Consumer confidence dips in five major cities
Consumer confidence in five major mainland cities fell last month as shoppers became aware of the full impact of the global financial crisis on the economy.
'Nervous' consumers in Beijing, Shanghai, Chengdu, Shenyang and Guangzhou are cutting back on their household and entertainment budgets following the Lunar New Year, according to a tracking study released yesterday.
Market research consultancy DDMA found 45 per cent of respondents in the five cities had already cut back on spending, an increase of seven percentage points on a similar study conducted in January.
A further 15 per cent had not reduced their spending but were planning to cut back, bringing the potential proportion of buying-wary consumers to 60 per cent.
DDMA director Sam Mulligan said the data showed mainland consumers were not panicking yet, but the economy was having a strong impact on their spending patterns. 'They are nervous, as opposed to anything else, which is making them cut back on their spending.'
People were beginning to worry about their jobs after hearing about friends who had been laid off.
'They know there is trouble on the way or in progress at this point in time,' Mr Mulligan said. 'It's not just far away, it is nearer to their own lives. It is now more tangible, something they can understand.'
The survey polled 602 middle-level to high-end consumers in the five cities. It was the first monthly tracking study following a benchmark study that spoke to 2,500 consumers in the same cities in January.
One in five respondents said their annual bonus had been cancelled, and 35 per cent said they had spent less over the Lunar New Year than usual due to the economy.
Job security was a key concern, with 26 per cent saying they were worried about being made redundant, up 5 percentage points on January. One in eight had already lost their job, a statistic described as 'astonishing'.
However, consumers were more positive about the longer-term economic situation, with 43 per cent believing things would get better within six months.
Mr Mulligan said people were generally confident that the government was 'going to sort everything out', but they remained cautious until they saw concrete evidence of the economy improving. There was also worry that the stimulus package 'can only manage things inside China'.
'The high-level consumers tend to work in finance or trading or with foreign companies and these are the companies that are under a lot more threat than the Chinese equivalent companies,' he said. 'It doesn't matter what stimulus package you have, it is not going to create demand for those companies.'