The consumer mood today
Marketing pundits believe that condoms, DVDs, lipstick and junk food are likely to gain prominence during economic slowdown. Will Chinese consumers’ behavior be similar in these times of strain? TNS China conducted a study in urban China to validate or explode these hypotheses and myths and we present here the key changes that we can expect in consumer behavior in these difficult times in urban China.
On the whole, the urban Chinese consumer is facing the crisis with stoic optimism. Half the consumers feel that despite the downturn their incomes in 2009 will actually increase in comparison to 2008. 31% expect to retain the 2008 income level and only 19% expect a decline. The optimism is based on the fact that most consumers feel that their lives will only be slightly singed by the fury of the global economic meltdown. However on the whole the year 2009 for the Chinese consumer will be a time for reflection and an opportunity to seek a balance in life – balance between work and play, friends and family, saving and spending, excitement and peace – in their quest to seek a better quality of life.
1. Health is wealth
When the wise man propounded that “health is wealth” he possibly did not expect that we may one day have a time when health is the only wealth that people possess. In a situation you can do little about the economic health, it becomes even more important to preserve the physical health. While gyms should still have their treadmills rolling strong as enthusiasts try to match their body weight graph with the stock market trend, most consumers will adopt the natural and free exercise of walking and jogging in their quest for healthier and slimmer bodies.
2. Goodbye luxury
“It has been said that man is a rational animal. All my life I have been searching for evidence which could support this,” said Bertrand Russell. He would possibly be pleased with the consumer desire to rationalize their spending and cut down on luxury goods in 2009. Consumers say that they plan to spend less on jewelry, bags and watches in 2009 as compared to 2008. The luxury goods manufacturers who were expecting China’s appetite for luxury to make it the largest market in the world, would need to wait till the economy turns around.
3. More skin-care and colors
Beauty may just be skin deep, and the recession is deeper. But the Chinese consumers still feel that a glowing skin and luminous lips could act as a shield against the pain of the economic crisis. Need to look good is never more pronounced than when the times are tough. A heady feeling from a positive reflection in the mirror and admiring glances from friends and colleagues could almost match and even compensate for the lightness of the wallet.
4. Skill enhancement and training
American consumers may have over mortgaged their houses, but the Chinese consumers will never mortgage their future. Learning has always been seen in China as a ladder of success. Dealing with difficult times calls for enhanced skills and capabilities. What could be a better time to invest in self enhancement than when employment is scarce, the salaries are low and the work load light. English language courses, already a booming business will get a further fillip. Consumers will try to teach themselves software, web page designing, and even belly dancing to enhance their chances for fruitful employment and a healthy pay check.
5. Digital world
With nearly 300 million internet users (the largest in the world) China was already hurtling towards a digital age. The rapid adoption of the digital media, of course, precedes the recession. Internet is where the Chinese go to look for a better job, download free movies and songs and just engage in incessant chatter with friends. In times like these, they expect to rely on the net even more to search for a better job, complain about their poorly paid jobs in their blogs and upload videos for their temporary leisurely existence. We believe the recession will further enhance the role of internet in the consumer lives in China. The availability of relatively inexpensive 3G mobile services will definitely also facilitate greater adoption and usage.
6. Home sweet home
The joy of family life will be further enhanced and family relationships will be even more delicious with the flavors of home cooking wafting from the kitchen. Chinese consumers plan to cook more at home in 2009 than they managed in 2008. The competition to home cooking comes from cheap fast food restaurants and road side stalls – both of whom are likely to lose business from this segment in 2009. However, the overall business of McDonald’s, KFC and Nan Xiang Xiao Long dumpling chain store may still see an increase in 2009, as consumers also down trade from more expensive restaurants.
If you need to spend more time at home, it also makes sense to vacuum the floor and tidy up the place, Chinese homes are going to look much more neater in 2009 and the lower toil demanded by the workplace may be substituted by efforts at home.
7. Shop wisely
While shopping at hypermarkets has its attractions, it does call for time at hand, With more time and greater incentive to economize, more consumers are likely to shop at hyper markets than the more ubiquitous but pricier supermarkets and convenience stores. The search for value and bargains will also turn the shoppers to internet shopping – the only channel that will grow even faster than hypermarkets.
