Chinese Consumers to Maintain or Increase Spending in 2016
Chinese consumers will continue and spend but only a bit slower this year due to a slowing economic growth and market volatility. Based on a research done by Boston Consulting Group, three quarters of Chinese consumers are planning to maintain or increase spending for 2016 a slight decrease for 81 percent in 2015.
The two main drivers of growth are consumers now have more disposable income and are spending more, this group is led by the upper middle class and affluent households, young consumers and employees with high paying jobs. 40 percent of these Chinese urban households are in the affluent and middle class category, and China is seeing an increase of the upper middle class households in small cities along with the emergence of a new generation of younger, eager and sophisticated consumers. In 2020, UMC and affluent households will double to 100 million and accounts for 30 percent of the urban population with spending intentions remaining constant and a spending growth rate of 17 percent.
The 30 percent which is the same for 2015, are planning to spend more this year, that is why there is spending resilience among the affluent consumers and half of the UMC consumers and three quarters of the affluent consumers are employed in the high end sector. The younger generation in China is growing rapidly in numbers and income, those aged 18 to 30 will make up more than a third of the urban population by 2020. The consumption is growing at 14 percent annually twice the pace of the last generation or those older than 35.
Chinese consumers will likely to trade up, although the buying of mix of objects of desire is undergoing a transition with baby products, consumer electronics and financial services that the top three things consumers will be trading up. Meanwhile skin care and beauty products along with vacations and traveling are also moving up on the list, while cars and durable goods are moving down indicating that consumers are canceling big ticket purchases.
Stock market volatility has a little impact on the daily lives of Chinese consumers ranging from consumption and housing market stability is in a more critical condition among Chinese consumers that continues to be optimistic on housing prices.