China’s Golden Week Holiday Signals Persistent Consumer Caution
As China’s week-long National Day holiday comes to a close, a trend of cautious spending and a focus on experiences has emerged among consumers. According to a recent analysis by Goldman Sachs, there was a 2% decrease in spending per domestic trip compared to pre-pandemic levels during the Golden Week holiday.
The decline in spending per head is seen as a reflection of weak domestic demand and continued consumption downgrading. However, this decrease is an improvement from the more than 10% gap seen during previous holidays earlier in the year.
The holiday, which commemorates the founding of the People’s Republic of China on October 1, saw a shift in consumer behavior. Trip.com reported that nearly one-fifth of bookings came from users aged 20 to 25, with a focus on experiences such as concerts and performances. However, a lack of blockbusters led to a drop in box office earnings compared to the previous year.
Consumers also displayed more spontaneity in their travel plans, with nearly 30% booking trips on the same day or one day in advance. This shift towards last-minute bookings reflects a more cautious approach to spending and a preference for affordable options.
The holiday period followed a series of policy announcements and promises, as well as a surge in the stock market. Consumer spending in China has been subdued since the pandemic, with uncertainty about future income and economic growth playing a role.
Experts suggest that consumers are now more interested in spending on experiences they can share on social media, rather than just big-ticket items. Brands, including luxury ones, are advised to adapt to this trend and focus on communicating the benefits to Chinese consumers.
Appliance sales saw a significant increase during the holiday, with retail sales rising by 9% and sales of home appliances surging by 149.1%. Trade-in policies for appliances and consumption vouchers issued by local governments were credited with driving this growth.
Overall, the Golden Week holiday in China highlighted a shift towards more cautious spending and a focus on experiences, signaling a continued trend of consumer caution in the country.
Source: CNBC
