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Newswire

Chinese Consumer Confidence Grows in Rural Areas - Slows in Cities

Markets and Finances | 08-20-2010
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In the largest survey of its kind, Nielsen and CEMAC (Chinese Economic Monitoring & Analysis Center) solicited feedback from over 3,500 shoppers across China’s cities, towns and rural villages.  Results showed consumer confidence slowing among those in cities, but steadily increasing among consumers in rural villages, who have a greater willingness to spend compared to those in larger cities.

Consumer confidence in rural areas increased six points (to 117), which, according to Pan Jiancheng, Deputy Director General of CEMAC, was largely driven by "government policies designed to stimulate economic activity and increase income levels in rural areas during the first half of this year. The increase of minimum wages for migrant workers in some parts of China has also brightened rural consumers’ attitudes.”

china-confidence-growth

China’s larger cities, however, experienced a slowdown in consumer confidence. “It was inevitable that we would eventually see a pullback,” said Mitch Barns, Greater China President, The Nielsen Company. “Confidence cannot increase indefinitely… there is a limit. Increasing consumer prices and stock market volatility are two of a number of factors that appear to be affecting consumers’ attitudes in this latest quarter, especially in the upper city tiers.”

Perception of Local Job Prospects and Personal Finance Remains Stable

There was a small drop (3%) in Chinese consumers’ perception of job prospects this quarter, with 68% of all those surveyed believing their future local job prospects will be good or excellent (current job prospects are at 53%). Consumers in rural villages have a high level of confidence (80%) in this area.  Income levels remain a top concern for Chinese consumers this quarter, and their expectations regarding their personal finances remain unchanged as well. Sixty-seven percent believe their finances will be good or excellent in the next 12 months. In this latest report, consumers in East China and in rural areas recorded the biggest gain in this measure.

Impact of New Government Real Estate Polices

Seventy percent of Chinese consumers are expecting real estate prices to increase over the next 12 months—a two percent increase from last quarter. The recent government action to slow the rise of real estate prices is having substantial effects on consumer expectations. While seventy-one percent of rural consumers expect real estate prices to increase in the next 12 months, only 36 percent of those in the largest cities expect real estate prices to increase—a 24 point decrease compared to last quarter.

Willingness to Spend Figures Boosted by Rural Consumers

Regarding their economic futures, consumers in rural areas and villages remain optimistic. Their willingness to spend increased dramatically—from 41% last quarter to 64%. By income level, confidence dropped 7 points among those with higher incomes, and rose in those with low and mid-level incomes (2 and 3 points, respectively). Overall, consumers are spending their money on: their children’s education (48%), new clothes (45%), dining out, (35%), books (33%), entertainment (32%) and technology (30%).

Those with higher incomes are more likely to invest in stocks and bonds, and spend on leisure activities like vacations. Those in the upper and mid-level income tiers spend their spare cash on new clothes, dining out, books, entertainment, and technology, while those in lower income tiers focus on necessities including education, new clothes, and home improvements.

Key Take-Away

“The continued increase in consumer confidence in the rural areas is the key positive take-away in this latest survey,” said Barns. “The growth potential in the vast central and western regions, together with the rapid development of small cities and towns, is an increasingly attractive opportunity for marketers.”

Tagged:  GLOBAL  |  APAC
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