Post-Lockdown Surge in Consumer Spending
Over the past few months, we have had a number of conversations with leading experts on China marketing trends, where we have discussed the shifts in consumer behavior that have occurred as a result of COVID-19. Here, we talked with founder of The Solution, Jerry Clode.
What is your sense of where China is at now and what it has gone through?
In the next month or two, there is going to be a bounce-back effect in the economy after people have been cooped up at home. Chinese consumers are known to be the most enthusiastic consumers in the world, and because they’ve had extra time during lockdown to spend on their phones looking at brands and products, they are eager to get back to the malls. This is going to result in an immediate surge in terms of consumer spending in the immediate post-lockdown period, similar to the effect of “Single’s Day.”
Do you see that as a short term bounce? How sustainable do you see this as?
Consumers will very quickly go back to normal shopping and spending, which will lead to an immediate period of bounce-back. After that, there will be a change where consumers will be spending more in areas that give them confidence post-lockdown, such as spending extra money to ensure quality and safety of products. There will also be a shift from the preference towards China brands before lockdown, to a new preference towards buying safety and quality products of imported brands. This shift will lead to premiumisation, trading up, and some brand swapping, toward more higher-end international brands.
Before lockdown, many Chinese consumers made their decisions based on specific product categories. In some areas, there was an emphasis on quality and safety, resulting in navigation towards international imported premium brands, and in other areas, there was a lean towards the best domestic brands. However, in the new normal after COVID, we should see that the number of categories in which one is not willing to compromise decisions for, will have increased. Tensions and insecurities have been heightened during lockdown, and the number of categories with the default as an international higher-priced item is going to be greater. This will be the new benchmark for spending within China’s middle class.
