Consumer confidence levels mixed in China

16 August 2010

BEIJING: The outlook among consumers in China is varying greatly between residents of cities like Beijing and Shanghai, and their counterparts in rural areas.

According to a study by Nielsen, the research firm, and the National Bureau of Statistics, the government body, popular opinion in the country is mixed at present.

In first tier cities like Shanghai, Beijing, Shenzhen and Guangzhou declined by five points from the last quarter, with second tier areas posting a decline of seven points.

"Increasing consumer prices and also stock market volatility are two of a number of factors that appear to be affecting consumers' attitudes," Mitch Barns, Nielsen's president in Greater China, said.

More positively, respondents in rural regions posted an increase of six points in the assessment period, contributing to an uptick of one point overall, to 109 points in total.

"That is mainly due to government policies to stimulate economic activities and increase incomes in rural areas during the first half of this year," said Pan Jiancheng, deputy director general at the China Economic Monitoring and Analysis Center of the NBS.

"Meanwhile, increased minimum wages for migrant workers in some parts of China have also brightened rural consumers' attitudes." 

Elsewhere, 68% of the panel believed that the employment market would continue to improve going foward, a three-point decline from the previous round of research.

More positively, 67% of respondents were optimistic about their personal circumtances over the coming year, a total that remained unchanged.

In terms of the issues that were causing the most anxiety among the panel, income levels, health and education retained their status as the three primary concerns.

Elsewhere, however, worries about increasing food prices rose from eigth position to fifth, with 70% of the sample expecting costs in this area to increase, up from 68% in Q2.

Food makes up approximately a third of the consumer price index in China, which climbed by more than 3% over the 12 months to July 2010.

"The key to manage inflation expectations is to manage food prices," said Pan.

In contrast, just 28% of contributors thought cars were likely to become more expensive, compared with 41% that believed it would soon cheaper to make a purchase in this category.

The outlook was also somewhat tempered for real estate, as 36% of people in top tier cities anticipated rising prices down by 24% quarter-on-quarter due to government measures to prevent a property bubble.

However, Barns suggested that brand owners still had considerable opportunities to drive up sales, with less less developed areas of the country proving extremely attractive at present.

"The growth potential in the vast central and western regions, together with the rapid development of small cities and towns, is an increasingly attractive opportunity for marketers," he said.

Data sourced from Sina/Reuters; additional content by Warc staff