retailmarketresearch by Retailtrend (press release) – Mintel’s Annual Chinese Consumer Report, offering a summary of the key trends and insights into Chinese consumer spending over the last year, reveals that urban Chinese consumers*, today, value the importance of an enjoyable job and work/life balance more so than they did just five year ago. In fact, one quarter (23%) of consumers say ‘having a job I enjoy’ is important to them, up from 16% in 2013; meanwhile, nearly one in five (18%) say ‘having enough time for my personal life’ is important, compared to just 13% who said the same five years ago.
Looking beyond the traditional Chinese societal core value of having a successful career, which decreased in importance for consumers between 2013 and 2018 (25% to 18% respectively), Mintel research indicates that consumers are recognising the importance of their well-being and personal values. However, ‘making more money’ continues to be a priority, as 25% of consumers today include this on their list of the most important things in life, compared to 23% in 2013.
In line with traditional Chinese values, family and health remain the centre of consumers’ lives. Mintel research indicates that urban Chinese consumers agree a ‘happy family life’ (51%), a ‘healthy lifestyle’ (45%) and ‘the best education for my children’ (28%) are the most important things in life.
In addition, consumers are showing their national pride as 78% of urban Chinese consumers agree that Chinese brands are just as innovative as foreign brands and 71% say supporting Chinese brands is important to them.
While the familiar worries over food safety (36%) and pollution (32%) remain top concerns for around one third of consumers in 2018, consumers have become more confident in dealing with these issues compared to five years ago when, in 2013, half said they worried about the safety of food products (50%) and two in five (41%) were troubled by pollution. Today, there is an increase in the percentage of consumers who express anxiety over things like stress at work (30% in 2018 compared to 25% in 2013) and intrusion of privacy (18% compared to 9%).
Ruyi Xu, Director of Research, China Reports, at Mintel, said:
“As the economy evolves, so too are consumers. Today, many attach more importance to personal satisfaction at work and the need to protect their privacy. This is driven by continuous improvement of income and education. More importantly, it also speaks to the fact that more Chinese consumers, today, realise the importance individuals play in defining happiness and success. Our research also shows an increase in national pride, reflected not only by a stronger confidence in and willingness to spend on Chinese brands, but also in the demand for bringing back traditional culture and heritage. These are providing new opportunities for brands to market themselves and engage today’s Chinese consumers.”
When it comes to China’s economy, things are also looking up. Experiencing consistent, good health, the economy is reforming to be more consumption- and service-driven in 2018; meanwhile, total consumer expenditure grew by 11.6% in 2017 to reach RMB 38,194 billion. For the first time, the holiday sector (valued at an estimated RMB 3,238 billion in 2017) has exceeded clothing and accessories to become the third-largest spending sector for Chinese consumers. Personal finance and housing (estimated RMB 9,283 billion) and in-home food (estimated RMB 5,549 billion) round out the top three sectors.
Two in five (41%) consumers say they increased their spending in 2017 (on average), up from 36% who said the same in 2016. Eating well has become a spending priority, as Mintel research reveals that 54% of urban Chinese consumers in tier one-to-three cities have increased their spending on in-home food, up from 46% in 2016, making it the top spending sector for 2017.
Mintel forecasts that total consumer expenditure will grow at a compound annual growth rate (CAGR) of 8.4% over the next five years, to reach RMB 57,788 billion in 2022.
“Thanks to a more solid performance in China’s economy in 2017, the overall consumer sentiment has started to move away slightly from the prudence and caution seen last year. Spending willingness has started to climb again in different sectors, indicating that consumers have, to some extent, relaxed their saving mentality as they become more confident in managing their financial circumstances. We see consumers striking a balance between the desire for indulgence today and preserving for tomorrow.” Ruyi continued.
Mintel’s annual The Chinese Consumer 2018 report tracks spending across 16 major consumer markets, revealing the categories that present areas of opportunity, disruption and innovation in the years ahead. Highlights from the 2018 report include:
Transport is still one of the fastest growing sectors
Transport expenditure is mainly made up of spending on the daily commute, both on public and private transportation. In 2017, the sector saw 17.3% growth over the previous year, reaching RMB 2,276 billion. Interest in large cars and growing car usage spending, as well as increasing public transport costs, are all key drivers of the market.
Beauty and personal care market keeps steady growth driven by elaborative care
In 2017, the sector is estimated to have reached RMB 612 billion, experiencing a value growth of 8.2%. This is mainly driven by consumers’ increasing elaborative care of appearance in terms of both time and money spending on the beauty and personal care categories. Moreover, e-commerce is also a remarkable category driver, with consumers nowadays more adoptive of purchasing from online channels even when purchasing premium products.
Busier and fun-seeking lifestyles drive expenditure on foodservice
Foodservice is estimated to have reached RMB 1,448 billion in 2017, experiencing growth of 14.8%. Mintel forecasts that in the five years to 2022, total consumer foodservice expenditure will experience an increase to the tune of 10.6% CAGR to reach RMB 2,394 billion. The growth will be driven not only by consumers’ continuous trading up to better options (healthier and premium ingredients), but also by eating out becoming an increasingly important part of leisure life.
Holidays sector maintains strong growth
The holiday market has maintained robust growth as a result of offering more varieties of holiday products that fulfil Chinese travellers’ demands. In the five years to 2022, total holidays expenditure will experience a 10.8% CAGR to reach RMB 5,395 billion. As the market gets mature, the growth of consumer expenditure is expected to slow down and future growth will rely on increasing travel frequency and spending per visit.
*3,000 internet users in tier 1-3 cities aged 20-49; survey conducted January 2018