8. In-home entertainment in, out-of-home entertainment out
When the slow speed of the internet connection makes downloading a movie difficult, we in China have the option of spending a dollar to buy the pirated DVD. If we did want to make an evening out of it, with popcorn and all, we would spend thirty dollars for two tickets in one of the many multiplex cinemas. While conventional wisdom suggests many alternative uses for the thirty dollars (including putting under the mat for a rainy day) the consumers are unwilling to give up this pleasure. Cinema ticket sales are likely to remain high, as long as the movie industry can come up with compelling attractions to help the consumers a few hours of blissful escape from the harsh reality.
Bars and karaoke flourish in economic booms, when clients are entertained and deals are made on favorable terms with suitably mellowed potential business associates. Not unexpectedly the recession will mean that entrepreneurs and managers do not have to listen to potential business partners sing out of tune, in the hope of securing a juicy contract. Less cognac will be poured (sale of beer and other cheap alcohol consumed at home or low priced eateries is unlikely to be affected).
9. Social harmony of a kind
Absorbed in the relentless wheels of economic activity, the Chinese consumer has been accumulating a feeling of guilt for neglecting the immediate as well as the broader family. Recession is the ideal time to catch up with friends, take the children to the park and visit your parents, and in the process enjoy emotional warmth to compensate for the coldness of the economic climate. The children are likely to pay a heavy price for this, with parents having more time and inclination as well as a renewed determination to help their children with their studies.
10. Sex and Love
Chinese consumers do not really plan to change their sexual habits during the recession. However with a strong intention to spend more time with spouse or partner, the consequences can not be predicted!
Some consumers, however, may be forced to give up expensive mistresses, particularly if they continue to demand luxury jewelry and handbags. The demand of condoms, may go up slightly as couples decide to postpone having a child till after the recession. Though as a counter trend, some women are said to be rushing to have a “financial crisis baby” as the law prevents the employers from laying off pregnant women and nursing mothers!
The Shanghai Adult Toys and Reproductive Health Exhibition attracted 20% less exhibitors (pun intended) this year. Is it that the industry which specializes in providing stimulation, is itself in need of a stimulus package! These are hard times indeed!
Written by Ashok Sethi, TNS China
Tuesday, May 5, 2009
Monday, March 16, 2009
Country road, (don’t) take me home
The reluctant march home
Twenty million migrant workers from the Chinese countryside, who have lost their jobs in the aftermath of the global financial crisis, do not wish to go home. Driven by the export boom, nearly 130 million rural Chinese had left their farms to toil in urban workshops and construction sites, sending money home to supplement the meager agricultural income. Unfortunately last year the Wall Street brought down the Main Street, which in turn resulted in the closure of factories in China which churned out products enjoyed by American consumers with borrowed money. Last month the Chinese government revealed that 20 million of these workers have lost their jobs and will possibly need to return to their rural homes.
The workers do not want to go home as their income from tilling their small farms is woefully inadequate to provide them with a comfortable existence and even a modicum of savings and security. The per capita rural income in 2007 was less than one third of what the urban Chinese enjoyed. Despite the harsh conditions of work and stay in the cities and the emotional pain of living separately from their loved ones, they willingly accepted this existence to be able to provide their families with a better quality of life.
