China’s shopping spree ahead of Spring Festival

By Li Xuanmin Source:Global Times Published: 2019/1/28 19:35:19

Holiday consumption is a barometer of the nation’s whole-year retail spending



A corner of Walmart supermarket in Beijing over the weekend Photo: Li Xuanmin/GT

 


Here comes the first shopping carnival for 2019, the Chinese Lunar New Year, which falls on February 5. 

This year, the Chinese consumers, with an ever-expanding middle-class population of around 400 million, are spending more on higher quality goods and services for the upcoming one-week festival. This sheds light on the strong domestic consumption, which guarantees a robust impetus to the economy against global downturns.

Chen Nan, a 29-year-old Beijing white-collar worker, told the Global Times at a bustling supermarket in Beijing that he had allocated a budget of more than 10,000 yuan ($1482.62), which is about half of his monthly salary, for Spring Festival purchases. Last year, he spent around 6,000 yuan to purchase his goods for the Spring Festival. 

"Besides buying traditional decorations for the Lunar New Year, I'm now spending more on imported foods compared with last year. You can see cherries from Chile, lobster from Boston and wines from France showing up on my holiday dining table. I'm not price-conscious, but rather care more about the quality," Chen said.

Behind Chen is the rapidly-rising consumption power of China's middle class, who are keen to consume high-quality and imported goods and have been driving a shift in the spending habits for the Spring Festival in recent years. The shift is also in line with the Chinese policymakers' stimulus measures to encourage imports and boost consumption.

High-quality demands 

To cater to the demands for high-quality goods, a note sent from US-based retailer Walmart said on Wednesday that they have imported 40 percent more merchandise from abroad including fruits, wines and drinks ahead of the Spring Festival compared with the year of 2018.  

As demands for imported wines surged this year, the supermarket has cooperated with more than 120 wine producers in about 11 countries and regions, putting wines from around the world on the shelves for sale. 

Walmart also took note of the "hot sales" of cherries from Chile. "The gift boxes of the fruits are selling at a faster rate, compared with last year, and some could be sold out within a very short time at some of our stores," it said. 

In Juhuasuan, a group-buying website under Alibaba Group, Chinese consumers have bought 1.98 million Australian steaks, 105,000 kilograms of Chilean cherries, and 90,000 kilograms of Ecuadorian seafood from January 13 to January 17, according to a report released by the platform. 

Fruit sales in JDDJ.com, an online-to-offline platform under e-commerce giant JD.com in China, has also posted a similar trend.

A report the company sent to the Global Times showed that the online sales of "expensive" tropical cherries are even with "affordable homegrown" sweet oranges, providing a vivid example of how Chinese consumers are becoming "less price sensitive" and rather "paying attention on quality, freshness and nutrition over price."

Other than cherries and oranges, the remaining two of the top four popular fruits sold at JDDJ.com are kiwi fruit and blueberries, which have an average price of 50 yuan per kilogram and 110 yuan per kilogram, respectively, further evidence of Chinese consumers' expanding consumption power.

Notably, the quest for high-quality foods is also surging in smaller cities. 

Wang Cuixi, a PR spokesperson of JDDJ.com, told the Global Times that spending on cherries in Southwest China's Chongqing Municipality and Chengdu, capital of Southwest China's Sichuan Province, have for the first time outpaced that of Guangzhou, capital of South China's Guangdong Province and jumped into the top five cities in terms of spending power. 

Social e-commerce platform Pinduoduo also said that seafood gift packages, including Boston lobster, Pacific saury from Japan's Hokkaido, and salmon from Chile are all items that have witnessed "explosive growth" during the platform's New Year Shopping Festival, which began on January 4, and users from third- and lower-tier cities account for around 65 percent of its total user base. 

Younger consumer

This year, the spending by young people born after 1990 accounted for 10 percent of the total spending for Spring Festival goods at JDDJ.com, with the amount recording a 37 percent year-on-year growth. 

A report released by data analytics company Nielsen also showed that the post 90s generation's willingness to spend stood at 63 points in the fourth quarter of 2018, higher than the 60 points of those born in 1980s and 54 points of those born in 1970s.

The younger generation is avid consumers of technologies, not only smartphones but also to other personal digital electronics such as intelligent sweeping robots and intelligent full-screen televisions. 

Data from Pinduoduo showed that sales of small household electrical appliances such as coffee-makers and ovens as well as intelligent home appliances such as sweeping robots have seen "big jumps" from January 4 to Thursday.  

The rising middle-class, combined with the growing younger generation, is also lifting the sales of travel packages during the Lunar New Year holiday, a new concept that is different from the traditional subjects of family reunion and returning home during the festival.  

Ctrip said in a note sent to the Global Times that the booking of customized travel packages has doubled ahead of the upcoming Spring Festival, with outbound trips to overseas destinations such as Thailand, Japan, Indonesia and Singapore increasingly becoming popular.

Another online travel agency Lvmama also said that the bookings for outbound trips for the Spring Festival rose 30 percent year-on-year, while spending has also increased 10 percent year-on-year, so far.

It is estimated that tourists will make more than 400 million trips during this year's holiday, compared with last year's 386 million trips, according to a report by Ctrip. 

Zhang Xuyang, a manager of Netherland-based logistics service provider Fulfilment Solutions, told the Global Times on Thursday that the company is shipping more cosmetics and skincare products from France, as well as Dutch flowers such as roses, to China in the last two months. The rate is growing faster than in previous years. 

"I can tell that China is embarking on a Spring Festival shopping frenzy amid a consumption upgrade," Zhang added.

Boost in consumption

Commenting on the spending pattern, Zhao Ping, director of the department of international trade research at the China Council for the Promotion of International Trade, told the Global Times over the weekend that Chinese consumers are "eating healthier, buying in a higher quality way and paying attention to cutting-edged tech products" thanks to a rise in personal incomes.

Industry insiders forecast that as Chinese residents are embarking on a new shopping spree, they are going to spend more during the holiday period compared with last year. Zhao predicted that the spending for the holiday could "grow steadily" at around 9 percent to exceed 1 trillion yuan this year. 

In 2018, the retail and catering sector reported robust sales of 926 billion yuan during the Spring Festival holiday, up 10.2 percent year-on-year, according to data from the Ministry of Commerce

The strong upswing bodes well for the Chinese economy, as Chinese policymakers have been scaling up efforts to boost consumption to make China less dependent on foreign trade amid rising global protectionism. Foreign trade now accounts for nearly one-third of China's GDP.

"The spending before and during the Spring Festival, which marks the first consumption carnival this year, is a barometer for the whole-year consumption power," Zhao said. "As the spending ahead of the holiday reflects, innovation, services and high-quality will be the highlights of the domestic consumption in 2019."

Industry insiders forecast that consumption is going to play a more pivotal role in driving China's high-quality economic growth in 2019. "The contribution from consumption to China's GDP growth could be more than 75 percent this year," Zhao said. 



Posted in: ECONOMY,BIZ FOCUS

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