Positive Economic Signals in Q1 Leading to Brand Optimism
Discover the Latest Chinese Consumer Trends
After a very difficult 2022, the China market is now “rebounding strongly” according to the IMF, who is estimating a GDP growth rate of 5.2% in 2023 and 5.1% in 2024 for China. We are seeing several indicators of a rapid pickup in consumer spending in Q1 2023, including:
- Retail sales jumped 10.6% in March from a year earlier, the highest level of growth since June 2021.
- LVMH recently reported that its first-quarter sales grew by 14% in Asia, excluding Japan, compared with an 8% decline in the fourth quarter of last year. The group said it expected China to drive growth in 2023, and noted that they are already seeing the impact of Mainland Chinese tourists in the Asia region in Q1.
- Gross domestic product grew by 4.5% in the first quarter from a year ago, according to the National Bureau of Statistics on Tuesday. That beat the estimate of 4% growth from a Reuters poll of economists.
- Hermès sales in Asia (ex Japan) grew 23% in Q1, with management noting a “very good Chinese New Year” that facilitated strong momentum in Greater China and across the region.
With the China market open to tourism now, we are seeing CEOs and management visiting the region for the first time in three years, leading to fresh strategic roadmaps to adapt to the changed market in a post-COVID landscape.
At CLA we are closely tracking changes in the consumer market post COVID. Contact us for a complimentary 30 minute trend update on the China market.
China’s Economic Resiliency
China’s Economy Shakes Off Covid Legacy to Grow 4.5% in Q1
China’s economy got off to a solid start in 2023, as consumers went on a spending spree after three years of strict pandemic restrictions ended.
Gross domestic product grew by 4.5% in the first quarter from a year ago, according to the National Bureau of Statistics on Tuesday. That beat the estimate of 4% growth from a Reuters poll of economists.
Consumption posted the strongest rebound. Retail sales jumped 10.6% in March from a year earlier, the highest level of growth since June 2021. In the January to March months, retail sales grew 5.8%, mainly lifted by a surge in revenue from the catering service industry.
“The combination of a steady uptick in consumer confidence as well as the still-incomplete release of pent-up demand suggest to us that the consumer-led recovery still has room to run,” said Louise Loo, China lead economist for Oxford Economics.
Resurgence in China Luxury
How Luxury Brands Are Courting The New Chinese Consumer As Shopping Tourism Resumes
Luxury brands are revamping connections between online and offline shopping channels ahead of high-spending Chinese tourists’ return to the world’s fashion hotspots, said industry executives.
Digital avatars, gamification and white-glove online services are part of the new retail experience demanded by Chinese shoppers after three years of strict COVID restrictions and reliance on e-commerce.
As they start to roam again after China’s borders reopened on Jan. 8, these travelers want the same seamless and fun shopping journey overseas as they get at home. They may also be looking for something highly specific that they have already researched online.
“Consumers have changed drastically over the past few years. They’re even more connected and tech-savvy,” said Paris-based Alibaba Group executive Nicolas Cano who helps French, Swiss and German luxury brands sell to Chinese consumers.
WeChat Channels Give Brands Competitive Advantage
A Luxury Brand Guide To Using WeChat Channels
Tencent is betting big on its short video platform, WeChat Channels. In an internal speech last year, CEO Pony Ma went so far as to call Channels “the hope of the whole company.”
There are good reasons to be excited about it. In the fourth quarter of 2022, Channels’ in-feed ads generated $145 million (1 billion RMB) in sales, becoming a key revenue driver for the company. In December that same year, the total time users spent on Channels exceeded that of WeChat Moments by 80 percent, signaling the former’s growing popularity.
Since its beta launch in 2020, WeChat Channels has flown relatively under the radar compared to established short-video platforms like Kuaishou and Bilibili. But with an estimated 813 million monthly active users, according to QuestMobile, the page connects brands and creators to WeChat’s larger ecosystem — including its 1.3 billion users — and should not be overlooked.
Balance Global and Local
Winning in China: Top Priorities for Global Apparel and Fashion Brands
The apparel, fashion, and luxury (AF&L) market in China remains one of the largest and most dynamic in the world. After a difficult 2022, the industry is likely to resume double-digit growth, fueled in part by a rising middle class. However, for multinational companies (MNCs), doing business in China is getting harder.
Strict pandemic-imposed restrictions were not the only cause of the country’s dampened consumer spending in the first half of 2022. According to the National Bureau of Statistics, the China Consumer Confidence Index fell by 28 percent from October 2021 to October 2022. Chinese champions are increasingly outpacing their global peers, and many are adopting a more agile operating model and supply chain to enable greater responsiveness to changing consumer preferences. They are also adept operators of the various social- media and -commerce channels in China, engaging local key opinion leaders and consumers (KOLs and KOCs) to connect directly with consumers.
The Latest Trends Taking China by Storm
5 Chinese Gen-Z Fashion Trends You Need To Know
As 2023 gets going, three new categories of consumer have emerged: high-end fashion adopters, quality life practisers and trend chasers – and they’ve all become leading forces in the country’s apparel market, writes Qing Na from Dao Insights.
The emergence of a more diverse and niche-interest-driven Gen-Z consumer has led to a rethink of the styles being championed by fashion’s biggest players. Aiming to cater to both fast-changing aesthetic tastes and more multi-layered needs in terms of functionality, China’s clothing industry wants just one thing in 2023: to bounce back. Dao Insights walks us through the most prominent fashion trends, how they resonate with China’s shrewd consumers, and why all consumer brands – not just apparel companies – should take note.