The Global Economic Crisis: The Impact On Consumer Attitudes & Behaviors In China

Published by: Datamonitor

Published: Jul. 15, 2009 - 16 Pages

Table of Contents

Overview

Catalyst

Summary

Table of Contents

Table of figures

Table of tables

THE FUTURE DECODED

INTRODUCTION: Understanding how 'recessionary mindsets' influence attitudes towards and actual consumption is vital

The 'recessionary mindset' prevalent among global consumers has not been as significant among Chinese citizens

The economic downturn has had an impact on the lifestyles of Chinese consumers although the majority do not seem to regard the country to be in a recession

Key takeouts and implications: a 'recessionary mindset' has characterized Chinese consumers to the same extent as elsewhere

TREND: Higher consumer confidence is reflected by a generally positive outlook among Chinese consumers

Chinese citizens are, by and large, upbeat about how things are going and this appears to be having a positive impact on perceptions about quality of life

Key takeouts and implications: Chinese consumers' optimistic mood is closely tied with economic progress

TREND: Chinese consumers still have strong confidence in their financial security and the future prospects of the economy

The economic outlook of China is improving as 2009 progresses

The stated importance of one's financial situation continues to be high among Chinese consumers

Perceptions about the economy, job security, financial status and the housing market in China have all stayed positive, and there is optimism for the six months ahead

Chinese consumers are also managing their finances more closely

In the period 2008-09, Chinese consumers are neither making greater efforts to save nor cutting down spending on credit

Key takeouts and implications: owing to considerable inequalities in the country, Chinese consumers express mixed satisfaction with their financial situation, but future optimism remains high

INSIGHT: The downturn has not had a significantly negative impact on the emotional wellbeing of Chinese consumers

Self-reported stress levels have not worsened in China during the downturn as much as elsewhere

Satisfaction with work-life balance has remained low in China in 2008-09

An upbeat economy continues to positively impact the general mood of Chinese consumers

Key takeouts and implications: consumers in China are less likely to be attracted to doses of optimism

INSIGHT: Chinese consumers have a reputation for being prudent spenders which is why value-for-money will prove to be an important theme in the country's consumer markets

Chinese consumers are becoming even more prudent in light of the economic downturn

Value consciousness heavily influences where Chinese consumers do their grocery shopping

Key takeouts and implications: the general value consciousness of Chinese consumers has intensified and is reflected by how they determine where and how to shop

INSIGHT: Chinese shoppers are not yet embracing private label to a significant extent

Chinese consumers are more reluctant to give up their favorite brands for more 'considered' choices

Comparatively higher skepticism poses a challenge for private labels to further expand in China

Key takeouts and implications: the value consciousness of Chinese shoppers creates an optimal platform for ongoing private label growth but a reluctance to forgo leading brands might impede development

INSIGHT: Chinese consumers are embracing higher quality products when it comes to food and non-alcoholic beverage purchases and preparation

Chinese consumers are opting for higher quality food and beverages but are still highly cost/value conscious

Many Chinese shoppers consider private label food and non-alcoholic beverages to be identical to famous branded equivalents

Key takeouts and implications: a resurging desire to cook at home has occurred while private label and market leading brand competition in food and non-alcoholic beverages will intensify somewhat

INSIGHT: Image conscious Chinese consumers continue to embrace personal care regimes and opt for more upscale product choices

More than 70% of Chinese consumers are committed to looking their best in day-to-day life

In 2008-09, value conscious Chinese personal care shoppers have not made notable changes in order to save money which partly explains why premium products continue to perform well

Private label and personal care/beauty products have a relatively high degree of credibility among Chinese consumers but are not frequently purchased

Key takeouts and implications: Chinese consumers' pursuit of high quality products is also apparent in their beauty regimes and product preferences

INSIGHT: Alcoholic drinks' consumption patterns and preferences in China have not changed significantly during the global economic downturn

Chinese consumers do not appear to be overly attentive about their spending on alcohol, nor do they perceive that they have been making significant cut backs in the amount they consume in 2008-09

