China’s Consumer Trend Index (CTI) amounted to 115 points in the first quarter this year, growing by two points from the previous quarter and nearly reclaimed the previous peak, according to Nielsen’s latest study.
Data from the National Bureau of Statistics showed, the country’s GDP grew by 6.4 percent in the first quarter from a year earlier. The growth was unchanged from that registered in the fourth quarter of last year, NBS said. The national economy continued to operate in a reasonable range in the first three months, and the overall steady pace laid a solid foundation for the improvement of China CTI.
Andy Zhao, president of Nielsen China, said: “As China’s regional economic development strategy continues to deepen, several plans have been advancing such as the Belt and Road Initiative, the coordinated development of Beijing-Tianjin-Hebei, the development of the Yangtze River Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area. Under such a backdrop, the potential of new urbanization market has been continuously unleashed, the vitality of market entities has been further enhanced, which effectively promotes the steady, healthy and sustainable development of China’s economy.”
Nielsen’s Consumer Trend Index measures perceptions of local job prospects, personal finance and willingness to spend. Consumer Trend levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively.
CTI nearly reclaimed the previous peak, led by the gain of job prospects
Nielsen study showed CTI is influenced by three factors: job prospects, personal finance and willingness to spend. Specifically, job prospects climbed five points to 79, a substantial increase, while both personal finance and willingness to spend increased three points to 61 and 70, respectively.
Andy said: “The government has been continuously deepening the reform of corporate taxes and fees, enhancing the vitality of enterprises. It has also been implementing policies to support employment and encourage innovation and entrepreneurship, which creates a favorable environment for stable employment. At the same time, the reform of individual taxes and fees has been deepening and the guarantee system been gradually improved. Consumers’ personal finance and willingness to spend have been increasing, which further stimulates market vitality.”
By regions, index in all regions were relatively stable, while that in the northern region achieved steady growth in the past three quarters. According to Nielsen data, CTI in the north reach 111 in the first quarter. That compared to 108 points in the third quarter of 2018, and 109 points in the fourth quarter. In the east, CTI remained at a high level of 124 points, unchanged from the previous quarter. The figure in the south and west also surged mildly to 116 points and 106 points, respectively.
The Nielsen study found that job prospects in the north continued to improve in the past year, from 62 points in the second quarter of 2018 to 73 points. The personal finance in the eastern region rebounded significantly from 80 points in the previous quarter to 86 points, and job prospects also rose sharply, up five points from the previous quarter to 84 points. The willingness to consume in all regions across the nation remained stable.
By city tiers, CTI in the second and third-tier cities reached 117 points, contributing much to the overall index. CTI in the fourth-tier cities increased by three points from the previous quarter to 115. In the first-tier cities, CTI amounted to 112, up four points from the previous quarter. Index in rural area remained stable at 114 points.
Nielsen data showed that the gradual recovery of consumers’ willingness to spend drove the growth of top-tier cities’ CTI — 65 points in the first-tier cities and 66 points in the second-tier cities, both increased five points from the previous quarter. In addition, job prospects and personal finance in the fourth-tier cities rebounded sharply, soaring by 8 points and 11 points respectively, reaching 79 and 82.
“A variety of economic leading indicators showed that the economy was off to a good start in the first quarter. Many macro data exceeded expectations, and the signal of economic recovery is obvious. The first and second-tier cities, as the vanguard of economic development, have relatively complete economic structure and economic resilience, so they recovered faster than other cities. At the same time, industrial structure optimization and industrial expansion to lower-tier market not only bring more development opportunities for the lower-tier cities, but also create more employment opportunities, boost local consumption and improve consumers’ willingness to spend,” said Andy.
Middle-class women advocate autonomy, ego and confidence, they are spokespersons for quality life
Nielsen data showed middle-class women’s CTI was the most eye-catching – 130 points, far higher than the national average of 115 points. Meanwhile, their job prospects, willingness to spend and personal finance were higher than the overall average. The job prospects stood at 81 points, higher than the average of 79 points; the willingness to spend reached 78 points, compared to the average of 61 points; the personal finance was 92 points, surpassing the average of 70 points.
