While China’s economic growth is expected to slow down next year, at least one part of its population will not be worrying and plans to carry on shopping, especially for luxury goods, according to a recent survey.
Around 70 per cent of millennial respondents of the survey, jointly conducted by consultancy KPMG and Mei.com, a Chinese online shopping platform, said they planned to increase or “significantly increase” their consumption of luxury goods and services over the next 12 months, with 45 per cent saying it is “essential” to own at least one designer item.
The survey defined millennials as people born after 1985, who accounted for 67 per cent of the around 3,000 people polled.
“Chinese millennials have very different consumption habits compared to their parents’ generation,” said Jessie Qian, head of consumer and retail at KPMG China, “They share more similarities with their western peers in terms of shopping behaviours, such as focusing on the quality of the goods and wanting a more innovative shopping experience.”
They are particularly interested in higher-end clothing, cosmetics and perfume, as well as shoes, watches, jewellery and bags, the survey found.
A number of forecasts have flagged a slowdown in China’s growth next year, with the country’s rising debt levels one of the causes. The Asian Development Bank sees 6.4 per cent growth in 2018 compared to an expected 6.8 per cent this year, while the International Monetary Fund predicts 6.5 per cent in 2018 from an estimated 6.8 per cent this year.
However the consumer segment is likely to remain robust, supported by rising disposable incomes, the continued process of urbanisation and sizeable wealth accumulated from property, according to a Citi Group research report on Wednesday. It predicted that private consumption as a share of China’s GDP would reach 43.8 per cent in 2020 from 39 per cent in 2016.
The Chinese government has said that it wants consumers to be the main drivers of the economy in coming years, rather than traditional industries and investment, and the country’s around 400 million millennials – defined in this case as those born after 1980 and more than the working populations of the US and western Europe combined, according to research firm eMarketer – would be key in achieving this.
“The Chinese government is very dedicated to encouraging more domestic consumption as a growth engine for its economy,” said KPMG’s Qian. “And with the strong confidence displayed by young consumers, there are plenty of opportunities for all players in this market.”