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Laura He

China’s consumer confidence has risen sharply from a year ago, with wage earners expecting a 6.1 per cent real growth in income in the next six months, according to a new survey.
Richard Kersley, Credit Suisse’s head of global thematic research, said the conclusions were drawn from a newly conducted survey produced by the Swiss investment bank and Nielson.
“In our 2017 survey we find general consumer confidence is recovering amongst respondents, with Asian consumers having the greatest level of optimism,” he said.
The findings are based on interviews with 14,000 consumers in eight emerging economies, including Brazil, China, India, Indonesia, Mexico, Russia, Turkey and South Africa. The survey measured consumer sentiment by looking at medium term expectations across five factors: personal finances, inflation, household income trends, immediate spending intentions, and income history.
China recorded a consumer confidence score of 64 per cent this year, sharply higher than 49 per cent in 2016.
Nonetheless, it dropped from the first spot last year to No 3 this year, behind India and Indonesia.
According to the survey, 20 per cent of total respondents are optimistic about the outlook for their personal finances versus 15 per cent last year. In Asia, more than 40 per cent of respondents expect to see their financial circumstances improve in the next six months.
The need for a healthy lifestyle is evident as health care spending looks set to increase rapidly
Richard Kersley, Credit Suisse’s head of global thematic research
Chinese consumers have the highest wage growth expectations in Asia, foreseeing real wage growth of 6.1 per cent in the next six months.
Kersley and his team also found some new developing consumption patterns among respondents, including a “conscious” consumer and a battle of brands accompanying the rise of “national champions”.
“Chinese consumers are adopting heathier lifestyles,” Kersley said. “The need for a healthy lifestyle is evident as health care spending looks set to increase rapidly otherwise.”
According to the survey, close to 40 per cent of Chinese respondents intend to increase their time spent playing sport, while almost 80 per cent agree that they have started to eat more healthily.
Spending on sportswear has also grown rapidly. More than 60 per cent of respondents in China bought sportswear in the past three months.
Also, as Chinese consumers become wealthier they have upgraded their lifestyles, Kersley said.
Entertainment spending among Chinese respondents has risen by more than 50 per cent since 2010 and now represents over 10 per cent of monthly household income, the highest among all countries in the survey.
The relaxation of the one-child policy has added a new dimension to the changing lifestyle of Chinese consumers.
“Baby-related consumption will get a boost,” Kersley said. Key sectors to benefit include sportswear, children’s wear, home improvement, appliance manufacturers, education and health care.
In addition to lifestyle upgrades, China is also witnessing a battle of the brands between “national consumer champions” and global premium brands.
“The typical pattern is that as incomes have risen, emerging market consumers have focused on international brands. But we are now seeing signs of this pattern changing,” Kersley said.
The change is evident in some consumer discretionary sectors, such as smartphones, as high income earners in China are showing a clear and growing preference for local brands, such as Huawei, over global premium brands, like Apple.
“Quality improvements are moving the needle, particularly in China,” Kersley said, adding that the quality gap between local and international brands is closing.


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China economy

China’s consumer confidence sharply higher in 2017, says Credit Suisse

A cinema room in China. CHINA OUT AFP PHOTO / AFP PHOTO / STR

The relaxation of the one-child policy has added a new dimension to the changing lifestyle of Chinese consumers. Photo: AFP