2020
0
The Chinese Consumer: Life after COVID-19 – China – July 2020
2020-09-04T09:30:34+01:00
OX990336
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Report
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“The gradual slowing of growth in the macro economy over the past ten years has already triggered consumers to establish prudent consumption habits. This outbreak of COVID-19 has intensified this…

The Chinese Consumer: Life after COVID-19 – China – July 2020

£ 3,695 (Excl.Tax)

Report Summary

“The gradual slowing of growth in the macro economy over the past ten years has already triggered consumers to establish prudent consumption habits. This outbreak of COVID-19 has intensified this attitude and it is expected to last a long time as a result of the uncertainty surrounding the length of the pandemic. Consumers’ focus will almost certainly shift to financial stability but the human desire to chase experience is still there. Opportunities for manufacturers lie in helping consumers to adapt to the changes and create a new balance in life through small indulgence and embracing simple moments.”

– Jessica Jin, Category Director

This Report is an annual summary of the key trends and stories of Chinese consumer spending in the following market sectors:

  • In-home food
  • Non-alcoholic drinks
  • Alcoholic drinks
  • Foodservice
  • Beauty and personal care products
  • Pharmaceutical products
  • Clothing and accessories
  • Home products
  • Household care products
  • Technology and communication
  • Leisure and entertainment
  • Transportation
  • Holidays
  • Housing and personal finances
  • Miscellaneous

Table of Contents

  1. Overview

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

            • China Today
              • Spending Overview
                • The Consumer
                  • Consumers are adapting to life after COVID-19
                    • Figure 1: Changes in spending – spent more, March – July 2020
                  • Core values maintained, while localism rises post COVID-19
                    • Figure 2: Most important things in life, January vs March 2020
                  • What we think
                  • China Today – The people

                    • A big consumer market with 1.4 billion people although population growth is slowing down
                      • Figure 3: Total population and growth rate, China, 2005-19
                    • Birth rate decline to continue as population of women of childbearing age shrinks
                      • Figure 4: New births and birth rate, China, 2015-19
                      • Figure 5: Population of women at childbearing age, China, 2015-24
                    • Growing importance of families with more than one child
                      • Ageing population and evolving seniors
                        • Figure 6: Population structure, by age, China, 2015-19
                      • Generations are evolving as they enter into different life stages
                        • Figure 7: Population structure by generation, China, 2020
                        • Figure 8: Age of different generations in 2020 and 2025
                      • Be mindful about shrinking population of young adults
                        • Urbanisation continues to unleash the spending potential in lower tier cities
                          • Figure 9: Population, by urban and rural, China, 2015-19
                        • Income change explains why value continues to be a key spending consideration
                          • Figure 10: Income per capita by five percentile groups and growth rates, national and urban China, 2014-2018
                        • Real income fell in the first half of 2020 due to COVID-19
                          • Figure 11: Changes in per capita disposable income, China, 2014-20 (Jan-Jun)
                        • Recovery of spending confidence takes time, but majority are positive about future
                          • Figure 12: Confidence in improving future finances, 2015-20
                      • China Today – The economy

                        • The impact of COVID-19 is unprecedented, but the economy has shown resilience so far
                          • Figure 13: Quarterly growth of GDP, China, 2000-20 Q1
                          • Figure 14: Key economic indicators, China 2019-20 Jan-Jun
                        • Yet a full recovery in consumer demand will take time
                          • Figure 15: Growth rate of GDP and by three major industries, China 2017-20 Q1 and Q2
                          • Figure 16: Changes in retail sales of consumer goods, China Dec 2018-Jun 2020
                      • China Today – Expenditure overview

                        • Spending more than doubled since 2010, up by 7.2% in 2019
                          • Figure 17: Total consumer expenditure, China 2010-19
                        • Top five spending sectors remain the same as 2018
                          • Figure 18: Consumer expenditure by sector, 2019
                        • Holidays, finance and housing, transport have taken a bigger share compared to 10 years ago
                          • BPC stands out even overall consumption spending growth slows down
                            • Figure 19: Growth rates by spending sector, China 2010-19
                          • Impact of COVID-19 on consumer spending
                            • Figure 20: Claimed change in consumer spending, averaged across sectors, 2018-20
                          • Path to recovery varies by sector
                            • Figure 21: Short-, medium- and long-term outlook of consumer spending, by sector, China 2019-24
                            • Figure 22: Total consumer expenditure, China, 2014-24
                        • Sector Review – In-home food

