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Consumer Spending Priorities - China - August 2019

“Although the majority are still in a good financial situation, uncertainties in the economy have rung alarm bells. Consumers have become more conservative in their financial outlook, and savings sentiment has also gone up. Instead of being blindly driven by promotions, more consumers are now buying what they need. When making purchasing decisions, value for money has become a decisive criterion. Brands can no longer take higher profits and loyalty for granted; they need to continuously generate excitement with their products and services to stay on top of consumers’ mind.”

– Summer Xia, Research Analyst

This report examines the following issues:

  • Doing price promotions at a value-centric time
  • Build an aspirational brand image to improve stickiness with consumers
  • How to pitch to young and new-to-market investors

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Figure 1: GDP growth rate (vs the same period last year), China, 2014 Q3-2019 Q2
            • Figure 2: CPI, China, July 2016-June 2019
            • Figure 3: Total retail sales of consumer goods, China, July 2016-Jun 2019
          • The consumer
            • More respondents choose to save
              • Figure 4: Current financial situation, 2016-2019
            • Confidence in enhancing finances remains high but is slowly weakening
              • Figure 5: Confidence in improving financial status over the next 12 months, 2016-19
            • Spending confidence is closely related to an individual’s fiscal budget
              • Figure 6: Confidence influencing factors, May 2019
            • Indulgence still ranks bottom, but importance is growing
              • Figure 7: Financial priorities, May 2019
            • More are buying when in need and searching for value-for-money
              • Figure 8: Spending habits, November 2016 and May 2019
            • Investment products with high liquidity and lower risk are sought-after
              • Figure 9: Preference for investment products, May 2019
            • What we think
            • Issues and Insights

              • Doing price promotions at a value-centric time
                • The facts
                  • The implications
                    • Build an aspirational brand image to improve stickiness with consumers
                      • The facts
                        • The implications
                          • How to pitch to young and new-to-market investors
                            • The facts
                              • The implications
                              • State of the Economy

                                • GDP growth slid to 6.2% in Q2, still within expectations
                                  • Figure 10: GDP growth rate (vs the same period last year), China, Q3 2014-Q2 2019
                                  • Figure 11: Share of the contributions of the three strata to the increase of the GDP, 2014-Q2 2019
                                  • Figure 12: Share of the contributions of the three GDP components to the GDP growth, 2015 Q2-2019 Q2
                                • CPI climbed up in the first half of 2019
                                  • Figure 13: CPI, China, July 2016-June 2019
                                  • Figure 14: Average year-on-year price increase for the first half of 2019
                                • Impact of personal tax cut in driving consumption is yet to be seen
                                  • Figure 15: Real growth of per capita disposable income and expenditure, by urban and rural China, 2016 3Q-2019 2Q
                                  • Figure 16: Percentage of disposable income spent, China, 20151Q-2019 2Q
                                • Growth in retail sales rebound in Q2, for mixed reasons
                                  • Figure 17: Total retail sales of consumer goods, China, July 2016-June 2019
                                • Labour market pressure eased in Q2
                                  • Figure 18: Surveyed unemployment rate, January 2018-June 2019
                                • Policy outlook for the second half of 2019
                                • The Consumer – What You Need to Know

                                  • Healthy finances but saving sentiment starts to grow
                                    • A slow weakening of confidence
                                      • Income and cost of living are the most influential factors
                                        • Saving for long-term plans instead of big purchases
                                          • Good enough is OK, instead of buying the best
                                            • Safety comes first for investment products
                                            • Current Financial Status

                                              • Saving sentiment has grown compared to 2016
                                                • Figure 19: Current financial situation, 2016-19
                                              • Deduction in personal taxes help post-80s with savings
                                                • Figure 20: Current financial situation, by generation, 2017-19
                                              • Consumers in tier one cities choose to save more for uncertainties
                                                • Figure 21: Current financial situation, by generation, 2016-19
                                              • High earners finding it more difficult to save compared to five months ago
                                                • Figure 22: Current financial situation, by generation, 2016-19
                                            • Confidence in Improving Financial Situation

