In China, economic recovery has been quick as consumers adapt. While some sectors will take longer than others to recover, beauty and personal care brands continue to fare well in the nation. These findings are highlighted in Chinese Consumer 2020, a new report by consumer research firm Mintel. The Chinese consumer market is facing more challenges than ever before. But as the coronavirus situation improves, most consumer goods categories are gradually recovering, Mintel research indicates. This includes discretionary categories such as dining out, clothing, beauty and personal care, and leisure and entertainment. However, no signs indicate an immediate return to pre-COVID-19 consumer spending levels. Here are four key findings from the report:
1 The Chinese economy is recovering quickly, showing that it remains resilient. The COVID-19 outbreak has had an unprecedented impact on both society and the economy, but effective anti-epidemic measures have laid a foundation for economic recovery. Preliminary accounting results for China’s GDP in Q2 2020, released in mid-July by China’s National Bureau of Statistics, showed that the economy is on track to recovery. This recovery will be quicker than many other major global economies, which have gone into lockdown at different stages in Q1/Q2 2020. This show that the fundamentals of China’s economy are not only unshaken, but also resilient.
The China-Britain Business Council (CBBC) has addressed communication platforms and channels in a bid to drive Britain-China trade. For example, CBBC launched the UK-China Business Matching Digital Platform to support the offline trade show China International Import Expo. Companies can highlight their core competencies on this platform and build a big data trade ecosystem, points out Kiran Patel, senior director of business development for the CBBC.
“We always believe innovation will help companies across industries stay ahead of the curve, accelerate development, and win the future,” Patel says.
2 The beauty and personal care sector stands out despite slowed growth in consumer spending. China’s top five sectors with the highest growth rates remained unchanged 2010-2019, including holidays at CAGR of 18%, transport at CAGR of 16.4%, OTC and pharmaceuticals at CAGR of 13.6%, foodservice at CAGR of 13.1%, and personal finance and housing at CAGR of 12.9%. However, while growth in most categories has tapered off due to slowed growth in overall consumer spending since 2017, the beauty and personal care sector has seen similar compound annual growth rates (CARG) 2010-19, including a 9.2% increase in 2019.
3 The path to recovery varies by sector. Sectors like holidays and foodservice, which require consumers to leave the home and potentially gather in small or large groups, saw reduced spending in Q1. Mintel predicts that under the current circumstances (that the outbreak is largely under control despite reported new cases), total consumer expenditure will experience a contraction of 5.6% in 2020. But in the long term, Mintel predicts that total consumer expenditure will recover to pre-COVID-19 levels in 2021 and continue to rise at CARG of 7.3% 2021-24.
“Consumer behaviors have shifted remarkably due to the coronavirus. This has affected some sectors related to offline purchases and in-person consumer experience, such as foodservice, tourism, and hotels,” says Elan Shou, regional director of Asia for PR firm Ruder Finn.
4 Consumers are adapting to changes, and balance is being restored to daily life. Nearly six out of 10 Chinese urban consumers (56%) want to have a happy family life, and 46% seek a healthy lifestyle. Meanwhile, 39% of Chinese urban consumers want to travel after the outbreak, according to Mintel research.
“The coronavirus pandemic has made consumers more focused on their family and health. In particular, the consumer habit of spending within their means and a more cautious attitude towards spending will push brands to consider new strategies,” says Ruyi Xu, head of Mintel reports for North Asia. “This will be mainly reflected in helping people find a balance in life and enjoy the quality and pleasure of life through small indulgence and embracing simple moments.”