McKinsey has released its 2016 China consumer report, summarising their survey of 10,000 Chinese consumers across 44 cities. The findings further quantify and reinforce five key trends that have been shaping China’s consumer market for the past few years.
The first takeaway is just how upbeat Chinese consumers remain – significantly higher than their peers in the US and UK. For the most part, “Chinese consumers seem unaware that the Chinese economy is deteriorating.” This indicates that the strong consumer confidence and resilience at the height of the stock market crash in mid-2015 and the months that followed continues.
Consumers are most upbeat from cities located around the Yangtze River down to the south and southwest of China, where residents are most likely to expect the good run to continue and wage increases. This also mirrors the Economist Intelligence Unit’s analysis of China’s fastest growing cities, which found this area also has the strongest focus on imports, consumption and the service industry.
The next takeaway was how Chinese are spending a greater share of their wallets to get out and enjoy life’s experiences. Everything from the cinema, to dining, to spas, to travel is seeing strong upside. 23% said they would spend more on travel if their incomes rose, up from 14% in 2012. This is particularly relevant for residents in ‘smaller’ cities, reflected in the increased budget airline presence and popular travel site Mafengwo’s new focus on lower tier cities.
The rise of Chinese brands was clear in the research, with 62% of consumers saying they’d prefer Chinese brands to foreign ones if at a similar quality and price. It was just 42% in 2009. China Skinny saw this trend first really take hold in 2012 across categories as diverse as fashion to smartphones.
The final two key takeaways were that Chinese are prepared to pay more for the best – even for everyday items such as beer and rice. This was particularly relevant if the products were healthy, with 72% of consumers last year worrying that the food they eat is harmful to their health, up from 60% in 2012. Food and health products are two categories where most consumers see greater quality and trust in foreign products. Go to Page 2 to see this week’s China news and highlights.