                                              • 80% still confident, but optimism is weakening slightly
                                                • Figure 23: Confidence in improving financial status over the next 12 months, 2016-19
                                              • Women feel less confident
                                                • Figure 24: Confidence in improving financial status over the next 12 months, by gender, 2017-19
                                              • High earners: still more confident than others, but less so than before
                                                • Figure 25: Confidence in improving financial status over the next 12 months, by monthly personal income, 2016-19
                                              • Employees at state-owned businesses and foreign enterprises become more cautious
                                                • Figure 26: Confidence in improving financial status over the next 12 months, by company type, state-owned business and foreign enterprises, 2018-19
                                              • Access to credit products drives confidence
                                                • Figure 27: Confidence in improving financial status over the next 12 months, by current financial status, 2017-19
                                            • Spending Confidence Influencing Factors

                                              • Income growth and living costs matter most
                                                • Figure 28: Confidence influencing factors, May 2019
                                                • Figure 29: Importance ranking of the confidence influencing factors, December 2016 and May 2019
                                              • Life stage influences what matters to different generations
                                                • Figure 30: Confidence influencing factors, by generation, May 2019
                                              • High income consumers and tier one city residents will take macro-environment into account
                                                • Figure 31: Confidence influencing factors, by monthly personal income, May 2019
                                            • Financial Priorities in the Next 12 Months

                                              • Saving and investing for the future still come first
                                                • Figure 32: Financial priorities, May 2019
                                              • Big-ticket purchases give way to self-indulgence, especially among post-80s
                                                • Figure 33: Financial priorities, selected activities, November 2014 and May 2019
                                                • Figure 34: Ranking of the financial priorities, very important, by generation, May 2019
                                              • Lower tier cities have a more traditional mindset
                                                • Figure 35: Financial priorities, selected activities, by city tiers, May 2019
                                            • Spending Habits

                                              • Consumers become more agile in their spending
                                                • Figure 36: Whether follow the monthly spending plan, November 2016 and May 2019
                                                • Figure 37: Financial priorities, any important, by whether follow the monthly spending plan, May 2019
                                              • Switching happens even when people love the brand
                                                • Figure 38: Brand loyalty, by selected demographics, May 2019
                                              • Value for money becomes more important
                                                • Figure 39: Value for money versus the best can afford, November 2016 and May 2019
                                              • Post-70s vs post-90s: patient bargain seekers vs instant gratification generation
                                                • Figure 40: Wiliness to wait for a promotion, by generation, and city tier, May 2019
                                              • Nearly two in five would consider paying in instalments for big-ticket purchases
                                                • Figure 41: Payment preference for large items, by demographics, May 2019
                                            • Preference for Investment Products

                                              • Top squad unchanged
                                                • Figure 42: Preference for investment products, May 2019
                                              • Men are more risk-tolerant
                                                • Figure 43: Preference for investment products, by gender, May 2019
                                              • Post-90s are interested in niche investment products
                                                • Figure 44: Preference for investment products, by generation, May 2019
                                              • High earners show investment expertise
                                                • Figure 45: Preference for investment products, by monthly personal income, May 2019
                                            • Meet the Mintropolitans

                                              • Uncertainties about the future make MinTs more conservative in spending
                                                • Figure 46: Confidence in improving the financial status, MinTs, 2016-19
                                                • Figure 47: Confidence influencing factors, by MinTs and non-MinTs, May 2019
                                              • Richer investment experience
                                                • Figure 48: Preference for investment products, By MinTs and non-MinTs, May 2019
                                              • Buy when needed, and use credit payments actively
                                                • Figure 49: Financial planning habits, by MinTs and non-MinTs, May 2019
                                              • Different from high earners, MinTs are more exploratory in trying out new brands
                                                • Figure 50: Spending habits, by MinTs and non-MinTs, May 2019
                                            • Appendix – Methodology and Abbreviations

                                              • Methodology
                                                • Abbreviations

                                                Consumer Spending Priorities - China - August 2019

                                                £3,486.28 (Excl.Tax)