Chinese consumer confidence reached a record high of 111 points in the fourth quarter of 2013, according to Nielsen.
The one-point boost in consumer confidence from third quarter put China in the number four spot among the 60 countries and regions covered by the Nielsen survey, behind only Indonesia (124), India (115) and the Philippines (114).
Nielsen found Chinese consumers’ perception about spending intention reached 47 per cent, the highest since second quarter of 2010, while the perception about job prospects jumped to 75 per cent, the highest since second quarter of 2012.
“Besides the 8.1 per cent of combined growth of disposable income among Chinese consumers, the well-controlled CPI and the concentration of Chinese style shopping carnivals in the last quarter all help boost the Chinese consumers’ willingness to spend,” said Patrick Dodd, MD of Nielsen China.
The fourth quarter was the biggest contributor (32 per cent) of the total fast moving consumer goods sales for the year (among channels and categories monitored by Nielsen), thanks to the concentration of holidays like Christmas and New Year, as well as traditions like the Singles’ Day shopping spree.
“It shows the dynamics of how the consumption has been generated, as both manufacturers and retailers tried to leverage these created shopping events to boost their sales by meeting the Chinese consumers’ desire for excitement and self-rewarding through spending,” Dodd said.
Meanwhile, the overall slowdown of GDP growth over the past couple of years has been felt in China’s retail market in 2013, with the growth of national retail sales declining for most of the industries. FMCG sales also slowed down to single-digit growth in the fourth quarter, and closed at seven per cent year-on-year growth for 2013. While in 2012, growth was a much brisker 15 per cent.
“It’s a challenge, but also an opportunity backed up by the strong willingness to spend among Chinese consumers. The key to getting out of the doldrums lies in identifying new demand based on the consumers’ changing needs and shopping behaviour, and exploring the new frontiers for future growth,” said Dodd.
Behind the record-high consumer confidence index, is the big jump of second-tier consumers (112 points) and third-tier consumers (111 points), which recorded eight percentage point and four percentage point growth.
The confidence in first-tier cities from first quarter to fourth quarter increased five points, from 109 to 114; eight points in fourth-tier cities, from 102 to 110; and declined one point in rural China, from 112 to 111.
“We are glad to see this high confidence among second-tier and third-tier consumers. Their huge spending potential could be vital for China to realise its transformation from investment-driven to consumption driven economy,” said Dodd.
Fifty-eight per cent of newly opened stores across China are found in second-tier and third-tier cities, while more than half of the second-tier (62 per cent) and third-tier (56 per cent) consumers said they shopped online over the past three months.
Nielsen said cities including Chongqing, Xi’an and Suzhou will be become “emerging first-tier cities” in the future.
