Chinese consumers resist trading down

22 May 2009

BEIJING: Some 70% of Chinese consumers do not intend to trade down to cheaper brands in the next year, although around a fifth are planning to cutback on some "discretionary purchases" over this period, a new study by Publicis has found.

Chinese shoppers are argued to be typically more cautious about spending than many of their western counterparts, and the country's government has recently launched a new scheme attempting to boost activity in the consumer electronics sector in the next 12 months.

Publicis polled 1,500 adults in China, Taiwan and Hong Kong in order to establish their probable buying behaviour in categories including luxury goods, beauty, consumer electronics and travel.

It found that some 75% of Chinese respondents are confident in their financial and employment prospects, a total that fell to 62% in Hong Kong, and to just 50% in Taiwan.

However, a fifth of contributors expect to cut back on buying personal care items, and on out-of-home entertainment, such as dining in restaurants. 

In terms of buying luxury goods, 46% of participants in Hong Kong are reducing their outlay, compared with 53% in Greater China, where 42% of shoppers are also buying less "big ticket" goods, as are a majority in Taiwan and Hong Kong.

Overall, Publicis suggested that 37% of consumers in China could be termed "business as usual high-enders", who remain optimistic and will maintain their current spending habits, or even boost their outlay on certain premium goods. 

Some 39% of consumers in Hong Kong, and 32% of participants in Taiwan, also fell into this category, the marketing services firm found.

A further 38% of Chinese can be characterised as "cautious regulars", who are not actively seeking to cut back, but are taking a more pragmatic approach.

This group – which makes up 34% of shoppers in Kong and 32% in Taiwan – will keep buying the same brands when making "day-to-day" purchases, but could cut back on "big ticket" items.

A third group identified by Publicis is the "ultimate cutters," making up 15% of those surveyed in China, 13% in Hong Kong and 20% in Taiwan.

Major traits exhibited by this demographic include a willingness to slash spending on both regular and major purchases, and Publicis reports that half of this group actually exhibited similar behaviour as "high enders" during 2008. 

A final 10% of Chinese consumers are "ultimate indulgers", a total that rises to 14% in Hong Kong and 17% in Taiwan.

While members of this group – three-quarters of who displayed similar habits to low or middle-income shoppers last year – are making reductions in "low involvement sectors", they are also seeking to purchase more premium products.

Laurie Kwong, ceo of Publicis Greater China, argued that these results demonstrated that "brand loyalty is more than a financial decision. Consumers in Greater China are not eager to define themselves as a 'cheaper me'."

Data sourced from ADOI/Media; additional content by WARC staff