                          • What we think
                            • Growth maintains stable with a slight increase
                              • Figure 23: Consumer expenditure on in-home food, 2014-19
                            • Who’s winning?
                              • Who’s disruptive that’s worth knowing?
                                • The five-year outlook
                                  • Impact of COVID-19 on the in-home food sector
                                    • Figure 24: Summary of impact of COVID-19 on the in-home food sector
                                  • Forecast of spending on in-home food
                                    • Figure 25: Forecast for consumer expenditure on in-home food, 2014-24
                                  • What we think
                                    • Analyst’s pick of consumer insights
                                    • Sector Review – Foodservice (eating out and takeaways)

                                      • What we think
                                        • Price increase has contributed to the overall business growth
                                          • Figure 26: Consumer expenditure on foodservice, 2014-19
                                        • Who’s winning?
                                          • Who’s disruptive that’s worth knowing?
                                            • The five-year outlook
                                              • Impact of COVID-19 on the foodservice sector
                                                • Figure 27: Summary of impact of COVID-19 on the foodservice sector
                                              • Forecast of spending on foodservice
                                                • Figure 28: Forecast for consumer expenditure on foodservice, 2014-24
                                              • What we think
                                                • Analyst’s pick of consumer insights
                                                • Sector Review – Non-alcoholic drinks

                                                  • What we think
                                                    • Functional purposes sustaining sector growth
                                                      • Figure 29: Consumer expenditure on non-alcoholic drinks, 2014-19
                                                    • Who’s winning?
                                                      • Who’s disruptive that’s worth knowing?
                                                        • The five-year outlook
                                                          • Impact of COVID-19 on the non-alcoholic drinks sector
                                                            • Figure 30: Summary of impact of COVID-19 on the non-alcoholic drinks sector
                                                          • Forecast of spending on non-alcoholic drinks
                                                            • Figure 31: Forecast for consumer expenditure on non-alcoholic drinks, 2014-24
                                                          • What we think
                                                            • Analyst’s pick of consumer insights
                                                            • Sector Review – Alcoholic drinks (in home)

                                                              • What we think
                                                                • Premiumisation continues to be leading strategy
                                                                  • Figure 32: Consumer expenditure on alcoholic drinks (in home), 2014-19
                                                                • Who’s winning?
                                                                  • Who’s disruptive that’s worth knowing?
                                                                    • The five-year outlook
                                                                      • Impact of COVID-19 on the alcoholic drinks (in home) sector
                                                                        • Figure 33: Summary of impact of COVID-19 on the alcoholic drinks (in home) sector
                                                                      • Forecast of spending on alcoholic drinks (in home)
                                                                        • Figure 34: Forecast for consumer expenditure on alcoholic drinks (in home), 2014-24
                                                                      • What we think
                                                                        • Analyst’s pick of consumer insights
                                                                        • Sector Review – Alcoholic drinks (out-of-home)

                                                                          • What we think
                                                                            • Sustained value growth recovery since 2018
                                                                              • Figure 35: Consumer expenditure on alcoholic drinks (out-of-home), 2014-19
                                                                            • Who’s winning?
                                                                              • Who’s disruptive that’s worth knowing?
                                                                                • The five-year outlook
                                                                                  • Impact of COVID-19 on alcoholic drinks (out of home) sector
                                                                                    • Figure 36: Summary of impact of COVID-19 on alcoholic drinks (out of home) sector
                                                                                  • Forecast of spending on alcoholic drinks (out of home)
                                                                                    • Figure 37: forecast for consumer expenditure on alcoholic drinks (out-of-home), 2014-24
                                                                                  • What we think
                                                                                    • Analyst’s pick of consumer insights
                                                                                    • Sector Review – Beauty and personal care

                                                                                      • What we think
                                                                                        • BPC continued strong growth in 2019
                                                                                          • Figure 38: Consumer expenditure on beauty and personal care, 2014-19
                                                                                        • Who’s winning?
                                                                                          • Who’s disruptive that’s worth knowing?
                                                                                            • The five-year outlook
                                                                                              • Impact of COVID-19 on the beauty and personal care sector
                                                                                                • Figure 39: Summary of impact of COVID-19 on the beauty and personal care sector
                                                                                              • Forecast of spending on Beauty and personal care
                                                                                                • Figure 40: Forecast for consumer expenditure on beauty and personal care, 2014-24
                                                                                              • What we think
                                                                                                • Analyst’s pick of consumer insights
                                                                                                • Sector Review – OTC and Pharmaceuticals

