McKinsey latest survey of Chinese consumers reveals significant change lurks beneath the surface.
Consumers are becoming more selective about where they spend their money, shifting from products to services and from mass to premium segments.
Reflecting 10,000 in-person interviews with people aged 18 to 56 across 44 cities, our 2016 China consumer report found that the days of broad-based market growth are coming to an end.
They are seeking a more balanced life where health, family, and experiences take priority. The popularity of international travel is astounding among Chinese consumers, as is their adoption of trends such as mobile payments. And despite many similarities, consumer behavior can vary significantly among the country’s 22 city clusters.
What they are buying
We found that consumers are generally becoming more selective about their spending. They are allocating more of their income to lifestyle services and experiences—over half plan to spend more on leisure and entertainment (the 50 percent surge in box-office receipts in the past year is just one indicator of that trend). At the same time, spending on food and beverages for home consumption is stagnating or even declining.
Chinese consumers are also increasingly trading up from mass products to premium products: we found that 50 percent now seek the best and most expensive offering, a significant increase over previous years.
Why Foreign Firms Struggle to Break Into China
In 2017, an analysis by Goldman Sachs found that while S&P 500 companies earned 30 percent of their revenues outside of the United States, China accounted for only 1 percent of their revenues.
How China is using tourists to realise its geopolitical goals
Over the last two decades, the number of Chinese overseas travellers rose by over 25 times from 5.3 million in 1997 to 130 million in 2017, contributing an estimated US$250 billion to overseas economies
How China’s role in global finance has changed radically
Within the space of just 15 years, China has gone from being the largest net lender to the world to now being a net borrower. The implications for the global economy, and China’s role within that economy, could be significant.
‘If you owe the bank $1 million, you have a problem. But if you owe the bank $1 trillion, then the bank has a problem’. It’s an old gag, but it underscores an important point: the size of your borrowing or lending can have profound implications for your role in the world.(more…)
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