Laurel Gu
Laurel joined Mintel in 2013 after five years work at Nielsen. Her areas of expertise include consumer research, product innovations and data analytics. She now focuses on identifying changing consumer behaviour, industry trends, and innovations in the leisure, travel, health and wellbeing sectors in China.
May 27th, 2020

As time goes by, summer is finally here. China has fully gotten into the rhythm of work and production resumption since it stepped up efforts to fight the coronavirus starting in January. Despite confirmed cases scattered in some places, on the whole, China has achieved phased success in its fight against the pandemic. At the recent Two Sessions, Li Keqiang, Premier of the State Council, also recognized the contribution made by the whole nation to China’s battle against the coronavirus. Mintel, the world’s leading market intelligence agency, has embarked on quantitative and qualitative analysis of the COVID-19’s impact on Chinese consumer behavior in February, and released a series of monthly reports on the impact. Today, we’ll share the latest research findings.

With Chinese consumers gradually returning to ‘normal life’, following the spread of COVID-19, they are experiencing more change as their priorities shift based on the events of the last few months.

With the number of diagnosed COVID-19 cases decreasing, economic activities are beginning to resume. In early May, 88% of people reported working at their usual office location, increasing from 56% who said the same in early March.

Despite a return to offices, however, there has been little change in people’s level of worry about the impact of the novel coronavirus on their lifestyle. Mintel research shows that 37% of consumers were “somewhat worried” and 32% were “moderately worried” about lifestyle changes in early May, compared to 37% and 33%, respectively, in early March. The most notable change over the same time period has been the percentage of Chinese consumers who are “extremely worried” falling to 13% in early May from 16% in early March.

New research from Mintel reveals that when it comes to spending priorities, consumers are reassessing what’s important with around one-third saying that luxuries are less desirable now.

Luxury products and services in general are seeing a decrease in consumer interest as a result of the COVID-19 pandemic. One-third consumers say that they have less desire for luxury products. However, there are potential bright spots for the luxury industry, mainly including luxury beauty products and high-end digital products, with nearly half of consumers saying their desire for these categories has increased or remained unchanged.

Desire for luxury products and services is dampened after COVID-19. In the short-term, this is a temporary setback, mainly associated with financial pressure, and is likely to recover as personal financial circumstances improve. In the long-term, expect to see the definition of luxury evolve and become a state of mind, rather than ownership of things. In general, we predict ‘mindful consumption’ will emerge as a notable trend that will see more consumers turn away from indulgent spending and review what matters in life.

China has not set a specific target for economic growth this year in the 2020 Government Work Report, due to the great uncertainty regarding the COVID-19 pandemic and the world economic and trade environment. But at the same time, the Government Work Report pointed out that this will enable China to concentrate on ensuring stability on the six fronts and security in the six areas. (The six fronts refer to employment, the financial sector, foreign trade, foreign investment, domestic investment, and expectations. The six areas refer to job security, basic living needs, operations of market entities, food and energy security, stable industrial and supply chains, and the normal functioning of primary-level governments.) It also emphasized increased efforts for ensuring stability on the six fronts, stressing that job security and basic living needs will have a positive impact on the consumer market.

Our preliminary research indicated that it would take at least four months or even longer for consumer confidence to be restored. The improvement we’re currently seeing in consumer sentiment related to the impact of COVID-19 on the market is largely driven by resuming business activities, which were brought to a near standstill when the outbreak was at its peak. A true rebound of consumer confidence depends on how quickly employment can be stabilized and the cost of living is brought under control.

Consumer spending remains focused on essentials, with in-home food (50%) and household care products (40%) earning the majority of increased spend. However, eating out is beginning to see a boost: 19% of consumers increased spending on eating out between the end of April and early May, compared to just 14% who did the same between the end of March to early April. This is the biggest change across all sectors since Mintel started tracking these categories in relation to COVID-19.

In our March insights report, “MOVING FROM REACTIONARY TO RATIONAL CONSUMPTION: COVID-19’S IMPACT ON CHINESE CONSUMERS”, we believe it is not likely to see reactionary consumption. This point of view also dovetails the recent market research data. For more consumers, it takes time to restore consumer confidence. People, especially those who have lost job security, will go back to spending within their means and even becoming more prudent with a saving mindset. Making more money and spending it rationally is likely to be the main theme for Chinese consumers for the remainder of 2020. Smart businesses should pay attention to risk management and be prepared to market a sense of protection, reliability, and value in their offerings.