Survey Shows Consumer Skepticism as Economy Slows
The world's widespread confidence in the Chinese consumer's ability to spend may not be shared by Chinese consumers themselves.
A new survey finds that 60% of middle class consumers in key Chinese cities have already cut their spending, or plan to this year. The basic worry is jobs, according to Data Driven Marketing Asia, a Shanghai firm that questioned 4,500 Chinese individuals late last month about their spending plans.
'If you are concerned about keeping your job, it's obviously going to curtail your spending,' says DDM director Sam Mulligan.
The five-city survey found people in the export-dependent economy in the southern manufacturing boomtown of Guangzhou most nervous about the employment outlook, and the first to cut back in spending. Items erased from shopping lists included branded clothing, entertainment and travel. But households also reported plans to cut corners where possible, such as watching for cut rate prices on basics like vegetables, pork and fish.
In Shanghai, 64% of respondents to DDM's survey said yes to the statement 'my company is not as busy as before' and almost a third in China's commercial capital said their employer has already laid off workers. Forty-two percent of Shanghai consumers furthermore predicted the economy would be 'bad' in the next 12 months, compared with 19% saying so in Beijing, where consumer sentiment remained the strongest in the survey. Over the next five years, 60% of Shanghai residents and 71% of Beijing people said, economic conditions will be good.
The survey isn't the first to point to gloomy prospects for consumerism in the world's most populous nation. Indeed, Beijing-based Horizon Research said recently its own confidence index fell in December to the lowest point since 2003 when the country was gripped by fear over the SARS virus. China's economy quickly rebounded when the infection was brought under control.
Beijing has estimated last year's retail sales - due to be reported any day now - expanded by 21% and topped 10 trillion yuan ($1.47 trillion) for the first time. But that's a small proportion of a gross domestic product estimated by HSBC economists to have expanded 9.2% to 28.91 trillion yuan in 2008.
Reading the writing on the wall, Beijing has also been speeding through measures aimed at underpinning buyer sentiment. In just one of the several steps announced in recent weeks, the government sought to support the domestic car industry by halving the sales tax on smaller vehicles. Nevertheless, 55% of Beijingers in the DDM survey said it is a bad time to buy a car.
The leading concern in the DDM survey wasn't the economy, however, which points to the complex menu of consumer sentiment problems facing Communist Party. The biggest worry centered on food safety, a concern cited by 86% of the respondents. |
|
