Wednesday, July 24, 2024

‘Rigorous yet relaxed’: China’s consumers up travel interest despite worries

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While remaining cautious about spending amid a sluggish recovery of their financial conditions, Chinese consumers are showing more interest in travelling, said a report on consumer trends in China.

Nearly a half of consumers aged between 18 and 59 said they were increasing spending on travel and holidays, surpassing food and clothing as necessities, according to a survey of 3,000 online users by consulting firm Mintel released on Wednesday.

Travelling also topped an 11-item to-do list for disposable income, followed by investment and wealth management.

A “rigorous yet relaxed” lifestyle is being increasingly sought after at a time when consumers continue to be cautious about consumption but have not lowered their demand for quality of life, the report said.

Travel, food and clothing were the only three items consumers said they would spend more money on in the coming 12 months, while they do not plan to spend money on a longer list of categories including entertainment, home appliances and tech products.

This comes along with a general financial situation that has yet to recover to pre-pandemic levels.

By April, 85 per cent of those surveyed said they were able to save some money every month, the same as when they were last polled in August, but still well below the peak of 92 per cent in May 2019, the report said.

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What does it mean for the world when Chinese consumers tighten their belts?

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Despite a strong rebound in the tourism market since China’s reopening in the end of 2022, travellers are becoming more thrifty due to poor income expectations.

Based on figures released by tourism authorities, Chinese tourists’ average spending during public holidays in the first half of 2024 was lower than before the coronavirus pandemic, although there was an increase from the overall level last year, said Mintel analyst Cheng Tianhua.

“Consumers are highly price sensitive and pursue reverse travel, so it is difficult for hotels to achieve revenue growth by raising prices, which to a certain extent has also led to a slow recovery in per capita tourism spending,” she said.

“Reverse travel” refers to the trend of Chinese travellers, especially younger ones, choosing cheap and less known places over famous tourist destinations.

The changes in China’s overall economy, employment situation and social security policies have further affected consumers’ mentality

Mintel report

Figures for June, along with second-quarter economic growth data, are set to be released on Monday.

Mintel’s study showed that consumer confidence had been recovering slowly with fluctuations over the past year.

“On the one hand, the macro trends such as the reversal of globalisation, the intensification of geopolitical risks and the uncertainty of the global economy continues to have a profound impact on consumers,” the report said.

“On the other hand, the changes in China’s overall economy, employment situation and social security policies have further affected consumers’ mentality.”

Consumers, the report added, maintained a strong willingness to invest and save, with investment the second top option for disposable income, with depositing it in banks ranked fifth.

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