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The Chinese Consumer - China - May 2019

Covered in this report

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

“The economy is still healthy, recording 6.6% GDP growth in 2018, maintained by consumers’ increasing consumption. But uncertainties ahead mean some sectors have experienced both trading up, with consumers’ seeking self-indulgence, and trading down, due to frugal mindsets, as seen in the holiday and clothes and accessories segments. Intangible assets such as knowledge improvement and experience accumulation are important and are being prioritised ahead of physical satisfaction, for both single and married people. Brands should impress consumers with outstanding product quality first rather than trying to resonate through value and personality.”

– Jessica Jin, Category Director

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Table of contents

  1. Overview

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

            • China today
              • Spending overview
                • Figure 1: Consumer expenditure and growth rate, by sector, China, 2018
              • The consumer
                • All sectors seeing trading up albeit for different reasons
                  • Figure 2: Changes in spending, January 2019
                • Self-care matters
                  • Figure 3: Lifestyle challenges, January 2019
                • Hierarchy of brand influence
                  • Figure 4: Impact of brand in purchasing, January 2019
                • What we think
                • China Today – The economy

                  • 6.6% growth is still over USD1 trillion
                    • Figure 5: GPD and growth rate, China, 2014-18
                  • 6.0%-6.5% target growth for 2019, quality over quantity
                    • CPI more under control towards later part of the year
                      • Figure 6: Consumer Price Index, China, 2016-18
                    • Employees reduce in number and keep moving to urban areas
                      • Figure 7: Employment personnel, by urban and rural, China, 2014-18
                  • China Today – The people

                    • 1.4 billion people, growing at 0.4% a year
                      • Figure 8: Total population and growth rate, China, 2014-18
                    • 15 million new births in 2018, down by 2 million vs 2017
                      • Figure 9: New births and birth rate, China, 2014-18
                    • Ageing population
                      • Figure 10: Population structure, by age, China, 2014-18
                    • Urbanisation now at 60%
                      • Figure 11: Population, by urban and rural, China, 2014-18
                    • Income growth continues to be the backbone of confidence
                      • Figure 12: Per capita disposable income, China, 2014-18
                      • Figure 13: Confidence in improving financial status in the next 12 months, China, 2017-19
                  • China Today – Expenditure overview

                    • An obvious slowdown in growth
                      • Figure 14: Total consumer expenditure, China, 2014-18
                    • Spending priorities remain the same in 2018, but motivations vary
                      • Figure 15: Consumer expenditure by sector, 2018
                    • The five-year outlook
                      • Figure 16: Total consumer expenditure, China, 2013-23
                      • Figure 17: CAGR in consumer expenditure, by sector, 2018-23
                  • Sector Review – In-home food

                    • What we think
                      • Pursuing better-for-you and convenient diets
                        • Figure 18: Consumer expenditure on in-home food, 2013-18
                      • Who’s winning?
                        • Who’s struggling?
                          • The five-year outlook
                            • Figure 19: Best- and worst-case forecast of consumer expenditure on in-home food, at current prices, 2013-23
                          • Key consumer findings
                            • Spending intention on in-home food maintained
                              • Figure 20: Claimed spending changes in in-home food, 2017-19
                            • Who is spending more?
                              • Analyst’s pick of 2018 insights
                              • Sector Review – Foodservice (eating out and takeaways)

                                • What we think
                                  • Development of food delivery service slows market growth
                                    • Figure 21: Consumer expenditure on foodservice, 2013-18
                                  • Who’s winning?
                                    • Who’s struggling?
                                      • The five-year outlook
                                        • Figure 22: Best- and worst-case forecast of consumer expenditure on foodservice, at current prices, 2013-23
                                      • Key consumer findings
                                        • Importance ranking drops
                                          • Figure 23: Claimed spending changes in eating out, 2017-19
                                        • Who is spending more?
                                          • Analyst’s pick of 2018 insights
                                          • Sector Review – Non-alcoholic drinks

                                            • What we think
                                              • Innovation drives stable growth
                                                • Figure 24: Consumer expenditure on non-alcoholic drinks, 2013-18
                                              • Who’s winning?
                                                • Who’s struggling?
                                                  • The five-year outlook
                                                    • Figure 25: Best- and worst-case forecast of consumer expenditure on non-alcoholic drinks, at current prices, 2013-23
                                                  • Key consumer findings
                                                    • More exciting innovation needed to drive more consumption
                                                      • Figure 26: Claimed spending changes in non-alcoholic drinks, 2017-19
                                                    • Who is spending more?
                                                      • Analyst’s pick of 2018 insights
                                                      • Sector Review – Alcoholic drinks – in-home and out-of-home

