China’s economic resilience: New spending pockets emerge

Despite China’s slowing economic growth, specific consumer segments and product categories are poised for notable gains this year, according to a new AlixPartners survey of over 3,000 Chinese consumers. Health leads spending intentions, with 41% of respondents planning to increase their expenditure in this category. This trend is particularly strong among high-income urban consumers and affluent seniors in smaller cities, who are increasingly focused on preventive care and wellness. Travel is another bright spot. More than 40% of young consumers plan to spend more on travel in 2025. Gen Z consumers in Tier 1 cities are spearheading this trend, joined by middle- to high-income individuals in Tier 2 cities. “This shift toward experiential spending mirrors trends seen in other maturing Asian economies,” says Lisa Hu, partner and managing director at AlixPartners. High-income consumers in major Chinese cities are cautiously optimistic about luxury spending. Although hesitant to splurge on high-ticket purchases, they are demonstrating a clear focus on quality, value, and sustainability. This shift highlights a growing preference for thoughtful, strategic acquisitions over impulsive buying, suggesting a changing dynamic in how premium goods are marketed and consumed. The survey identifies three key consumer groups driving growth: Gen Z urbanites show strong spending intentions across multiple categories, particularly in travel, health products, and clothing. This demographic values quality and meaningful experiences over traditional luxury goods, with over 60% of high-income Gen Z consumers in Tier 1 cities planning to increase travel spending. Affluent seniors, especially in Tier 2 cities, are emerging as a significant growth driver in health-related products and premium clothing. This group demonstrates higher brand loyalty and less price sensitivity, with 54% of high-income seniors in Tier 2 cities planning to increase health-related spending. Middle-income urbanites in Tier 1 and 2 cities maintain robust spending in essential categories while selectively increasing discretionary purchases, particularly in clothing and beauty products. The survey shows that 49% of this group plan to increase clothing expenditure. Online vs. offline Channel preferences vary significantly by category, with online platforms dominating certain sectors. Travel and entertainment show the highest online penetration at 82% and 76%, respectively, while traditional retail remains strong in categories like wines and spirits. Repeat purchase behavior Brand loyalty patterns reveal significant variations across categories, with the highest likelihood of switching in apparel (18%), followed by food and beverages (12%) and beauty/cosmetics (9%). Categories with longer purchase cycles, such as home refurbishment and luxury goods, show stronger brand loyalty, with switching rates ranging from just 4% to 6%. Price sensitivity and product functionality are the primary drivers of brand switching, followed by recommendations from friends and family. Notably, country of origin has become less important in brand choice, with only 11% of respondents citing it as a key factor. This shifting loyalty landscape presents both challenges and opportunities for brands. While some categories like clothing require more aggressive retention strategies, others like health products offer stronger foundations for building lasting customer relationships. Moving the needle For brands seeking to capture these growth opportunities, the survey suggests three key strategies. Price and functionality remain the primary drivers of brand-switching behavior, suggesting opportunities for companies that can deliver value while maintaining quality. This is particularly relevant in daily-use categories like food and beverages, where brand loyalty is weaker. Traditional e-commerce platforms continue to dominate, with over 60% of respondents preferring these channels for interest-related goods. The platforms’ extensive product ranges, competitive pricing, and trusted infrastructure make them crucial for brand success. For beauty and cosmetics, 36% of consumers prefer traditional e-commerce platforms, while only 16% opt for brand stores. Category-specific engagement strategies are essential, as consumer behavior varies significantly across product types. While health products and luxury goods enjoy strong brand loyalty, with switching likelihoods of only 6% and 4%, respectively, categories like apparel and food require more aggressive customer retention efforts. “China’s economy has entered a transformative phase,” says Hu. “While consumers are generally more cautious, our survey reveals significant variations in spending intentions across demographics and categories — differences that create substantial opportunities for businesses with precise targeting and execution.” The survey indicates that, despite overall economic caution, specific market segments remain vibrant, offering significant potential for companies that can align their strategies with evolving consumer preferences and behaviors. Success in this market requires understanding not just what consumers buy but how they buy it, with channel strategies tailored to category-specific shopping behaviors. The Jing Daily Data Snapshot analyzes the latest data on China’s luxury and lifestyle markets.

China’s economic resilience: New spending pockets emerge

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Published February 01, 2025

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China’s economic resilience: New spending pockets emerge