The official deliberations
Not surprisingly, the welfare of these migrant workers and the economy in general was salient in the deliberations of China’s top legislative body (National People’s Congress or the NPC ) and the top advisory group (CPPCC) which meet every year in Beijing around this time. As can be expected in China, scale is important and the meetings are held with great pomp and ceremony. The sheer size is staggering – NPC has nearly 3000 deputies, and the CPPCC National Committee has 2,235 members. Unlike the House of Lords in UK and the Rajya Sabha in India, attendance is high even in the advisory body and members are expected to remain awake during the proceedings. The publicly released pictures of the meetings show the members in a state of significant alertness, despite the soporific speeches of fellow members and leaders. Previous meetings have debated, modified and adopted other important issues such as the Labor Contract Law and the Property Law. Discussion on China’s economy has always been prominent, but the tone in the past has been congratulatory and exuding pride. Economic achievement offered much fuel for pride in the past (in the 2008 meeting of the NPC the Chinese Premier Wen Jia Bao had proudly declared that China's economy grew by 65.5 percent over the past five years, or an average annual increase of 10.6 percent)
Not only is the agenda this year single-mindedly focusing on economic development, for the first time this year, in recognition of the need of the hour of judicious spending, the agenda of the meeting has been trimmed 10 days from the usual 14 days. The euphoria of a decade long galloping economy has evaporated and the party officials are scratching their heads for how to keep the gravy train going and continue to provide jobs for the laid of workers as well as the new workforce entering the market (including a crop of 5.5 million university graduates every year). The languishing countryside and the widening urban-rural income gap was always an area of anxiety. Guided by this concern, the party leadership in the past raised slogans like “the new socialistic countryside” accompanied by supportive actions such as abolishing the tax on agricultural income. The 2009 meeting clearly recognized that more needs to be done.
The rural stimulus
Research done by TNS in the cities, indicates that the urban Chinese though fearful of the global crisis (63% think that they will be affected slightly and 28% significantly) still sport a staunch optimism. However the rural folks – particularly the migrant workers are already in distress. The workers are obviously not happy to lose an income which they will never able to match with digging the small piece of land back home. They will perhaps be willing to work for even less, driving down the labor prices, and undoing some of the strength they had gained since the adoption of the Labor Contract Law last year. The government is helping out by infrastructure spending in the 4 trillion Yuan stimulus package– including expansion of railways, building roads and housing - much of which will go to rural areas and small towns. It is also trying to boost domestic consumption and cheer the rural masses by offering a 13% subsidy on a range of home appliances ranging from washing machines to mobile phones.
While the new DVD player and a color television may serve as a temporary palliative and help the returned workers while away their time (of which they have no scarcity now) a more lasting smile on their faces can only be achieved through alternate meaningful employment. The workers need an alternative to a miserable though lucrative toil in the cities and leisurely but penurious existence at home. More needs to be done to equip the laid off workers with new skills which make them eligible for other employment opportunities in and around their homes.
Equally important will be to offer them advice, guidance as well as small loans to start village level enterprises which could offer a sustained source of income. Micro-credit, the business of giving small, mortgage free loans in rural communities, which has transformed the lives of millions of peasants in many countries, possibly has a major role to play in China too. The new motorcycle that a rural resident may buy, aided with a newly introduced 13% discount, needs to become a vehicle for entrepreneurship and its engine also serve as an engine for rural growth.
Written by Ashok Sethi, TNS China
Twenty million migrant workers from the Chinese countryside, who have lost their jobs in the aftermath of the global financial crisis, do not wish to go home. Driven by the export boom, nearly 130 million rural Chinese had left their farms to toil in urban workshops and construction sites, sending money home to supplement the meager agricultural income. Unfortunately last year the Wall Street brought down the Main Street, which in turn resulted in the closure of factories in China which churned out products enjoyed by American consumers with borrowed money. Last month the Chinese government revealed that 20 million of these workers have lost their jobs and will possibly need to return to their rural homes.
The workers do not want to go home as their income from tilling their small farms is woefully inadequate to provide them with a comfortable existence and even a modicum of savings and security. The per capita rural income in 2007 was less than one third of what the urban Chinese enjoyed. Despite the harsh conditions of work and stay in the cities and the emotional pain of living separately from their loved ones, they willingly accepted this existence to be able to provide their families with a better quality of life.