                                                        • What we think
                                                          • In-home consumption grows faster than out-of-home
                                                            • Figure 27: Consumer expenditure on alcoholic drinks (out of home), 2013-18
                                                            • Figure 28: Consumer expenditure on alcoholic drinks (in home), 2013-18
                                                          • Who’s winning?
                                                            • Who’s struggling?
                                                              • The five-year outlook
                                                                • Figure 29: Best- and worst-case forecast of consumer expenditure on alcoholic drinks (out of home), at current prices, 2013-23
                                                                • Figure 30: Best- and worst-case forecast of consumer expenditure on alcoholic drinks (in home), at current prices, 2013-23
                                                              • Key consumer findings
                                                                • Signs that consumers are starting to find the right balance
                                                                  • Figure 31: Claimed spending changes in alcoholic drinks, 2017-19
                                                                • Who is spending more?
                                                                  • Analyst’s pick of 2018 insights
                                                                  • Sector Review – Beauty and personal care

                                                                    • What we think
                                                                      • Strong NPD, robust growth
                                                                        • Figure 32: Consumer expenditure on beauty and personal care, 2013-18
                                                                      • Who’s winning?
                                                                        • Who’s struggling?
                                                                          • The five-year outlook
                                                                            • Figure 33: Best- and worst-case forecast of consumer expenditure on beauty and personal care, at current prices, 2013-23
                                                                          • Key consumer findings
                                                                            • Willingness to increase spending gets stronger
                                                                              • Figure 34: Claimed spending changes in beauty products and toiletries, 2017-19
                                                                            • Who is spending more?
                                                                              • Analyst’s pick of 2018 insights
                                                                              • Sector Review – OTC and pharmaceuticals

                                                                                • What we think
                                                                                  • Stable growth seen in 2017 maintained in 2018
                                                                                    • Figure 35: Consumer expenditure on OTC and pharmaceuticals, 2013-18
                                                                                  • Who’s winning?
                                                                                    • Who’s struggling?
                                                                                      • The five-year outlook
                                                                                        • Figure 36: Best- and worst-case forecast of consumer expenditure on OTC and pharmaceuticals, at current prices, 2013-23
                                                                                      • Key consumer findings
                                                                                        • Stable spending compared to 2018
                                                                                          • Figure 37: Claimed spending changes in healthcare and pharmaceutical products, 2017-19
                                                                                        • Who is spending more?
                                                                                          • Analyst’s pick of 2018 insights
                                                                                          • Sector Review – Clothing and accessories

                                                                                            • What we think
                                                                                              • A slight decrease in the growth rate
                                                                                                • Figure 38: Consumer expenditure on clothing and accessories, 2013-18
                                                                                              • Who’s winning?
                                                                                                • Who’s struggling?
                                                                                                  • The five-year outlook
                                                                                                    • Figure 39: Best- and worst-case forecast of consumer expenditure on clothing and accessories, at current prices, 2013-23
                                                                                                  • Key consumer findings
                                                                                                    • Growing investment in one’s appearance and pampering oneself
                                                                                                      • Figure 40: Claimed spending changes in clothing and accessories, 2017-19
                                                                                                    • Who is spending more?
                                                                                                      • Analyst’s pick of 2018 insights
                                                                                                      • Sector Review – Technology and communication

                                                                                                        • What we think
                                                                                                          • Breakthrough innovation needed for growth
                                                                                                            • Figure 41: Consumer expenditure on technology and communication, 2013-18
                                                                                                          • Who’s winning?
                                                                                                            • Who’s struggling?
                                                                                                              • The five-year outlook
                                                                                                                • Figure 42: Best- and worst-case forecast of consumer expenditure on technology and communication, at current prices, 2013-23
                                                                                                              • Key consumer findings
                                                                                                                • Similar level of spending to previous year
                                                                                                                  • Figure 43: Claimed spending changes in technology and communication, 2017-19
                                                                                                                • Who is spending more?
                                                                                                                  • Analyst’s pick of 2018 insights
                                                                                                                  • Sector Review – Household care

                                                                                                                    • What we think
                                                                                                                      • Growth maintained at a moderate level as market matures
                                                                                                                        • Figure 44: Consumer expenditure on household care, 2013-18
                                                                                                                      • Who’s winning?
                                                                                                                        • Who’s struggling?
                                                                                                                          • The five-year outlook
                                                                                                                            • Figure 45: Best- and worst-case forecast of consumer expenditure on household care, at current prices, 2013-23
                                                                                                                          • Key consumer findings
                                                                                                                            • No significant change compared to the previous year
                                                                                                                              • Figure 46: Claimed spending changes in household care products, 2017-19
                                                                                                                            • Who is spending more?
                                                                                                                              • Analyst’s pick of 2018 insights
                                                                                                                              • Sector Review – Home

