Planet New Economy

Consumer

While China’s economic growth is set to slow over the coming decade its households could enjoy more money in their pockets, courtesy of the country’s common prosperity drive. That, combined with more empowered women, the arrival of Generation Z into the workforce and the ongoing strength of e-commerce in China, is likely to benefit an array of consumer products. 


Increasing household incomes

The Chinese government’s common prosperity policy drive appears intended to alleviate expenditure pressures such as education, housing and childcare for middle-income households, while also ensuring they have more disposable income. UBS predicts the country’s total household consumption could grow by USD5.3 trillion by 2030, to equal the US’s current USD17 trillion level. That would be roughly USD10,975 extra per household (given the average China household size of 2.92 in 2019, according to Statista)  

Wealthier women

The rising earnings will particularly be driven by women, whose average income is projected to rise by a 6.3% CAGR until 2030. That will make them increasingly influential when it comes to consumer spending patterns. China has one of the highest female labour participation rates for women aged 15 or over in the world (about 60% as of 2019), and Chinese women make most family spending decisions. And millennial females (born between 1980 and 1994) are the only female working age group set to expand over the coming decade.

Gen Z’s growth

Generation Z – born in 1995-2009 – will also be increasingly influential. They are set to become the country’s wealthiest generation; indeed, some anecdotal accounts estimate that Gen Z already accounts for 40% of consumption – particularly through e-commerce – despite being just 17.4% of China’s population. Gen Zers like to spend money on themselves, particularly when it comes to wellbeing and fitness 

E-commerce evolution

The drive for common prosperity and stricter rules around data and anti-trust activities will moderate the ambitions of some internet giants. However, with growing household expenditures and increasing online penetration, some existing large platforms and many new ones stand to benefit, especially in categories like groceries and media like live streaming

Products to watch

Rising household incomes, gender diversity and wealthier young people will have several consumption ramifications. Expect to see more spending on: investment services such as asset management and insurance; luxury goods including automobiles, apartments; cosmetics; pet products and services; healthy foods and supplements; sporting goods and gym membership; plus pleasure goods like beer, bubble tea, and strong flavored cuisines

Robots for sale

Robots look like a growing area for consumers as well companies. Households could increasingly look to buy up robotic vacuum cleaners and drones – plus, eventually, autonomous vehicles. The country’s consumer drone sales stood at US$6.1 billion in 2020, according to the National Bureau of Statistics.

Made (well) in China

The government’s drive to promote common prosperity and ongoing geopolitical tensions could encourage a greater emphasis on buying domestic products – especially household essentials. That offers local brands an opportunity. However, Gen Z buyers in particular will not buy ‘Made in China’ out of national pride alone – they insist on both product quality and design quality