The official deliberations
Not surprisingly, the welfare of these migrant workers and the economy in general was salient in the deliberations of China’s top legislative body (National People’s Congress or the NPC ) and the top advisory group (CPPCC) which meet every year in Beijing around this time. As can be expected in China, scale is important and the meetings are held with great pomp and ceremony. The sheer size is staggering – NPC has nearly 3000 deputies, and the CPPCC National Committee has 2,235 members. Unlike the House of Lords in UK and the Rajya Sabha in India, attendance is high even in the advisory body and members are expected to remain awake during the proceedings. The publicly released pictures of the meetings show the members in a state of significant alertness, despite the soporific speeches of fellow members and leaders. Previous meetings have debated, modified and adopted other important issues such as the Labor Contract Law and the Property Law. Discussion on China’s economy has always been prominent, but the tone in the past has been congratulatory and exuding pride. Economic achievement offered much fuel for pride in the past (in the 2008 meeting of the NPC the Chinese Premier Wen Jia Bao had proudly declared that China's economy grew by 65.5 percent over the past five years, or an average annual increase of 10.6 percent)
Not only is the agenda this year single-mindedly focusing on economic development, for the first time this year, in recognition of the need of the hour of judicious spending, the agenda of the meeting has been trimmed 10 days from the usual 14 days. The euphoria of a decade long galloping economy has evaporated and the party officials are scratching their heads for how to keep the gravy train going and continue to provide jobs for the laid of workers as well as the new workforce entering the market (including a crop of 5.5 million university graduates every year). The languishing countryside and the widening urban-rural income gap was always an area of anxiety. Guided by this concern, the party leadership in the past raised slogans like “the new socialistic countryside” accompanied by supportive actions such as abolishing the tax on agricultural income. The 2009 meeting clearly recognized that more needs to be done.
The rural stimulus
Research done by TNS in the cities, indicates that the urban Chinese though fearful of the global crisis (63% think that they will be affected slightly and 28% significantly) still sport a staunch optimism. However the rural folks – particularly the migrant workers are already in distress. The workers are obviously not happy to lose an income which they will never able to match with digging the small piece of land back home. They will perhaps be willing to work for even less, driving down the labor prices, and undoing some of the strength they had gained since the adoption of the Labor Contract Law last year. The government is helping out by infrastructure spending in the 4 trillion Yuan stimulus package– including expansion of railways, building roads and housing - much of which will go to rural areas and small towns. It is also trying to boost domestic consumption and cheer the rural masses by offering a 13% subsidy on a range of home appliances ranging from washing machines to mobile phones.
While the new DVD player and a color television may serve as a temporary palliative and help the returned workers while away their time (of which they have no scarcity now) a more lasting smile on their faces can only be achieved through alternate meaningful employment. The workers need an alternative to a miserable though lucrative toil in the cities and leisurely but penurious existence at home. More needs to be done to equip the laid off workers with new skills which make them eligible for other employment opportunities in and around their homes.
Equally important will be to offer them advice, guidance as well as small loans to start village level enterprises which could offer a sustained source of income. Micro-credit, the business of giving small, mortgage free loans in rural communities, which has transformed the lives of millions of peasants in many countries, possibly has a major role to play in China too. The new motorcycle that a rural resident may buy, aided with a newly introduced 13% discount, needs to become a vehicle for entrepreneurship and its engine also serve as an engine for rural growth.
Written by Ashok Sethi, TNS China
Wednesday, February 18, 2009
Love in crisis
The importance of being in love
The Chinese celebrate Valentine’s day on the 7th day of the 7th lunar month. As if one Valentine’s day was not enough, the people have also whole heartedly embraced the Western Valentine’s day of February 14, as is evident from the spurt of sales promotions and amorous activities seen around this time in the main cities.
It is not surprising, therefore, that love is important for the Chinese - as high as 98% claim that they have ever been in love. In fact falling in love seems to be easy for the Chinese – 76% believe in love at first sight. Surprisingly the sentiment does not wane with age and the belief in first sight Cupid is as strong among the older Chinese as among the younger. On an average a Chinese has been in love 2.5 times, and 10% have been swept off their feet as many as 5 times. They also start their love life relatively early – two in five first fell victims at the tender age of 18 or even less.
