China’s fast moving consumer goods (FMCG) market grew 7.1 per cent in the second quarter to June 14.

But according to research firm Kantar Worldpanel, that’s lower than the 8.4 per cent growth in the first quarter and the lowest quarter-on-quarter growth in the last two years.

The slowdown in growth is in line with slower growth in household spending as shoppers bought less over the quarter compared to last year.

Kantar says that the growth of FMCG in China has been a story of two halves with the North of China including Beijing seeing the slowest growth at just 3.9 per cent whereas the South has seen a more prosperous quarter with growth of 8.4 per cent.

Regional and provincial differences in the performance of FMCG are important for retailers to understand especially when considering where to expand their footprint, it says.

Sun-Art Group is the largest operator in China’s FMCG market, followed by CR-Vanguard.

Meanwhile, the Western hypermarket chains struggle to grow share as local retailers fight back. This trend is very evident in the Northern provinces where the likes of Dashang Newmart, Jia Jia Yue and Yonghui are rapidly gaining share and becoming increasingly competitive with Walmart, Tesco and Carrefour.

E-commerce growth continues with growing importance across all tiers of city, but notably in key cities (Shanghai, Beijing, Guangzhou and Chengdu) where this channel now occupies 3.7 per cent of the total FMCG trade.

E-commerce is now bigger than more traditional channels such as direct sales and Kantar Worldpanel predicts the annual penetration will be more than 60 per cent in key cities within the next three years.