                                                                                                                                • What we think
                                                                                                                                  • Home market plunges as a result of property market depression
                                                                                                                                    • Figure 47: Consumer expenditure on home, 2013-18
                                                                                                                                  • Who’s winning?
                                                                                                                                    • Who’s struggling?
                                                                                                                                      • The five-year outlook
                                                                                                                                        • Figure 48: Best- and worst-case forecast of consumer expenditure on home at current prices, 2013-23
                                                                                                                                      • Key consumer findings
                                                                                                                                        • Growing enthusiasm year on year
                                                                                                                                          • Figure 49: Claimed spending changes in home, 2017-19
                                                                                                                                        • Who is spending more?
                                                                                                                                          • Analyst’s pick of 2018 insights
                                                                                                                                          • Sector Review – Transportation

                                                                                                                                            • What we think
                                                                                                                                              • Double-digit growth continues despite market slow down
                                                                                                                                                • Figure 50: Consumer expenditure on transport, 2013-18
                                                                                                                                              • Who’s winning?
                                                                                                                                                • Who’s struggling?
                                                                                                                                                  • The five-year outlook
                                                                                                                                                    • Figure 51: Best- and worst-case forecast of consumer expenditure on transport, at current prices, 2013-23
                                                                                                                                                  • Key consumer findings
                                                                                                                                                    • 39% of respondents have spent more
                                                                                                                                                      • Figure 52: Claimed spending changes in transport, 2018-19
                                                                                                                                                    • Who is spending more?
                                                                                                                                                      • Analyst’s pick of 2018 insights
                                                                                                                                                      • Sector Review – Leisure and entertainment

                                                                                                                                                        • What we think
                                                                                                                                                          • More leisure spending to boost emotional wellbeing
                                                                                                                                                            • Figure 53: Consumer expenditure on leisure and entertainment, 2013-18
                                                                                                                                                          • Who’s winning?
                                                                                                                                                            • Who’s struggling?
                                                                                                                                                              • The five-year outlook
                                                                                                                                                                • Figure 54: Best- and worst-case forecast of consumer expenditure on leisure and entertainment, at current prices, 2013-23
                                                                                                                                                              • Key consumer findings
                                                                                                                                                                • A high priority when people want to treat themselves
                                                                                                                                                                  • Figure 55: Claimed spending changes in leisure and entertainment, 2017-19
                                                                                                                                                                • Who is spending more?
                                                                                                                                                                  • Analyst’s pick of 2018 insights
                                                                                                                                                                  • Sector Review – Holidays

                                                                                                                                                                    • What we think
                                                                                                                                                                      • Growth rate leader across all sectors in 2018
                                                                                                                                                                        • Figure 56: Consumer expenditure on holidays, 2013-18
                                                                                                                                                                      • Who is winning?
                                                                                                                                                                        • Who is struggling?
                                                                                                                                                                          • The five-year outlook
                                                                                                                                                                            • Figure 57: Best- and worst-case forecast of consumer expenditure on holidays, at current prices, 2013-23
                                                                                                                                                                          • Key consumer findings
                                                                                                                                                                            • Spending willingness growing even stronger
                                                                                                                                                                              • Figure 58: Claimed spending changes in holidays, 2017-19
                                                                                                                                                                            • Who is spending more?
                                                                                                                                                                              • Analyst’s pick of 2018 insights
                                                                                                                                                                              • Sector Review – Personal finance & housing

                                                                                                                                                                                • What we think
                                                                                                                                                                                  • Growth slowing for multiple reasons
                                                                                                                                                                                    • Figure 59: Consumer expenditure on personal finance & housing, 2013-18
                                                                                                                                                                                  • Who’s winning?
                                                                                                                                                                                    • Who’s struggling?
                                                                                                                                                                                      • The five-year outlook
                                                                                                                                                                                        • Figure 60: Best- and worst-case forecast of consumer expenditure on personal finance & housing, at current prices, 2013-23
                                                                                                                                                                                      • Analyst’s pick of 2018 insights
                                                                                                                                                                                      • Sector Review – Miscellaneous

