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Consumer Spending Priorities - China - March 2018

“There are many grounds to believe continuous growth in consumer spending will take place in 2018, but businesses should not simply conclude that growth will be easy in every sector. When it comes to luxury indulgences, holidays and beauty services are going to catch more share of consumers’ discretionary spending. However, all brands need to continuously bring excitement in their products and services or they can be easily seen as boring and lose appeal.”

– Ruyi Xu, Director of Research

This report examines the following issues:

  • What does consumer sentiment say about 2018?
  • Which sectors are going to benefit from more discretionary spending?
  • Are consumers prepared to spend tomorrow’s money today?

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Table of contents

  1. Overview

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

          • The economy remains in a good shape
              • Figure 1: Gross Domestic Product growth rate (vs same period last year), China 2013 Q3-2017 Q4
            • Stronger spending growth coming from rural China
              • Figure 2: Growth in per capita income and expenditure, by urban and rural, China 2017
            • Most consumers have maintained a healthy financial status…
              • Figure 3: Current financial situation, 2016-17
            • …and feel confident about future financials
              • Figure 4: Confidence in improving financial status over the next 12 months, 2013-17
            • A stronger willingness to spend beyond Beijing and Shanghai
              • Figure 5: Overall spending willingness in the next 12 months, by city, December 2017
            • Holiday and beauty services going to take the lead in discretionary spending
              • Figure 6: Ways of spending annual bonus, December 2017
            • Paying by instalments is becoming more common
              • Figure 7: Usage of instalment payments in the past 12 months, December 2017
            • Proactive financial management instead of a last resort
              • Figure 8: Reasons for using pay by instalment payments, by service provider, December 2017
            • What we think
            • Issues and Insights

              • What does consumer sentiment say about 2018?
                • The facts
                  • The implications
                    • Which sectors are going to benefit from more discretionary spending?
                      • The facts
                        • The implications
                          • Are consumers prepared to spend tomorrow’s money today?
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • Macro-economy in a good shape
                                  • Consumer spending remains strong, though further room for growth exists
                                  • State of the Economy

                                    • GDP growth accelerated to 6.9% in 2017
                                      • Figure 9: Gross Domestic Product growth rate (vs same period last year), China 2013 Q3-2017 Q4
                                    • CPI under control
                                      • Figure 10: Consumer Price Index, China January 2015-December 2017
                                    • Lowest unemployment since 2002
                                      • Spending growth remains solid, especially in rural China
                                        • Figure 11: Total retail sales of consumer goods, China 2008-17
                                        • Figure 12: Per capita disposable income and expenditure, China 2014-17
                                        • Figure 13: Growth of per capita disposable income and expenditure, by urban and rural China. 2014-17
                                    • The Consumer – What You Need to Know

                                      • The majority have healthy finances
                                        • Overall confidence about future remains high
                                          • More discretionary spending going to services
                                            • Consumers are getting used to paying by instalments
                                            • Current Financial Situation

                                              • Signs of more polarising spending habits
                                                • Figure 14: Current financial situation, 2016-17
                                              • Young females are most relaxed about saving
                                                • Figure 15: Current financial situation, by age and gender, December 2017
                                              • Key household income thresholds
                                                • Figure 16: Current financial situation, % of “I can save a considerable amount of money at the end of the month”, by monthly household income, 2016-17
                                              • Property ownership still makes a big difference
                                                • Figure 17: Current financial situation, by property ownership, December 2017
                                            • Confidence in Improving Future Finances

                                              • Overall confidence still remains high
                                                • Figure 18: Confidence in improving financial status over the next 12 months, 2013-17
                                              • But not all groups feel the same
                                                • Figure 19: Confidence in improving financial status over the next 12 months, % of “very confident”, by age and city tier, 2013-17
                                              • White collar workers in foreign enterprises are least confident
                                                • Figure 20: Confidence in improving financial status over the next 12 months, % of “very confident”, by occupation and company type, 2013-17
                                              • Those spending more than they should are becoming less confident
                                                • Figure 21: Confidence in improving financial status over the next 12 months, by current financial situation, 2017 vs 2016
                                            • Future Spending Sentiment

                                              • More than half would spend more
                                                • Figure 22: Overall spending willingness in the next 12 months, by confidence in future financial status, December 2017
                                              • Young males are ready to open their purses
                                                • Figure 23: % willing to spend more in the next 12 months vs % can currently save considerably, by age and gender, December 2017
                                              • Lower tier cities catching up
                                                • Figure 24: % willing to spend more in the next 12 months vs % can currently save considerably, by city, December 2017
                                            • Ways of Spending Annual Bonus

                                              • Beauty treatments going to take a bigger share of people’s pocket
                                                • Signs of getting weary about fashion, expensive meals, and consumer electronics
                                                  • Figure 25: Ways of spending annual bonus, December 2017
                                                • Demographic differences
                                                  • Figure 26: Selected ways of spending annual bonus, by city tier, December 2017
                                              • Use of Instalment Payment

                                                • Seven in 10 have used some sort of pay by instalments services
                                                  • Figure 27: Usage of instalment payments in the past 12 months, December 2017
                                                • Are young consumers more open to paying by instalments?
                                                  • Figure 28: Usage of instalment payments in the past 12 months, by age, December 2017
                                                • Higher earners are more likely to pay by instalments
                                                  • Figure 29: Usage of instalment payments in the past 12 months, by household income and region, December 2017
                                                • Self-willing rather than a last resort
                                                  • Figure 30: Reasons for using pay by instalment payments, by service provider, December 2017
                                              • Meet the Mintropolitans

                                                • Significantly more MinTs are better off
                                                  • Figure 31: Current financial situation, by consumer classification, 2016-17
                                                • A wider gap between MinTs and Non-MinTs
                                                  • Figure 32: Confidence in improving financial status over the next 12 months, by consumer classification, 2015-17
                                                • Holidays, beauty treatments, cultural events and cars
                                                  • Figure 33: Ways of spending annual bonus next time, by consumer classification, December 2017
                                                • More proactive use of pay by instalment services as a finance tool
                                                  • Figure 34: Reasons for using pay by instalment payments, by consumer classification, December 2017
                                              • Appendix – Methodology and Abbreviations

                                                • Methodology
                                                  • Abbreviations

                                                  Consumer Spending Priorities - China - March 2018

                                                  US $4,460.00 (Excl.Tax)