Where love has gone
But the Chinese love story has elements of both joy and tragedy. While nearly all have been in love at some point of their lives, regrettably only 37% can say that they feel the sway of the emotion in their hearts today. Age definitely dims the ardor – with only 17% of 45 years and older feeling the tug of love today. Men seem to fall out of love more easily than women – only 32% claim to be in love today as compared to 41% of the women. The words of Ambrose Pierce ( “Love: a temporary insanity, curable by marriage”) seem to ring true as only 24% of the married men and women say that they are still in love, as compared to 94% of unmarried couples. Even among the incurable romantics (who say that they believe in everlasting love) many could not help feeling disillusioned. It would seem that the celebration of Valentine’s day with sending gifts (which is the intention of 36%), dining out (planned by 34%), or an evening out at the movies (17%) for many may be less an expression of passion and romance and more a mechanical ritual.
The lack of love in people’s lives today is particularly poignant as 60% equate love with happiness. This happiness expected or derived out of love seems to come more from the feeling of companionship, affection and understanding than passion and pleasure. Love means passion for only one in ten urban Chinese. Also only for one in five, sex is one of the important meanings of love. While men talk a little more about sex, women perhaps euphemistically refer to “attraction”.
Fidelity and love
The lack of feeling of love today could well be related to a feeling that their partner has not been giving them his or her single–minded attention. Nearly half the people said that they feel they have been cheated by their partner. Whether real or imagined, fidelity seems to be a key ingredient of love in China. The feeling here is “more sinned against than sinning” – only one third admit themselves that they have succumbed to the temptation of an illicit affair, but nearly half are suspicious of their partner’s fidelity.
Written by Ashok Sethi
Based on an online survey of 290 Chinese, aged 18-54 in key cities of China. Conducted in February 2009, before Valentine’s day.
The Chinese celebrate Valentine’s day on the 7th day of the 7th lunar month. As if one Valentine’s day was not enough, the people have also whole heartedly embraced the Western Valentine’s day of February 14, as is evident from the spurt of sales promotions and amorous activities seen around this time in the main cities.
It is not surprising, therefore, that love is important for the Chinese - as high as 98% claim that they have ever been in love. In fact falling in love seems to be easy for the Chinese – 76% believe in love at first sight. Surprisingly the sentiment does not wane with age and the belief in first sight Cupid is as strong among the older Chinese as among the younger. On an average a Chinese has been in love 2.5 times, and 10% have been swept off their feet as many as 5 times. They also start their love life relatively early – two in five first fell victims at the tender age of 18 or even less.
Where love has gone
But the Chinese love story has elements of both joy and tragedy. While nearly all have been in love at some point of their lives, regrettably only 37% can say that they feel the sway of the emotion in their hearts today. Age definitely dims the ardor – with only 17% of 45 years and older feeling the tug of love today. Men seem to fall out of love more easily than women – only 32% claim to be in love today as compared to 41% of the women. The words of Ambrose Pierce ( “Love: a temporary insanity, curable by marriage”) seem to ring true as only 24% of the married men and women say that they are still in love, as compared to 94% of unmarried couples. Even among the incurable romantics (who say that they believe in everlasting love) many could not help feeling disillusioned. It would seem that the celebration of Valentine’s day with sending gifts (which is the intention of 36%), dining out (planned by 34%), or an evening out at the movies (17%) for many may be less an expression of passion and romance and more a mechanical ritual.
The lack of love in people’s lives today is particularly poignant as 60% equate love with happiness. This happiness expected or derived out of love seems to come more from the feeling of companionship, affection and understanding than passion and pleasure. Love means passion for only one in ten urban Chinese. Also only for one in five, sex is one of the important meanings of love. While men talk a little more about sex, women perhaps euphemistically refer to “attraction”.
Fidelity and love
The lack of feeling of love today could well be related to a feeling that their partner has not been giving them his or her single–minded attention. Nearly half the people said that they feel they have been cheated by their partner. Whether real or imagined, fidelity seems to be a key ingredient of love in China. The feeling here is “more sinned against than sinning” – only one third admit themselves that they have succumbed to the temptation of an illicit affair, but nearly half are suspicious of their partner’s fidelity.
Written by Ashok Sethi
Based on an online survey of 290 Chinese, aged 18-54 in key cities of China. Conducted in February 2009, before Valentine’s day.
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