Christina Chen, Analyst, HSBC
The rise of China’s female consumers
Young Chinese women are an increasingly important force in the world’s consumer markets. Females are responsible for three-quarters of household purchasing decisions in mainland China and their annual spending is expected to rise from RMB3.3 trillion in 2017 to RMB8.6 trillion (about USD1.2 trillion) by 2022.
The coronavirus outbreak has cast a near-term shadow on consumer spending in mainland China. But there are a number of structural factors likely to support longer-term growth in the market.
Women account for a relatively high proportion of China’s workforce. The labour participation rate was 80 per cent for women aged 25 to 54 in 2018 compared with a global average of 62 per cent. And better education is giving greater financial autonomy: 56 per cent of women completing secondary school now enrol in tertiary education, compared with 46 per cent of men.
Later marriage and a lower birth-rate mean smaller households. China’s average household size fell from 4.4 to 3.3 between 1982 and 2017. Marriage registration for 20 to 24-year-olds fell from 47 per cent in 2005 to 26 per cent in 2018. The birth rate is now just 1.0 per cent compared with 2.2 per cent in 1982.
Meanwhile social commerce – that is, online shopping driven by or taking place through social media platforms – is increasingly popular with female shoppers. It accounted for more than 20 per cent of online sales in 2019.
From fashion to fitness to healthcare and family care, companies need to tailor their products and services to meet the changing demands of Chinese women. But they also need to be nimble as preferences change. ‘Premiumisation’ – a switch towards brands promising higher quality or exclusivity – value for money and a rising interest in self-improvement and experiences are key trends shaping the market.
While some women in lower-tier cities still spend relatively freely, the country’s consumption habits are diversifying. An increasing proportion of consumers, especially those in higher-tier cities, are becoming more discerning or frugal about spending amid an economic slowdown.
Consumers who are busy and affluent continue trading up for better quality, while shoppers with less income but more time are carefully choosing better-quality goods offering value for money.
Women in mainland China are spending more on themselves, especially on beauty and fitness. Working women increasingly use gyms. Cosmetic sales in mainland China rose 13 per cent in 2019 while ‘aesthetic’ medical services – such as anti-wrinkle treatment or plastic surgery – have grown by 24 per cent a year over the past five years. Hong Kong is a big beneficiary of medical tourism from mainland Chinese female consumers.
Women don’t spend money only on themselves, though. They influence the majority of household spending and buy a wide range of goods related to maternity, babies, and children. Sales of such products were RMB367 billion in 2016 but could double by the end of 2021.
For many retailers in mainland China, whether online or in-store, one trend is clear: the future is female.
- Disclosure and disclaimer
The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Christina Chen
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