                                                                                                  • What we think
                                                                                                    • Accelerated growth after healthcare reforms and regulatory efforts
                                                                                                      • Figure 41: Consumer expenditure on OTC and pharmaceuticals, 2014-19
                                                                                                    • Market opportunities: new drugs approval speeding up
                                                                                                      • Market challenge: win back trust on supplements
                                                                                                        • Who’s winning?
                                                                                                          • Big pharma benefit from 4+7 drug tendering system
                                                                                                            • Home-use healthcare devices for monitoring cardiovascular disease enjoyed growth in tier two cities
                                                                                                              • E-commerce players benefit from the opening up of online platforms selling prescription medicines
                                                                                                                • Who’s disruptive that’s worth knowing?
                                                                                                                  • Swiss actively building awareness via offline consumer interactions
                                                                                                                    • TCM makes more effort to appeal to younger generations
                                                                                                                      • Home-use healthcare devices are specializing
                                                                                                                        • The five-year outlook
                                                                                                                          • Impact of COVID-19 on the OTC and pharmaceuticals sector
                                                                                                                            • Figure 42: Summary of impact of COVID-19 on the OTC and pharmaceuticals sector
                                                                                                                          • Forecast of spending on OTC and pharmaceuticals
                                                                                                                            • Figure 43: Forecast for consumer expenditure on OTC and pharmaceuticals, 2014-24
                                                                                                                          • What we think
                                                                                                                            • Analyst’s pick of consumer insights
                                                                                                                            • Sector Review – Clothing and accessories

                                                                                                                              • What we think
                                                                                                                                • Slower growth as market matures
                                                                                                                                  • Figure 44: Consumer expenditure on clothing and accessories, 2014-19
                                                                                                                                • Who’s winning?
                                                                                                                                  • Who’s disruptive that’s worth knowing?
                                                                                                                                    • The five-year outlook
                                                                                                                                      • Impact of COVID-19 on the clothing and accessories sector
                                                                                                                                        • Figure 45: Summary of impact of COVID-19 on the clothing and accessories sector
                                                                                                                                      • Forecast of spending on clothing and accessories
                                                                                                                                        • Figure 46: Forecast for consumer expenditure on clothing and accessories, 2014-24
                                                                                                                                      • What we think
                                                                                                                                        • Analyst’s pick of consumer insights
                                                                                                                                        • Sector Review – Technology and communication

                                                                                                                                          • What we think
                                                                                                                                            • Slowest growth in 2019 dragged down by smartphone sales
                                                                                                                                              • Figure 47: Consumer expenditure in technology and communication, 2014-19
                                                                                                                                            • Who’s winning?
                                                                                                                                              • Mobile apps thrive in 2019
                                                                                                                                                • Huawei outperformed Apple as the second largest global smartphone vendor
                                                                                                                                                  • Wearables technology
                                                                                                                                                    • Who’s disruptive that’s worth knowing?
                                                                                                                                                      • Foldable screens respond to needs for bigger screens
                                                                                                                                                        • Oneplus’ built success
                                                                                                                                                          • The five-year outlook
                                                                                                                                                            • Figure 48: Summary of impact of COVID-19 on the technology and communication sector
                                                                                                                                                          • Forecast of spending on technology and communication
                                                                                                                                                            • Figure 49: Forecast for consumer expenditure on technology and communication, 2014-24
                                                                                                                                                          • What we think
                                                                                                                                                            • Analyst’s pick of consumer insights
                                                                                                                                                            • Sector Review – Household Care

                                                                                                                                                              • What we think
                                                                                                                                                                • A stable and growing market heading toward RMB400 billion
                                                                                                                                                                  • Figure 50: Consumer expenditure on household care, 2014-19
                                                                                                                                                                • Who’s winning?
                                                                                                                                                                  • Who’s disruptive that’s worth knowing?
                                                                                                                                                                    • The five-year outlook
                                                                                                                                                                      • Impact of COVID-19 on the household care sector
                                                                                                                                                                        • Figure 51: Summary of impact of COVID-19 on the household care sector
                                                                                                                                                                      • Forecast of spending on household care
                                                                                                                                                                        • Figure 52: Forecast for consumer expenditure on household care, 2014-24
                                                                                                                                                                      • What we think
                                                                                                                                                                        • Analyst’s pick of consumer insights
                                                                                                                                                                        • Sector Review – Home

