China Consumer Trend Index reached 113 points in Q4 of 2018

Markets and Finances | 01-23-2019

China Consumer Trend Index, released by Nielsen, a global measurement and data analytics company, saw steady growth in the fourth quarter last year - the figure reached 113 points, up one point from the previous quarter.

According to the National Bureau of Statistics, China's year-on-year GDP growth reached 6.4 percent in the fourth quarter of 2018, and growth of the whole year was 6.6 percent – meeting the target of 6.5 percent. Expansion of the national economy remained within a reasonable range last year, continuing the stable trend. It laid a solid foundation for the enhancement of China Consumer Trend Index.

Andy Zhao, president of Nielsen China, said: “As the country’s favorable policies on trade, private companies, micro-and-small enterprises gradually take effect, the Chinese economy has shifted away from high-speed growth to high-quality growth in 2018.”

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 indicates degrees of optimism and pessimism, respectively.

Consumer Trend Index remained steady growth, led by job prospects

For the past year, China Consumer Trend Index fared well – the figure reached 113 points in 2018, compared with 112 points in the previous year. The Nielsen report showed all three components consisting Consumer Trend Index witnessed steady growth: job prospects jumped to 75 points from the previous year’s 70; the willingness to spend surged 3 points to 60; personal finance stood at 69, the same as the previous year.

Consumer Trend Index in all city tiers remained a stable state. The index in rural areas and third-tier cities increased slightly – grew by two points and one point, respectively. Consumer Trend Index in the first-tier cities stood at 110 points, the second-tier cities 113 and the fourth-tier cities 110.

As the supply-side structural reform is advancing, the economic structure is being optimized, the new economy is gradually expanding and fresh economic drivers are replacing the old ones, the Chinese economy has continued a steady run. In the future, China Consumer Trend Index will remain at stable levels,” Andy said.

The Nielsen data showed job prospects led the growth of the overall index - the component increased to 74 points in the last quarter, compared with 73 in the previous quarter. Both personal finance (67) and willingness to spend (58) maintained stable.

In terms of different city tiers, Consumer Trend Index in the third-tier (116) and fourth-tier (112) cities saw a clear growth, mainly driven by the rising job prospects. Job prospects in the third-tier cities rose to 67 in the fourth quarter from 65 in the previous one, while that in the fourth-tier cities climbed to 71 from 65.

Job prospects in the north and west performed well, delivering substantial growth. The indicator in the northern areas reached 69 in the fourth quarter, an increase of four points from the previous one, while that in the west jumped to 68 from 61.

"China has been making concerted efforts to adopt employment policies, encourage entrepreneurship, stabilize the economic prospects, enhance companies’ confidence and competitiveness, and create favorable conditions for the job market. All these factors helped underpin the consumers’ job prospects. " Andy said.

Post 90s: Generation growing to become main consumption force

Statistical Reports on Internet Development in China showed, about 28 percent of internet users in China are post-90s generation, the highest proportion among all demographic groups. Now, the post 90s (born between 1990-1999) has become main consumption force in the internet age. The Nielsen data showed post 90s’ willingness to spend was 63 points, higher than those born in 1980s (60 points), 1970s (54 points) and 1960s (54 points).

Meanwhile, the post-90s generation is more open to explore personal development. Some of their typical labels are me-oriented (who pay more attention to own opinion than others), risk-takers and “Slash Youth” (who have multiple careers). The Nielsen study indicated 60 percent of the post 90s paid more attention to their own opinion than others and social norms, 25 percent of them changed jobs within the last year, and 66 percent were “Slash Youth”.

However, within the demographic, early and late 90s have generational shift. The Nielsen data showed that post 90s had positive attitude towards future income, with sixty-seven percent of the surveyed had “good” personal finance expectations. For post 95s, income was their top concern. Sixty percent of the post 95s worried about their income.

The willingness to spend among early post 90s was the highest. The group generally held positive attitude towards consumption, with 72 percent of the surveyed having “excellent” or “good” willingness to spend. The post-95s generation was more cautious, with 54 percent of the respondents having  “excellent” or “good” willingness to spend. At the same time, the early post 90s had strong self-identity: 36 percent of the surveyed could form their own opinions based on research and analysis while 35 percent would stick to their own values. The post 95s asserted themselves in self-searching: 41 percent of the respondents believed in the advice of authorities while 49 percent were willing to accept, tolerate different ideas and phenomena.

Andy said: “Now, the post 90s are gradually becoming the main consumption force. They are deeply influenced by the internet and more digital-savvy. Digital economy has become the core driver of economic growth, and thus transformed the consumption pattern and boosted consumption upgrade.”

Both early and late post 90s intend to trade up, but with different preferences

Both early and late post 90s intend to trade up, but their consumption patterns are different from each other. The Nielsen report found that post 95s were avid consumers of technologies: 24 percent of them spent more on personal digital electronics and 23 percent have larger cell phone bills. On the contrary, the post 90s paid more on necessities. According to the report, thirty-eight percent of the post 90s spent more on clothes and 30 percent on daily necessities. Meanwhile, they cared more about quality and status, and were willing to pay more for the naturally planted and celebrity endorsement.

The two groups’ watch behaviors are also different. According to Nielsen, the post 95s preferred videos and audio clippings over the post 90s. Fifty-eight percent of the post 95s liked to watch videos, compared with 50 percent of the post 90s. Seventeen percent of the post 95s preferred audios, compared with 11 percent of the post 90s. The post 90s preferred social news while the post 95s entertainment programs.

Andy said: “For the post 90s, a consumer group with different demands, the brands should pay more attention on high-quality and individualized products. They should also analyze the watch behaviors of the post 90s and 95s, and the two groups’ preferences for different social platforms. In this way, they can influence the consumers and thus deliver precision marketing.”

Tagged:  DEMOGRAPHICS  |  CONSUMER  |  CPG AND RETAIL  |  CHINA  |  CONSUMER CONFIDENCE

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