Value-consciousness continues to influence Chinese drinkers' alcoholic beverage choices, but significant cut backs are not being made

Private label alcohol is not as developed in China and therefore yet to be accepted as a credible alternative among Chinese drinkers

Key takeouts and implications: in 2008-09, there has been little to no change for around six in ten Chinese drinkers

INSIGHT: Chinese consumers' household care buying preferences are shaped more by product traits and brand

Characteristics directly related to the product are deemed most influential for Chinese household and laundry care purchases

The private label household care market in China is small but potentially lucrative given shoppers' higher willingness to try and switch

Key takeouts and implications: Chinese consumers associate hygiene and cleanliness with wellbeing and this, combined with their inherent focus on a clean home and aspirational consumer mentality, makes them quality-conscious

ACTION POINTS

ACTION: Adopt a relentless approach to delivering and communicating better value than the competition

Focus on quality to create and maintain differentiation, also prove to consumers that quality really matters

Invest in brand management because strong brands are even more pertinent indicators of quality in emerging markets

Evaluate and adapt cost structures so that it is feasible to offer value-for-money solutions, particularly to those with less discretionary income

ACTION: Look for opportunities to extend pre-existing products or launch new premium products into China

Explore opportunities for basic market entry, store expansion and distribution expansion in the emerging markets

Use acquisitions and alliances as a means of improving local market understanding

Do not assume emerging market consumers to be a large homogenous group

Use local personalities as brand spokespeople when expanding into the emerging markets

Release products in smaller sizes with correspondingly smaller price tags to target the lower incomes apparent in the emerging markets such as China

Start planning for the longer-term by continually tracking Chinese consumers as an economic recovery begins to become a reality

APPENDIX

Methodology

Further reading and references

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Consumer survey: level of satisfaction with the general direction of how things are going and quality of life, in China and globally, 2009

Table 2: Consumer survey: satisfaction with current financial situation and importance attached to wealth/ income and having finances in good order, in China and globally, 2009

Table 3: Consumer survey: perceptions of whether broader economic conditions, financial situation, job security/confidence and housing market confidence had improved or worsened in the six month previous and how each might change in the proceeding six months, in China, 2009

Table 4: Consumer survey: propensity to feel tense and the extent to which perceived levels of stress have changed in the last six months and are expected to change in the next six months, in China, 2008-09

Table 5: Consumer survey: propensity to feel very tired and the extent to which perceived work-life balance has changed in the last six months and are expected to change in the next six months, in China, 2008-09

Table 6: Consumer survey: happiness levels and the extent to which perceived happiness has changed in the last six months and are expected to change in the next six months, in China, 2008-09

Table 7: Consumer survey: changing value-consciousness and desire to save money when buying groceries among Chinese shoppers, 2009

Table 8: Consumer survey: changing efforts being made to use coupons, change grocery store choice to save money, embrace more disciplined shopping and gather and utilize store price information, among Chinese shoppers, April 2008-April 2009

Table 9: Consumer survey: the relative cost/value and quality consciousness of China and global consumers overall when purchasing food and beverage products in 2008

Table 10: Consumer survey: the extent to which consumers are making effort to save money by adopting various food and drinks consumption and preparation approaches, in China, 2008-09

Table 11: Consumer survey: perception about the relative superiority or inferiority of private labels versus well known or market leading famous brands in food, soft drinks and hot drinks, in China, 2009

Table 12: Private label food penetration and spend ($ millions) in China, 2002-2012

Table 13: Private label non-alcoholic beverage penetration and spend ($ millions) in China, 2002-2012

Table 14: Consumer survey: the importance attached to looking one's best in day-to-day life, the pressure to look good, and satisfaction with physical attractiveness/ appearance, among Chinese consumers, 2008 and 2009

Table 15: Premium fragrance, make-up, haircare, skincare and personal hygiene markets ($ millions), in China, 2002, 2007, 2012

Table 16: Consumer survey: the extent to which consumers are making an effort to save money by using spas or salons less often, in China, 2008-09