                                                                                                                                                                          • What we think
                                                                                                                                                                            • Small home appliances and home accessories are the growth engine
                                                                                                                                                                              • Figure 53: Consumer expenditure on home, 2014-19
                                                                                                                                                                            • Who’s winning?
                                                                                                                                                                              • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                • The five-year outlook
                                                                                                                                                                                  • Impact of COVID-19 on the home sector
                                                                                                                                                                                    • Figure 54: Summary of impact of COVID-19 on the home sector
                                                                                                                                                                                  • Forecast of spending on home
                                                                                                                                                                                    • Figure 55: Forecast for consumer expenditure on home, 2014-24
                                                                                                                                                                                  • What we think
                                                                                                                                                                                    • Analyst’s pick of consumer insights
                                                                                                                                                                                    • Sector Review – Transport

                                                                                                                                                                                      • What we think
                                                                                                                                                                                        • Transport market slowed down to single digit growth in 2019
                                                                                                                                                                                          • Figure 56: Consumer expenditure on transport, 2014-19
                                                                                                                                                                                        • Who’s winning?
                                                                                                                                                                                          • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                            • The five-year outlook
                                                                                                                                                                                              • Impact of COVID-19 on the transport sector
                                                                                                                                                                                                • Figure 57: Summary of impact of COVID-19 on the transport sector
                                                                                                                                                                                              • Forecast of spending on transport
                                                                                                                                                                                                • Figure 58: Forecast for consumer expenditure on transport, 2014-24
                                                                                                                                                                                              • What we think
                                                                                                                                                                                                • Analyst’s pick of consumer insights
                                                                                                                                                                                                • Sector Review – Leisure and Entertainment

                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                    • Growth slowed due to regulatory adjustment in lottery segment
                                                                                                                                                                                                      • Figure 59: Consumer expenditure on leisure and entertainment, 2014-19
                                                                                                                                                                                                    • Who’s winning?
                                                                                                                                                                                                      • Online literature, music and videos led the online segment growth
                                                                                                                                                                                                        • Figure 60: Online entertainment users, 2018-19
                                                                                                                                                                                                      • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                                        • Nintendo Switch shows the potential of making gaming part of a healthy lifestyle
                                                                                                                                                                                                          • Linking to consumers’ social needs, WeSing finds a way out in highly concentrated music app market
                                                                                                                                                                                                            • The five-year outlook
                                                                                                                                                                                                              • Impact of COVID-19 on the leisure and entertainment sector
                                                                                                                                                                                                                • Figure 61: Summary of impact of COVID-19 on the leisure and entertainment sector
                                                                                                                                                                                                              • Forecast of spending on leisure and entertainment
                                                                                                                                                                                                                • Figure 62: forecast for consumer expenditure on leisure and entertainment, 2014-24
                                                                                                                                                                                                              • What we think
                                                                                                                                                                                                                • Analyst’s pick of consumer insights
                                                                                                                                                                                                                • Sector Review – Holidays

                                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                                    • Sector grew slower but still a top three spending area
                                                                                                                                                                                                                      • Figure 63: Consumer expenditure on holidays, 2014-19
                                                                                                                                                                                                                    • Who’s winning?
                                                                                                                                                                                                                      • Growing demand for self-drive tour
                                                                                                                                                                                                                        • Overseas holidays going niche and featuring local culture and lifestyle
                                                                                                                                                                                                                          • Differentiated experiences powered by themes
                                                                                                                                                                                                                            • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                                                              • Airbnb bringing hobby-based activities onto its platform
                                                                                                                                                                                                                                • Resorts with theme park experience
                                                                                                                                                                                                                                  • The five-year outlook
                                                                                                                                                                                                                                    • Impact of COVID-19 on the holidays sector
                                                                                                                                                                                                                                      • Figure 64: Summary of impact of COVID-19 on the holidays sector
                                                                                                                                                                                                                                    • Forecast of spending on holiday
                                                                                                                                                                                                                                      • Figure 65: Forecast for consumer expenditure on holidays, 2014-24
                                                                                                                                                                                                                                    • What we think
                                                                                                                                                                                                                                      • Analyst’s pick of consumer insights
                                                                                                                                                                                                                                      • Sector Review – Personal Finance and Housing

