Chinese consumer sentiment has bounced back after a dip last year.
A new study by The Boston Consulting Group (BCG) found Chinese consumers feel more optimistic and secure, while also accepting economic growth is leveling off.
“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. The number of consumers who plan to spend more money in the coming year exceeds the number who plan to spend less,” said Youchi Kuo, a principal at BCG.
The improvement in sentiment is driven by middle-class and affluent consumers (MACs) from smaller cities, where people intend to spend more money on more things.
“Last year, small-city MACs were feeling the hit of the Chinese government’s anti-corruption campaign, which caused cancellation of subsidies and reduced discretionary spending. However, people have adjusted, and sentiment has returned to previous levels,” said Jeff Walters, another BCG partner.
In bigger cities, sentiment continues to deteriorate, but the intention to spend is strong in certain categories.
Big-city MACs have become more cautious and selective when it comes to where they spend. They are saving their money for big purchases such as cars, houses and education and they are valuing quality over quantity. They are willing to spend even more than before on high-priority categories but are no longer interested on trading up in nonessential categories like packaged food and beverages and entertainment.