Table 17: Consumer survey: attempts made by Chinese consumers to change their personal care/beauty habits in order to save money, by product category, 2008-09

Table 18: Total private label personal care penetration and spend ($ millions) in China, 2002-2012

Table 19: Consumer survey: perception about the relative superiority or inferiority of private labels versus well known or market leading famous brands for grooming/ beauty products, and agreement that such products are good alternatives to well known or market leading famous brands, in China, 2009

Table 20: Consumer survey: attentiveness towards the amount of money spent on alcohol and the degree to which alcoholic beverage consumers in China have cut down on the overall amount of alcohol bought/consumed, 2008-09

Table 21: Total private label alcoholic beverage penetration and spend ($ millions) in China, 2002-2012

Table 22: Consumer survey: the changing degree to which household and laundry care consumers in China made product choices with value/cost and quality considerations in mind, 2008

Table 23: Consumer survey: attitudes towards doing housework in China and globally, 2008

Table 24: Private label household care penetration and spend ($m) in China, 2002-2012

Table 25: Consumer survey: perception about the relative superiority or inferiority of private labels versus well known or market leading famous brands for household cleaning/laundry products, and how often such products are purchased to save money, in China, 2009

List of Figures

Figure 1: Datamonitor's Recession and Recovery portal will allow industry players to continually identify emerging opportunities and track what is happening in the Chinese economy as it develops

Figure 2: Nearly half of Chinese consumers believe the country is not in a recession which is considerably lower than elsewhere

Figure 3: Chinese consumers are less likely to perceive that their lifestyle has changed in light of the economic downturn

Figure 4: Chinese consumers are inherently satisfied with how things are going in their country, which coincides with the high level of satisfaction with their quality of life

Figure 5: Burgeoning economic prosperity in China has been accompanied by increasing satisfaction with the country's direction

Figure 6: Despite the burgeoning economy over the last decade or so, more Chinese consumers are dissatisfied with their financial situation than they are satisfied

Figure 7: Negativity about the economy at large is greater than that shown towards their personal situation

Figure 8: By the first quarter of 2009, China's economic growth rate had dropped by nearly half since 2007

Figure 9: Nearly two-thirds of Chinese consumers expect economic conditions in the country to improve in the six months through to October 2009 and 42% think the same about the housing market

Figure 10: Nearly 70% Chinese consumers are managing their finances more closely given the downturn

Figure 11: Moving into 2009, Chinese consumers appear to be marginally less credit resistant and less cautious of cutting down their spending throughout

Figure 12: While Chinese citizens experienced comparable levels of stress as elsewhere in the globe in 2008, the situation has not worsened to the same degree as in other countries

Figure 13: Chinese consumers are prone to fatigue, while the GEC has not caused a worsening work-life balance in the period October 2008 to April 2009

Figure 14: Only 14% Chinese citizens have become less happy during the period October 2008 to April 2009

Figure 15: The overwhelming majority of Chinese consumers are more value conscious following the downturn, but this has been an important shopping orientation for some time

Figure 16: Quality of products sold has more influence than lower prices or habit in directing Chinese shopping behaviors

Figure 17: Value consciousness is influencing where Chinese consumers do their grocery shopping and how they shop

Figure 18: Chinese consumers' in-store shopping pattern differs to the global average, particularly in the way they more freely navigate in-store environments

Figure 19: Chinese consumers are more reluctant to give up their favorite brands to save money than consumers elsewhere

Figure 20: Being seen with the right brand is an important part of emerging consumer cultures characterizing the emerging Asia markets

Figure 21: Less than 20% of Chinese shoppers are routinely buying private label/store branded products in order to save money

Figure 22: With prominent product display and attractive prices in store, private label products are attracting Chinese consumers in shops owned by international grocery retailers

Figure 23: The private label market is impacted by a broad range of drivers and inhibitors

Figure 24: Chinese consumers became increasingly cost and quality conscious in their food and beverage choices in 2008 which is indicative of the value-for0money shopper mindset within the country