                                                                                                                                                                                        • What we think
                                                                                                                                                                                          • Sustained growth fuelled by education, medical care and home services
                                                                                                                                                                                            • Figure 61: Consumer expenditure on miscellaneous, 2013-18
                                                                                                                                                                                          • Who’s winning?
                                                                                                                                                                                            • Who’s struggling?
                                                                                                                                                                                              • The five-year outlook
                                                                                                                                                                                                • Figure 62: Best- and worst-case forecast of consumer expenditure on miscellaneous, at current prices, 2013-23
                                                                                                                                                                                              • Analyst’s pick of 2018 insights
                                                                                                                                                                                              • The Consumer – What You Need to Know

                                                                                                                                                                                                • People continued to spend more in most categories over the past 12 months
                                                                                                                                                                                                  • Indulgence fuels trading up in entertainment
                                                                                                                                                                                                    • Growing health awareness cuts spending in certain categories
                                                                                                                                                                                                      • Personal investments should not be sacrificed for family
                                                                                                                                                                                                        • Brands mainly used to evaluate product quality
                                                                                                                                                                                                          • Value-driven not price-driven
                                                                                                                                                                                                          • Changes in Spending

                                                                                                                                                                                                            • Consumers trading up not down
                                                                                                                                                                                                              • Figure 63: Changes in spending, January 2019
                                                                                                                                                                                                              • Figure 64: Changes in spending – Spending more, 2018 vs 2019
                                                                                                                                                                                                          • Reasons for Spending More

                                                                                                                                                                                                            • More about trading up than having to pay more
                                                                                                                                                                                                              • Figure 65: Reasons for spending more – Average across sectors, January 2019
                                                                                                                                                                                                            • Top sectors for trading up
                                                                                                                                                                                                              • Figure 66: Reasons for spending more, January 2019
                                                                                                                                                                                                            • Consumers feel cost pressures in food and transportation the most
                                                                                                                                                                                                            • Reasons for Spending Less

                                                                                                                                                                                                              • Conservative money management habits impact more than promotions
                                                                                                                                                                                                                • Figure 67: Reasons for spending less – Average across sectors, January 2019
                                                                                                                                                                                                                • Figure 68: Comparison between top reasons for spending more and spending less, by sector, January 2019
                                                                                                                                                                                                              • Drinks see rigid demand from some loyal users
                                                                                                                                                                                                                • Household care products sector see most people looking for price promotions
                                                                                                                                                                                                                  • Figure 69: Reasons for spending less, January 2019
                                                                                                                                                                                                              • Lifestyle Challenges

                                                                                                                                                                                                                • Almost everyone feels there is not enough time
                                                                                                                                                                                                                  • Time for hobbies, exercise and sleep most squeezed
                                                                                                                                                                                                                      • Figure 70: Lifestyle challenges, January 2019
                                                                                                                                                                                                                  • Brand Impact

                                                                                                                                                                                                                    • Brand is still, most of all, a shortcut to judge product quality
                                                                                                                                                                                                                      • Figure 71: Impact of brand in purchasing, January 2019
                                                                                                                                                                                                                    • Value and personality outweigh status
                                                                                                                                                                                                                      • Figure 72: Impact of brand in purchasing, by monthly personal income levels, January 2019
                                                                                                                                                                                                                  • Attitudes towards Spending

                                                                                                                                                                                                                    • Common mindset: value-driven and exploratory
                                                                                                                                                                                                                      • Figure 73: General spending attitudes, January 2019
                                                                                                                                                                                                                    • Four types of consumers
                                                                                                                                                                                                                      • Figure 74: Consumer segmentation based on general spending attitudes, January 2019
                                                                                                                                                                                                                    • What’s their attitude?
                                                                                                                                                                                                                      • Figure 75: General spending attitudes, by consumer segmentation, January 2019
                                                                                                                                                                                                                      • Figure 76: Impact of brand in purchasing, by consumer segmentation, January 2019
                                                                                                                                                                                                                    • What’s their behaviour?
                                                                                                                                                                                                                      • Figure 77: Changes in spending – % spending more, by consumer segmentation, January 2019
                                                                                                                                                                                                                    • Who are they?
                                                                                                                                                                                                                      • Figure 78: Consumer demographics, by consumer segmentation, January 2019
                                                                                                                                                                                                                  • Appendix – Consumer Expenditure Forecast

                                                                                                                                                                                                                      • Figure 79: Consumer expenditure by sector, 2018-23
                                                                                                                                                                                                                  • Appendix – Methodology and Abbreviations

                                                                                                                                                                                                                    • Methodology
                                                                                                                                                                                                                      • Fan chart forecast
                                                                                                                                                                                                                        • Abbreviations

                                                                                                                                                                                                                        The Chinese Consumer - China - May 2019

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