Tag Archives: consumers

China’s Stimulus Plan: Spurring Consumption?

All Eyes On Chinese Consumer Data, Particularly In The Luxury And High-End Segments, As Consumption In Other Markets Remains Sluggish

China's traditionally high individual savings rate is showing signs of easing somewhat, as middle-class and wealther consumers head back to stores

China's traditionally high individual savings rate is showing signs of easing somewhat, as middle-class and wealther consumers head back to stores

A number of outlets have given their thoughts on what it will take for Chinese consumers to cut back on their traditionally high savings rate and spend more of their disposable income, with some writing that it will take the creation of a bigger social safety net by the government and others advocating patience and still others defending high savings rates. Today, Susan Weerts writes in Seeking Alpha that data coming out of China this month suggests that consumers there are — without any major need for a socio-cultural shift, spending more on consumer items. This may mean that more confidence in the Chinese economy on the part of the consumer could be largely responsible for more spending in major cities and markets there.

As Weerts writes, the strongest growth in July retail sales was found in furniture, motor vehicles and building/decoration materials, which grew at 42.5%, 32% and 25% respectively, year over year. This massive growth, Weerts proposes, should give luxury brands some cause for (tentative) celebration:

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Chinese Consumers Keep Spending – Good News For Economy

More People Shopping Amid Positive Signs From Economic Stimulus Plan

Businesses and Politicians alike hope China's stimulus measures kick-start the economy and drive consumer spending as consumers in developed economies hunker down. Illustration © The Economist

Businesses and Politicians alike hope China's stimulus measures kick-start the economy and drive consumer spending as consumers in developed economies hunker down. Illustration © The Economist

The Wall Street Journal just posted an informative story about increased spending amongst Chinese consumers, as savings rates drop in younger consumer segments and more first-time car buyers take advantage of small-engine subsidies and overall lower prices on big-ticket items. These habits, of course, turn tradition upside down, as consumers in developed countries save more and hold off on purchasing new automobiles or real estate as the financial crisis continues. Although Chinese consumer confidence is tentative and somewhat fragile, consumers are responding to discounts and other moves by retailers to entice potential customers. Interestingly enough, the macro-level improvements in consumer confidence are boosting sales for companies who have not received any direct benefit from the economic stimulus:

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