Middle-class women have high-income, high position at work and are highly educated. Autonomy, ego and confidence are their labels. Their autonomy is mainly reflected in the strong sense of self-worth and close social circle. Nielsen data showed that 47 percent of middle-class women were more concerned about their payment and return, 60 percent of them were more committed to the values that they think are right, while 42 percent and 24 percent were willing to spend leisure time by having afternoon tea / date or socializing in a particular circle. Middle-class women’s ego refers to their pursuit of self-improvement and their focus on spiritual life. Nielsen data showed that they were more likely to spend spare money on investment and financial management (36%), children’s education (46%) and travel vacation (57%). As for their choice of leisure time in the coming year, they are more willing to choose self-improvement (29%), cinema/concert/art exhibition (44%), vacation/hiking (54%). Their confidence reflected in their diversified choices of financial management and stronger risk tolerance. In addition to fixed deposit, their tools of investment and financial management included internet wealth management products (40%), fixed income investment products (32%), funds (28%), and insurance investment products (27%). In the coming year, 29 percent of them hope to continue to increase investment in internet financial products, and 31 percent want to invest more in funds.
Middle-class women’s characters are also reflected in their consumption attitudes and purchasing behaviors. They have the ability to earn and spend, with their willingness to spend surging substantially. Nielsen data showed that compared with last year, 65 percent of them had new consumption, which was mainly spent on children’s education (40%), skin care/makeup/beauty (29%), cultural and entertainment (15%), investment and finance (25%),keep fit (11%), buy her first car(7%). In the coming year, 57 percent of them are willing to pay for their favorite products/interests, and 44 percent focus more on pursuing quality life.
For middle-class women, interest and relationship are the biggest drivers for them to consume. In the coming year, in addition to holiday and tourism/hiking and camping (49%), the proportion of middle-class women who are willing to pay more for concerts/art exhibitions (19%), social/activities in specific circles (12%) are nearly twice the overall average. Nielsen’s research found that during the spring festival of 2019, middle-class women’s expense on tourism, recreation and entertainment were 7,337 yuan and 2,337 yuan, far higher than the average of 4,968 yuan and 1,077 yuan.
Middle-class women pursue both inner and outer beauty, and intend to improve their families and themselves. Nielsen data showed that in terms of the next year’s shopping preferences, middle-class women showed a stronger willingness to upgrade the quality of food, clothing, housing and transportation. In addition, their willingness to purchase jewelry (36%) and furniture (19%) in the next year is higher than the entire female group, and their shopping incentives are more to show the status.
They spend to pursue beauty in a healthy way and to create a charming self. Nielsen data showed that the proportion of middle-class women who are concerned about health issues was 22 percent, the highest among all. Therefore, 35 percent of them will choose physical fitness in the future, 37 percent will choose to buy healthcare products/drugs. The proportion of them who will buy professional equipment and personal training courses are 27 percent and 36 percent respectively, which are much higher than the overall level of 15 percent and 11 percent.
Middle-class women rely on e-commerce for a convenient life. Nielsen data showed that 54 percent of them made new online purchases of fast moving consumer goods in the past three months, higher than that of the overall population (41%). Meanwhile, 42 percent of middle-class women consumed frequently — more than two times per month on average. In addition to FMCG, they also bought high-quality goods online, 65 percent of them paid for cosmetics and personal care products, 45 percent for fresh food and 40 percent for personal electronics. In addition, 66 percent of them have plans to increase online consumption.
Middle-class women understand time value, and are advocates for smart life. Nielsen report showed that 63 percent of them have smart TVs, 39 percent own internet TV boxes, 22 percent have children’s smart watches, and 19 percent use housekeeping robots to better save their time and efforts.
Andy said: “Middle-class women are growing and their innovation power cannot be ignored. They are an important force behind all fields of the society. They are highly educated, have high income and pursue independence. They advocate confidence, autonomy and ego, pursue quality life, and have distinct characteristics in their consumption concept and behavior.”
“Middle-class women are often the dominant players in household consumption. They have become the main force to lead the future consumer market. Paying attention to women and meet their needs have become an inevitable choice for all brands,” Andy added.