China’s Consumer Confidence Index (CCI) reached historical high to 114 points in the third quarter this year, up two points from the last quarter, according to Nielsen's latest study. Even more noteworthy is the fact that Chinese CCI, rising from 106 points in the fourth quarter of 2016 to 114 points in the same period this year, witnessed growth for fourth consecutive quarter.
The uptrend indicates that "Chinese consumer confidence maintain a steady increase, income of urban and rural residents continue to grow, as the country's economy continues to fare well", the study says.
The findings are in line with China's recent official data. The country's GDP growth stood at 6.8 percent in Jul-Sep period, according to the National Bureau of Statistics.
“Since this year, the Chinese economy has shown a relatively obvious trend of structural optimization and adjustment, that new growth drivers are taking the place of old ones. The excessive capacity of traditional industries has gradually been solved, and the new growth points have emerged,” said Wei Shao, manager of Nielsen China.
“The quality of economic development has been improved, with growing indexes of employment, income and prices.”
"Newly emerging sectors such as technology services, financial technology, audio and visual network, digital economy and shared economy inject new vitality to Chinese economy,” he continued.
It not only creates more job opportunities for the society, but also created new demand for consumption. It created more possibilities for the transformation and upgrading of China's consumption structure,” he elaborated.
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.
The country’s surging CCI, according to Nielsen, is due to consumers' optimistic perceptions of local job prospects, personal finances and immediate spending intentions.
In the third quarter, Nielsen’s report shows job prospects grew from 66 to 68. Immediate spending intentions increased from 56 to 58, the largest increase since 2014. At the same time, personal finance reached to 70, up one point from the last quarter.
Different factors resulted in the increase of CCI in different regions. In the east, job prospects rose to 80 from 75, while personal finance and willingness to spend remain steady growth. In the west, the rising CCI was led by personal finance and willingness to spend, both scoring a substantial increase. Job prospects in the southern region surged by two points to 76, and the figure in the north rose by five points to 64. For consumers living in the north part of China, their personal finance and willingness to spend also increased by one points, respectively.
CCI in top-tier cities maintain steady growth. In first-tier cities, the index increased from 65 points to 66 points, while that in second-tier cities rose from 65 points to 67 points. CCI in lower-tier cities also shows steady trend. In fourth-tier cities, the number increased from 57 to 59, further narrowing the gap with other cities. As China continues to push for the new type of urbanization and deepen supply-side structural reform in rural areas, a new trend formed that migrant workers return home to run their own startup. It also fuels the growth of job opportunities. Job prospects in rural regions continue to improve, jumping from 76 to 81, which becomes an important factor in boosting the CCI.
Bali said: “The government is pushing for reforms to streamline administrative process, such as cutting multiple certificates to one. As such reform advances, mass entrepreneurship and innovation has been burgeoning and market vitality has been stimulated.”
“At the same time, the Chinese economy continues to shift toward a growth model driven by service sector, which add new jobs and reduce unemployment,” he added.
Nielsen finds that beyond enjoyment, consumers are seeking for healthy and environmental lifestyle. Purchase intention in next 12 months of water purifier, smart bracelet, air purifier, that are indispensable to a healthy living, rose by four points, two points, and two points, respectively.
The growth rate of electric vehicles stands at 30.8 percent, while growth rate of integrated circuits, and solar cells output are 20 percent, the report finds.
At the same time, consumers pay more attention on healthy, especially health food, according to Nielsen’s data. 62 percent of consumers are concerned about health foods, 45 percent of them are focused on health services. Only about one third of buyers give attention to medicines and health products.
Consumers’ health concept has expanded, beyond food, to personal care and household cleansing products. Silicone-free shampoo increased by 14.4 percent, and washing-up liquid that gentle to hands accounted for 62 percent market share.
Among all diversified sales channels, hypermarket remains the major option for people to buy their healthy food. Nielsen data shows that 79 percent of consumers in the country choose to buy healthy food in hypermarkets. The figure in first-tier cities stands at 74 percent, and that in second-tier cities is 73 percent.
Consumers choosing retail channel pay more attention to a green lifestyle. Nielsen's report shows that the inclusion of more green and healthy products and the improvement of goods display could bring more traffic in the store.
The Nielsen report shows that consumers of different ages have different interpretation to health. Consumers born in the 1990s are more concerned about their appearance, 35 percent of which focus more on their weight and 32 percent on their skin. Those born in 1980s pay more emphasis on nutrition. People born between 1950s and 1970s care more about the healthy condition of their organs, including hypertension/hyperlipemia/hyperglycemia (42%), cardiovascular (37%), gastrointestinal tract (34%) and joint (20%).
"Unlike other consumer products, health is rigid demand. As life quality improves, consumers’ demand for health is being felt sharply. It will activate the health service market. The report to 19th CPC National Congress clearly put forward to implement ‘Healthy China Strategy,’ which hails the conception as a national strategy. It is bound to become a new driving force to upgrade consumption,” Bali elaborated.
As health spending continues to grow, doing sports is the main way for people to achieve their healthy demands.
The Nielsen study finds that sport options vary in different tier cities. For consumers in top-tier cities, exercising is socializing, while those living in lower-tier cities prefer outdoor activities.
Data shows 36 percent of the first-tier cities consumers choose ball games, 27 percent of them choose to ride, and 33 percent swim. About 80 percent of residents in the second, third and forth-tier cities choose to run outdoors.
The Nielsen report shows that though exercising has become a mainstream lifestyle to all Chinese people, the majority of them still far from understanding scientific ways to do sports. Studies show that scientific exercise duration is 7 hours per week. However, the average weekly exercise time for Chinese consumers is only 4.2 hours, find Nielsen data.
Meanwhile, consumers living in different tiers of cities are at different stages for their exercising habits. Those in first-tier cities feel disciplined to do sports. 49 percent of them have been working out in a regular manner for more than two year, compared to the national average of 28 percent. Residents in second-tier cities persist in taking exercise, 38 percent of whom have been doing sports regularly for six months. In comparison, village inhabitants are attempting to exercise more. 44 percent of them take regular exercise for less than half a year.
As for sports consumption, Nielsen's report shows that Chinese consumers’ average sports spending per year stands at 1213 yuan, one-tenth of the global average. Specifically, the highest average number of the first-tier cities is 2927 yuan, followed by the second-tier (2105 yuan) and the third-tier cities (2438 yuan) respectively. The figure in the fourth-tier cities and rural areas are relatively low.
Cities vary in terms of sports consumption. Residents in upper-tier cities are concerned about environment and experience, and spend most on membership card registration, venue cost, sports watch and earphones. Inhabitants in lower-their cities, who are upgrading their purchases, spend most on gym equipment and event tickets. Rural residents’ consumption is on basic level, like gym suits and sneakers.
Bali said: "Thanks to the national strategy of involving every Chinese in the sports programs, the new wave of fitness will push China’s sports industry to a new level. The country is stimulating the vitality and potential of the sports industry, as people’s awareness is gradually being built.”