FEBRUARY 9TH 2016
CHINESE CONSUMER CONFIDENCE HELPS THE SERVICES SECTOR
A new report released by the company Nielsen indicates that despite downward pressures on the economy, in 2015 Chinese consumers’ willingness to spend reached the four-year peak. This trend can be seen as the fruit of the government’s plan to adjust the economy to the “new normal” by shifting its focus on consumption rather that export driven economy.
Booming online shopping provides more variety and convenience to customers, thus successfully fueling their spending desire. Compared to 2014, consumers’ willingness to spend increased by two percentage points to 48%, the highest level over the past four years, according to data published by Nielsen. Their data indicate that the slowdown of China’s economic growth (down to 6.9%) last year did not have a significant impact on Chinese consumers’ desire to spend.
The report also put the confidence of Chinese consumers in context with the global moods. On a scale to 100, which the Nielsen consumer confidence index uses as a baseline to evaluate optimism and pessimism – in Q4 2015 Chinese consumer confidence ranked at 107. Globally, China ranked first, followed by the United Kingdom and the United States.
Chinese consumer confidence indicates the trend of focus on services that will continue to increase in prominence. This is also confirmed by Caixin China Purchasing Managers’ Index numbers, according to which China’s service sector entered 2016 with very successfully by hitting a six-month high of 52.4 for the. In total, the boost of China’s services sector helped offset the continued decline in manufacturing.
Although the service sector helps offsetting the impact in slowdown in manufacturing and contributes to keep the unemployment rate at a reasonable level, the workforce shift from manufacturing to services causes disruptions locally as often manufacturers lay off the workers on a higher rate than by which the service providers create job position.
In many aspects, China is on the right track in balancing this new reality. Chinese consumers are slowly but certainly learning to recognize, appreciate and prefer Chinese brands over imported ones. Gone the era when anything imported was better by definition. Nowadays, Chinese consumers seek high quality food products and local producers are trying to cater to that trend. This is very much evident also in the case of high end clothing, where once prominent Prada and LV purses and apparel are now challenged by domestic designers who offer authentic Chinese yet high end products.
Sources:
«Consumption: New Key to Chinese Growth» China Business Review, http://www.chinabusinessreview.com/consumption-new-key-to-chinese-growth/
«Service Sector Has Good Start to Year, Caixin China PMI Shows» Caixin Online, http://english.caixin.com/2016-02-03/100906664.html
«Consumer confidence rises to new high despite economic slowdown» China Daily, http://www.chinadaily.com.cn/business/2016-02/03/content_23364431.htm
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