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Covid-19 polarises China’s consumers as luxury sales boom while the lower income group turns to cheaper alternatives

  • Unable to shop overseas, wealthier Chinese consumers turned to luxury goods from cars to lavish holidays domestically
  • Lower-income workers have been hurt disproportionally by the Covid-19 outbreak

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People wearing protective masks walk around a shopping area in Beijing in September 2020. China’s economic recovery from Covid-19 accelerated, spurred by a rebound in consumption. Photo: Bloomberg
Yujing Liu

China’s wealthy consumers splurged on luxury goods this year while low-income workers tightened their belts by saving on cheaper alternatives. Both can point to Covid-19 for the polarised spending behaviour.

The pandemic has aided sales of luxury items such as high-end cars, liquor and lavish holidays at home as overseas shopping trips became restricted, according to analysts. At the same time, concerns about job losses in a beaten-down economy have prompted workers – many in the catering and services industry – to be frugal, they added.

“There are these insulated spenders who have pent-up frustration because they are not able to travel overseas, so on one hand we are seeing this higher-end growth,” said Justin Sargent, president of retail intelligence at market research firm Nielsen Asia.

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“By the same token, if you look at the statistics around, more people are feeling the pressure on their finances and job prospects, so you’ve also got more focus on the value spectrum.”
China’s wealthy consumers spent on luxury cars, lavish holidays as Covid-19 hampers overseas shopping trips. Photo: AP
China’s wealthy consumers spent on luxury cars, lavish holidays as Covid-19 hampers overseas shopping trips. Photo: AP
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Underscoring the polarisation, luxury car sales climbed by 32 per cent in August from the same period last year, according to a Nomura report on September 24. Their share of the market rose to 14 per cent in January-to-August from 11 per cent in the same period in 2019. The overall industry saw a 15 per cent decline in sales.

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