Figure 25: The attributes deemed most influential in what food and beverages Chinese consumers buy highlight the value consciousness shaping the choices they make

Figure 26: Chinese consumers are adopting various responses to save on food and beverage expenditures

Figure 27: In 2009-09, an increased proportion of Chinese consumers cooked an evening meal at home from scratch, while less people are doing so everyday

Figure 28: The percentage of Chinese consumers who 'rarely' or 'never' have a takeaway meal at home decreased in 2009

Figure 29: Chinese consumers are divided in their opinions about how famous branded food products, soft drinks and hot drinks compare to private label equivalents

Figure 30: Chinese consumers are appearance conscious and this makes them more willing to trade-up when making personal care choices

Figure 31: In a mentality that conforms to the ideology of 'self branding' and the modernization of the country more generally, Chinese consumers believe that physical attractiveness will ultimately be advantageous to securing more opportunity in life

Figure 32: Chinese personal care/beauty shoppers continue to be cost conscious in 2008, but showed a continuing preference to opt for superior quality products

Figure 33: Brand and efficacy are more influential than price to Chinese shoppers in directing their personal care/beauty choices

Figure 34: Around half of Chinese consumers hold a neutral attitude about whether private label beauty products are good alternatives to well know or market leading brands

Figure 35: Chinese consumers are not as attentive on how much they spend on alcohol as drinkers from other countries, and they do not appear to have cut back the amount of alcohol they consume in 2008-09

Figure 36: The value-consciousness of Chinese drinkers is influencing both on-trade and off-trade alcoholic drinks' consumption in 2008-09

Figure 37: Chinese drinkers, perhaps influenced a sense of entitlement, are reluctant to opt for cheaper brands and formats of alcoholic beverages

Figure 38: Chinese drinkers are influenced by promotional offers to a similar extent as consumers elsewhere

Figure 39: Less than a third of Chinese drinkers believe that private label alcoholic drinks are good alternatives to market leading or famous brands

Figure 40: Private wine has the least credibility among Chinese drinkers

Figure 41: Compared to brand image/brand name, price has less influence on Chinese drinkers' choices

Figure 42: Product promise is deemed most influential in directing Chinese consumers' household cleaning and laundry product choices which accentuates the need to appropriately communicate efficacy

Figure 43: Brand, rather than price led value, is the most influential factor for Chinese consumers' household and laundry care purchases

Figure 44: In 2008, Chinese household and laundry care choices were made with greater consideration for cost/ value with a even greater desire for efficacy led quality

Figure 45: Chinese citizens value cleanliness, but seek to minimize the amount of time they spend on such tasks and this is why ease of use and efficacy so are deemed so influential in product choices

Figure 46: More than two-thirds of Chinese consumers are frequent purchasers of household care products on the basis of value-for-money

Figure 47: Nearly 30% of Chinese shoppers purchases private label household care products in order to save money

Figure 48: The majority of Chinese consumers consider private label household and laundry products to be identical to branded equivalents

Figure 49: Manufacturers and retailers looking to deliver value-for-money must in the provision of factors associated with the PPI, but while also offering consumers lower than expected prices

Figure 50: Datamonitor's Recession and Recovery portal will facilitate forward thinking planning for those leading companies that start planning for the longer-term

Abstract

• Detailed analysis documenting Chinese consumers' 'recessionary mindset' and how this influences perceptions about current and future prospects
• Insights highlighting how the economic downturn has affected perceived quality of life, emotional wellbeing and financial security in China
• In-depth analysis of Chinese shoppers' changing price sensitivity, value consciousness and attitudes towards private label across 4 major FMCG sectors
• Countries and categories covered: China; food and non-alcoholic beverages, alcoholic beverages, personal care and household care

• Gain a detailed understanding of changing consumer attitudes and behaviors amid the downturn in order to determine appropriate recessionary strategies
• Obtain country and sector specific insight about pertinent recessionary themes such as private label and consumers' value consciousness
• Assist consumer segmentation and targeting efforts by accessing data from two waves of primary research conducted in August 2008 and April 2009

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