China’s New Consumption Trends: Who Wins?

on June 3 2013 | in Retail Trends | by | with No Comments

Luxury shopping, luxury consumption, Hong Kong, China

According to the 2013 China Consumer Market Development Report released by China’s Commerce Ministry, consumer goods sales will grow 13 percent year-on-year, a figure that’s lower than previous years, but still robust by global standards.

Zhao Ping, deputy director of the Department of Consumer Economics at the Ministry, tells China Daily that a major cause of the slowdown is the trend shifting from public funds spending to private consumption.

There will be fewer government stimuli to drive consumption and more crackdowns on corruption to limit lavish spending on luxury goods and dining. As a result, the consumer goods industry will be more accurately measured by the purchasing power of the private sector rather than from public spending, as was often the case before.

This new consumption trend is good news for some product categories but bad news for others. Below is a general outlook by category:

Furniture and Decoration Materials: Driven by high levels of construction and home purchasing in second and third-tier cities, the sales of furniture and decoration materials will see the fastest growth at 20 percent.

Food and Beverage: Boosted by income increase policies for the lower and medium-income earners, the main buyers of F&B products, the sales of this category will remain strong.

Clothing: Clothing products will also grow at a fast pace, especially for fast fashion brands and local Chinese brands. Ecommerce will continue to be a main contributor to clothing sales.

Auto and Electronic Appliances:  Both sectors rely heavily on stimulus policies. Due to the cutback on public funds, auto and electronic appliance sales are likely to remain sluggish.

Luxury Goods and Fine Dining:  The growth of the luxury market slowed to 7 percent in 2012 from 30 percent in 2011. The government’s crackdown on corruption has put a stop to excess gifting, which drove the sales of luxury goods in previous years. Similarly, revenues of high-end restaurants in Beijing and Shanghai has dropped 35 percent and 20 percent year-on-year respectively.

image credit: slices of light

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