China’s Consumer Confidence Index (CCI) amounted to 112 points in the second quarter this year, the highest score since the fourth quarter in 2013, according to Nielsen’s latest study.
The figure, up two points from the last quarter, shows that “Chinese consumer confidence maintain a steady increase, as the country’s economy continues to fare well”, finds the study.
The findings are in line with China’s recent official data. According to the National Bureau of Statistics, China’s GDP growth stood at 6.9% in the second quarter of 2017, up 0.1 percentage point than market expectations.
Vishal Bali, Managing Director of Nielsen China, said China’s CCI in Q2 suggested the continuous upward trend of the country’s overall economy.
“Both China’s domestic reform and the opening-up process are entering into a new stage, buoyed by the coordinated development of Beijing-Tianjin-Hebei region and the ongoing Belt and Road Initiative,” said Bali.
“As the national economy gains a steady momentum, Chinese consumers are becoming more willing to spend, with nationwide buying spree driving upgrade,” he added.
Looking into a bigger picture, Nielsen’s report shows that the global CCI surged to 101 points in the second quarter, 2 points higher than that of the first three months.
Nielsen’s CCI index measures perceptions of local job prospects, personal finance and immediate spending intentions. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.
China CCI Reaches 112 Points, Personal Finance Leads the Increase
The rising CCI, according to Nielsen, is due to consumers’ optimistic perceptions of local job prospects, personal finances and immediate spending intentions. From April to June, Nielsen’s report shows that personal finance surged from 66 to 69, the largest increase among the three factors. At the same time, job prospects grew from 66 to 68. Immediate spending intentions increased from 55 to 56.
The personal finance state of consumers from the third and fourth-tier cities, especially those living in rural areas, has improved significantly. For example, the figure in the fourth-tier city rose by 3 points from the last quarter to 71.
The reason behind, said Bali, lies in the on-going supply-side reform and local economic policies aimed at boost the less-developed regions.
“Fast-pace economic growth offers more job opportunities to local residents, the development of China’s rural area and lower-tier cities will become a new driver for the country’s future economic growth,” elaborated Bali.
Consumption Upgrade Continues to Advance
In the first six months of 2017, Chinese per capita disposable income amounted to 12,932 yuan, up 7.3% from last year, according to the latest data of the National Bureau of Statistics.
Groceries is the top one category in Chinese consumers’ increasing spending, shows the study conducted by Nielsen.
“At present, China is at a critical stage of consumption upgrade. Households’ steady growth in income will translate into a potential demand for purchase and investment. New consumption structures and growth momentum are also forming at a fast pace,” said Bali.
Since July 2015, Midstream Price Index has been higher than Fair Price Index, and Premium Price Index has continued increasing, shows Nielsen’s data. For example, consumed premium products among shampoo, lotion, mask accounted for 85%, 74%, and 78%, respectively.
Seeking Precision Marketing
Nielsen’s study finds that consumers in higher-tier cities tend to spend more on better food and beverages, while those from lower-tier cities are willing to spend more on better daily necessities.
Nationwide, consumers spend an average of 3 hours on smartphones. Among first-tier consumers, 52% of them prefer to read news on smart phones. While, 39% of fourth-tier consumers are more willing to use their cell phones to watch television shows.
“Advertisers need to tailor their content and channels on the basis of consumers’ living places, preferences, and behavior habits. In this way, they can optimize the advertising effect and achieve precision marketing,” he added.