Chinese consumers plan to spend more

Warc, 28 July 2014

HONG KONG: Middle-class and affluent consumers (MAC) in smaller Chinese cities plan to spend more on products compared to last year while consumers in larger cities remain more cautious and selective, a new report has said.

Based on responses from 1,000 people in 12 cities, the Boston Consulting Group (BCG) found overall Chinese consumer sentiment has improved since last year, but it rose the most in lower-tier cities.

"Last year was the first time in recent history that more Chinese consumers wanted to cut spending than to increase it. This year, the balance has shifted back," said Youchi Kuo, an expert principal at BCG and a co-author of the report.

"The number of consumers who plan to spend more money in the coming year exceeds the number who plan to spend less," she said.

BCG found sentiment between the smaller and larger cities to be widening, China Daily reported – the percentage of MAC respondents in big cities who plan to spend more over the next 12 months has fallen to 28% from 31% last year and 35% in 2012.

By contrast, the percentage of MAC consumers in smaller cities who plan to spend more has grown to more than a third (34%) compared to just 26% last year.

It appears that the more stressful lifestyle of big city residents is responsible for the difference, as the survey uncovered that they have more anxiety about the future and more concerns about job security.

Although big city MACs have become more cautious and selective about their spending intentions, they are willing to spend more than before on high-priority categories, the report said.

However, they are no longer interested in trading up in non-essential categories, such as packaged food, beverages or entertainment.

There is also strong demand in the large cities for lifestyle categories, such as baby products, fresh produce, cars, home renovation and tourism, BCG added.

Data sourced from BCG, China Daily; additional content by Warc