China’s consumption upgrade hits coronavirus hurdle as consumers want more bang for their buck amid slowdown

Name: Chinese exporters turn to domestic consumers as coronavirus hits overseas markets
Uploaded: 2020-06-30T14:40:46.000Z
Duration: 2 min 19 s
Description: Chinese exporters turn to domestic consumers as coronavirus hits overseas markets

Spending on fast-moving consumer goods in the mainland fell 6.7 per cent in the first quarter, the biggest decline on record, study shows

Kantar’s list of the world’s 100 most valuable brands in 2020 includes Alibaba and Tencent

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Chinese consumers throng a Costco Wholesale store in Shanghai during the first week of its opening in August last year. The coronavirus pandemic has dented Chinese consumers’ appetite for higher priced goods. Photo: EPA-EFE

Daniel Ren

Published: 10:40pm, 30 Jun 2020Updated: 11:53pm, 30 Jun 2020

The coronavirus pandemic has set back China’s consumption upgrade as people become increasingly price conscious amid falling household income due to the economic slowdown, with spending on fast-moving consumer goods likely to fall for the first time ever this year, according to a joint study by global consultancy Bain & Co and market research firm Kantar Worldpanel.

The study found that expectations of “revenge spending” will not be enough to overcome the 6.7 per cent slump – the biggest decline on record – in FMCG spending on the mainland in the first three months of the year.

“The middle class is grappling with an economic downturn and they will spend less,” said Derek Deng, a partner at Bain, adding that that pandemic has slowed China’s consumption upgrade drive.

He said that consumers were closely watching the prices of daily necessities such as milk powder, instant noodles and toothpaste.

02:19

Chinese exporters turn to domestic consumers as coronavirus hits overseas markets

The category of FMCG refers to non-durable goods such as packaged foods, beverages, skincare products, shampoos and over-the-counter drugs. The Chinese government has been using the phrase “consumption upgrade” over the past few years to describe the growing demand for high quality, higher priced goods and services.

The coronavirus pandemic, which originated in Wuhan, in central China’s Hubei province, last December, has resulted in nearly three months of lockdown and home isolation since late January, largely disrupting production of goods and commercial activity across the mainland.

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