                                                                                                                                                                                                                                        • What we think
                                                                                                                                                                                                                                          • Continuous slowdown in growth rate
                                                                                                                                                                                                                                            • Figure 66: Consumer expenditure on personal finance and housing, 2014-19
                                                                                                                                                                                                                                          • Who’s winning?
                                                                                                                                                                                                                                            • Health insurance led segment growth
                                                                                                                                                                                                                                              • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                                                                                • Insurance industry going through digital transformation
                                                                                                                                                                                                                                                  • The five-year outlook
                                                                                                                                                                                                                                                    • Impact of COVID-19 on the personal finance and housing sector
                                                                                                                                                                                                                                                      • Figure 67: Summary of impact of COVID-19 on the personal finance and housing sector
                                                                                                                                                                                                                                                    • Forecast of spending on personal finance and housing
                                                                                                                                                                                                                                                      • Figure 68: Forecast for consumer expenditure on personal finance and housing, 2014-24
                                                                                                                                                                                                                                                    • What we think
                                                                                                                                                                                                                                                      • Analyst’s pick of consumer insights
                                                                                                                                                                                                                                                      • Sector Review – Miscellaneous

                                                                                                                                                                                                                                                        • What we think
                                                                                                                                                                                                                                                          • Increasing service consumption in pursuit of lifestyle upgrading
                                                                                                                                                                                                                                                            • Figure 69: Consumer expenditure on miscellaneous, 2014-19
                                                                                                                                                                                                                                                          • Who’s winning?
                                                                                                                                                                                                                                                            • Who’s disruptive that’s worth knowing?
                                                                                                                                                                                                                                                              • The five-year outlook
                                                                                                                                                                                                                                                                • Impact of COVID-19 on the miscellaneous sector
                                                                                                                                                                                                                                                                  • Figure 70: Summary of impact of COVID-19 on the miscellaneous sector
                                                                                                                                                                                                                                                                • Forecast of spending on miscellaneous
                                                                                                                                                                                                                                                                  • Figure 71: Forecast for consumer expenditure on miscellaneous, 2014-24
                                                                                                                                                                                                                                                                • What we think
                                                                                                                                                                                                                                                                  • Analyst’s pick of consumer insights
                                                                                                                                                                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                                                                                                                                                                    • Consumer spending to remain cautious in short term
                                                                                                                                                                                                                                                                      • Growing localism has long-term implications on consumer behaviour
                                                                                                                                                                                                                                                                      • Changes in Spending

                                                                                                                                                                                                                                                                        • Consumers keep spending (and sometimes more) on essentials
                                                                                                                                                                                                                                                                            • Figure 72: Changes in spending – spent more, January vs March 2020
                                                                                                                                                                                                                                                                          • Discretionary spending takes different paths to recovery
                                                                                                                                                                                                                                                                            • Figure 73: Changes in spending – spent more, March – July 2020
                                                                                                                                                                                                                                                                            • Figure 74: Changes in spending – spent more, by financial situation, April 2020
                                                                                                                                                                                                                                                                            • Figure 75: Changes in spending – spent more, by financial situation, July 2020
                                                                                                                                                                                                                                                                          • More prudent spending should be expected for the foreseeable future
                                                                                                                                                                                                                                                                              • Figure 76: First action to control spending, by category, January 2020
                                                                                                                                                                                                                                                                          • Priorities in Life

                                                                                                                                                                                                                                                                            • Human nature doesn’t change easily
                                                                                                                                                                                                                                                                              • Figure 77: Most important things in life, January vs March 2020
                                                                                                                                                                                                                                                                            • Consumers adapt and will restore balance in life
                                                                                                                                                                                                                                                                              • Figure 78: Most wanted things after COVID-19, April 2020
                                                                                                                                                                                                                                                                            • Localism intensifies and will have a lasting impact on consumer behaviour
                                                                                                                                                                                                                                                                              • Figure 79: Attitudes towards Chinese brands, April 2020
                                                                                                                                                                                                                                                                          • Appendix – Consumer Expenditure Forecast

                                                                                                                                                                                                                                                                              • Figure 80: Consumer expenditure by sector, 2019-24
                                                                                                                                                                                                                                                                          • Appendix – Methodology and Abbreviations

                                                                                                                                                                                                                                                                            • Methodology
                                                                                                                                                                                                                                                                              • Abbreviations

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