The beginning of a new Twenty years in China Consumers Market
“ 2024 unfolded the beginning of a new Twenty years in China consumers market, so called 'Great fire luck cycle' from the culture perspective. Trends will focus on areas related to certain elements. In the context of geopolitical and economic adjustments, opportunities in the Chinese market have not disappeared but are shifting in different directions at a transition point. Understanding the unique changes and challenges in the Chinese market is crucial to seizing market opportunities. ”
On August 31, data released by the National Bureau of Statistics of China showed that the Manufacturing Purchasing Managers' Index (PMI) for August was 49.1%, indicating a decline in factory activity from 49.4%. The Non-Manufacturing Business Activity Index rose to 50.3%. Industry-wise, indices for sectors such as railway and air transportation, telecommunications, broadcasting, satellite transmission, as well as culture, sports, and entertainment, all remained above 55.0%, reflecting expansion in service sector above. In contrast, indices for capital market services, real estate, and residential services fell below the critical point.
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Amid weak domestic demand and high debt levels, China is implementing various strategies to boost consumption and stimulate economic growth. Service consumption is identified as a key driver, with a focus on promoting growth in sectors like dining, tourism, cultural entertainment, and education. Efforts are also being made to enhance the elderly care and domestic services industries to further drive domestic demand and employment. Additionally, lowering deposit interest rates is intended to encourage consumption and investment.
At this pivotal moment, "Black Myth: Wukong," released by Chinese company Game Science on August 20, has been hailed as "a perfect blend of Eastern culture and modern gaming technology." The game quickly gained global attention for its high-quality graphics and combat system, earning praise from international media like IGN and GameSpot. Based on the classic Journey to the West, this game not only showcases China's rich cultural heritage but also serves as a cross-cultural bridge, highlighting the entertainment industry's impact. Its promotion by official channels and major media underscores the gaming industry's growing mainstream acceptance.
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Performance and Trend Analysis of Leading Companies in the Consumer Industry
In the first half of 2024, Nongfu Spring's revenue and profit from tea beverages saw a significant year-on-year(YoY) increase of 59.5%, highlighting the rising demand for healthy drinks. Pinduoduo's(PDD) revenue and net profit surged by 144%, reflecting the strong momentum of e-commerce platforms. Xiaomi's performance improved, with the gross margin of its automotive business rising to 15.4%, showcasing the potential of smart devices and emerging businesses. Anta Sports' revenue grew by 13.8%, with e-commerce accounting for 33.8% of income, while Haidilao's revenue increased by 13.8%, signaling a recovery in the sports and dining sectors. These trends underscore the diversification and growth potential of China's consumer market.
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In a rapidly changing environment, Douyin has become a crucial platform for understanding social trends and consumer behaviors.
Fashion trends on Douyin have evolved from dopamine styles to the mint mambo of 2024, with new Chinese-style women's wear gaining popularity. Footwear trends lean towards casual, sporty, and platform shoes. Convenience foods like boneless chicken feet and spicy noodles are popular, as are dairy drinks and local specialties like snail noodles. Educational toys account for 54% of the toy market, while electric and remote-controlled toys show significant growth, and strollers have high potential. Beauty and skincare make up 68.08% of the market, with a 41.26% increase in sales in the first half of 2024, and notable growth in makeup and perfumes, including a 1716.49% rise in men’s fragrances. The pet industry sees 80% of spending on food and supplies, with a total consumption of 6.2 billion yuan.
Data credit:Dongjian research
Young consumers, while active on e-commerce platforms like PDD and Taobao, are also willing to invest in high-quality goods. Economic uncertainty has led many to embrace "slash careers" or "gap years," with lower savings and a trend towards multiple occupations. Social interactions emphasize "light socializing" and individual satisfaction, with a more autonomous approach to marriage and relationships, reflected in a 12.7% decrease in marriage registrations in early 2024. These trends highlight three key consumption shifts: segmented demand with a balance of mass and personalized options, rational consumption focused on quality and value, a preference for experiences with emotional comfort driving young consumers' spending.
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What Does the Central Bank's Purchase of 400 Billion Special Government Bonds Signal?
The action aim to boost economic growth by enhancing liquidity, reducing financing costs, and building market confidence. Its impact along with the results of other stimulation measures on China’s consumption market are worth our attention in the latter half of 2024.
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