares of communication devices, home appliances and cosmetics in China increased by about 0.8, 0.4 and 0.2 percent, respectively, said the report.

By comparison, shares of jewelry and clothes both dropped by about 0.4 percent during those same periods.

As the traditional festival usually falls in the first quarter, the above change in retail shows gradual consumption upgrading, as people increasingly seek a higher quality life, experts noted.

The report also shows that high-end liquor is also in great demand.

Kweichow Moutai, a famous Chinese liquor brand based in Southwest China's Guizhou Province, raised the retail price of its 500ml bottle of Feitian Moutai, its flagship product which contains as much as 53 percent alcohol by volume, to 1,499 yuan ($238.19) at the beginning of 2018 from 1,299 yuan in 2017.

Popular imports

With the increasing popularity of cross-border e-commerce, Chinese consumers' enthusiasm has been further energized.

Large e-commerce platforms such as Tmall International - the online shopping mall under Alibaba Group Holding - JD.com Inc and Amazon.com Inc have all launched promotional activities for imported goods.

For example, JD launched a special page for the selling of imported goods. After selecting a Danish cookie on the site, the Global Times found that the number of purchaser comments for that one product had reached 150,000.

Data shows that imported goods have so far taken up 63 percent of goods purchased for the Chinese lunar new year, People's Daily reported on Monday.

Meanwhile, in addition to the consumption boom in first-tier cities, people's purchases of imported goods in second-tier cities have also been quickly increasing, with the figure growing 27 percent year-on-year in 2017.

Increasingly favorable tariff policies have also triggered the growth of imported goods for the upcoming lunar new year, Gao Feng, spokesperson of the Ministry of Commerce, said at a press conference held in Beijing on January 11.

He noted that 15 free trade agreements between China and various other countries and regions have taken effective, covering 8,000 goods with zero tariffs.

The goods include Icelandic salmon, Chilean wine and fruit from the Association of Southeast Asian Nations, Gao said.

Confident spending

The radical change in consumer spending demonstrates the continuous upgrading of the Chinese market's consumption structure and indicates domestic consumers' willingness to pursue a lifestyle with a stronger focus on quality, experts said.

China's consumer market is characterized with a strong growth impetus, improving quality and narrowed consumption disparity, Zhao Ping, director of the Department of International Trade Research at the China Council for the Promotion of International Trade, told the Global Times on Tuesday.

Innovative products and services have become a major force leading the rise in consumer spending and will further enhance mid-to-high-end consumption, Zhao said.

China's retail sales of consumer goods reached 36.6 trillion yuan in 2017, an increase of 10.2 percent year-on-year, according to official data.

Zhao forecast that the amount will continue to rise throughout 2018 to exceed 40 trillion yuan.

On November 11, 2017, e-commerce giant Alibaba generated a record 168.2 billion yuan in sales during its annual Double 11 Shopping Festival, 39 percent more than the figure in 2016.

The surge in sales volume not only reflects the strong confidence of Chinese consumers, but also signals that China has gradually marched into a new era of consumption, experts said.

Chinese consumers now have confidence in their consuming capabilities and are prone to buying more expensive brands, said a report released by McKinsey & Co on Monday.

Particularly, luxury products are enjoying increasing popularity among Chinese consumers.

In 2016, Chinese consumers spent 166 billion yuan on luxury goods in the domestic market, and such spending will continue to rise to 441 billion yuan by 2025, the report said.

Chinese consumers are willing to embrace various brands and focus on a healthy lifestyle, experts said.

In the new era of consumption, Chinese consumers are releasing large potential, Daniel Zipser, senior partner of McKinsey & Co, told a meeting on Monday in Beijing.

Zipser also noted that given the fierce competition among different brands, businesspeople are expected to meet consumers' needs by getting to know their thoughts and behaviors.

Zhao noted, however, that consumer spending on food and clothes will continue to decline, while spending on education, entertainment, culture and travel will grow fast.

Stable consumption will play a bigger role in contributing to China's future growth as upgrades in consumption will optimize supply-side reforms and bring further economic sustainability, Zhao said. China's consumer spending contributed 58.8 percent to the country's economic growth in 2017, said the National Bureau of Statistics.



Posted in: ECONOMY,BIZ FOCUS

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