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Mintel’s annual The Chinese Consumer Report, offering an overview of the key trends and spending behaviours affecting China’s consumer landscape over the last year, reveals that Chinese consumers are in pursuit of richer experiences and quality of life.

Latest findings from The Chinese Consumer Report shows that a staggering 91% of Chinese respondents* agree that when making a purchase, quality is more important than price; while over four in five (81%) are interested in trying something new than sticking to the familiar (eg buying a new product, going to a new holiday destination).

The new Mintel research also reveals that total consumer expenditure in China grew 8.6% to reach RMB41,146 billion in 2018. While this is an apparent slowdown when compared to the 11.2% growth seen in 2017, expenditure grew in line with China’s per capita disposable income of 8.7%.

Jessica Jin, Category Director of Mintel China Reports, said:

“With China’s economy still experiencing healthy growth, Chinese consumers, today, are increasingly in pursuit of richer experiences and quality of life. Furthermore, our research shows that they are becoming savvier spenders. Consumers are willing to pay a premium for products and services that offer them new and richer experiences that align with their values—and it is the stable growth of disposable income that is supporting this lifestyle. When it comes to basic daily offerings, value for money is still the top consideration.

Savvier and more prudent spending

Indeed, household care products is the top sector where decreased prices or discounting has played a big part in driving consumers to spend less; as indicated by the 43% of Chinese respondents who have spent less on household care products (eg tissue paper, household cleaning products). On the other hand, consumers are willing to spend more for broader, self-indulgent experiences; as many as 84% of Chinese respondents who have spent more on holidays in the last year* did so to treat themselves.

Mintel research further reveals that personal finance and housing remains to be the biggest consumer spending sector, accounting for 23.7% of total consumer expenditure in 2018. This is followed by in-home food (14.3%), holidays (9%) and clothing and accessories (8.1%). Looking ahead, Mintel predicts that holidays, transportation, and personal finance and housing, will be the top three sectors with the highest growth in terms of consumer spending, reaching a CAGR (compound annual growth rate) of 12.8%, 10.2% and 10.1%, respectively, in the five years to 2023.

“China’s stable economy in 2018 has driven consumer demands beyond basic necessities like food and drink, towards more emotional requirements like attaining enjoyment from holidays, leisure and entertainment. With more and more consumers pursuing a better quality of life and wanting more new life experiences, sectors such as holidays, leisure and entertainment, and clothing and accessories, have encouraged many consumers to self-indulge and spend more in 2018. Meanwhile, increasing expenditure on essentials like in-home food, for instance, is driven by rising prices in the market.” Jessica continued.

Mintel’s annual The Chinese Consumer 2019 Report tracks consumer spending across 15 market sectors, revealing the future opportunities with each category. Sector highlights include:

In-home food: Pursuing better-for-you and convenient diets

“In the five years to 2023, total in-home food expenditure will grow at a CAGR of 5.3%. With increasing knowledge around food and consumption upgrade expected to continue, people are now pursuing better diets that are more nutritionally-balanced and natural. At the same time, convenience is highly valued given today’s faster pace of life. With China’s younger generation (consumers aged 20-29) becoming the main consumption group, manufacturers and brands need to look into solutions that meet their demand for nutrition facts, consumption experiences and effective information channels.”

Beauty and personal care: 360-degree holistic beauty solutions will mainstream

“Over the next five years, total consumer expenditure in beauty and personal care will grow at a CAGR of 7.0%. Today, consumers are taking good care of their appearances, while companies are launching successful new product innovations—and these are the factors which are driving beauty consumers to trade up and develop repertoire usage. However, consumer needs are ever-evolving from maintaining personal hygiene to improving appearance to now paying more attention to their health and wellness and emotional needs. Looking to the future, the universal pursuit of health and wellness will continue to impact the beauty and personal care sector. Furthermore, solutions that take a 360-degree holistic approach to beauty will move to the mainstream.

Clothing and accessories: keeping up with growing individuality

“Looking ahead to 2023, total expenditure on clothing and accessories will grow at a CAGR of 6.9%. The way consumers are expressing their individuality through their appearance is evolving and many category players are unprepared for this change. Simply allowing consumers to mix and match styles is no longer enough as consumers today want to show their uniqueness in more distinct and personalised ways. Sportswear has maintained its winning position in the market with Chinese brands increasingly in the spotlight. Meanwhile, fast fashion is facing challenges in several areas, and players are looking for growth opportunities through the development of online channels.”

Leisure and entertainment: Self-indulgence and breaking from routine

“In the next five years, total consumer expenditure in the leisure and entertainment sector will grow at a 9.0% CAGR. This growth is fundamentally driven by people’s desire to relax, unwind and strike a work-life balance. With consumers, especially the younger generations, becoming more experience-driven, cultural events such as exhibitions, live performances and music festivals are becoming more popular and sought after. Chinese consumers are putting more emphasis on themselves as individuals and are keen to share these moments on social media. Leisure activities that are ‘all-time favourites’ will have to re-invent themselves if they want to attract new consumers. The opportunity lies in offering consumers new and fun leisure experiences that allow them to be culturally sophisticated.

Holidays: Leading sector for consumer spending with promising growth prospects

“In the five years to 2023, total holiday expenditure will grow at a CAGR of 12.8%. Future growth prospects remain highly positive as the holidays sector is the top choice for consumers’ discretionary spending. As consumers become more culturally sophisticated, along with more favourable visa policies, China’s outbound travel market is one to watch over the next couple of years. Future growth calls for more innovative products and services, as well as diversification. Trips that incorporate concepts around trying, exploring and experience—such as riding in a hot air balloon and enjoying local specialty food—will be more appealing to Chinese consumers.”

*3,000 internet users aged 20-49, January 2019

Interviews with Mintel China Reports’ Category Directors are available on request from the Mintel Press Office.