Consumer confidence is at a new low, and businesses are not optimistic, says business analyst Ben Cavender in the Jing Daily. Luxury consumption is especially suffering, he says. “However, brands will have to work much harder to resonate with consumers and get them to spend.”
Jing Daily:
The current economic challenges in China are marked by uncertainty and a lack of consumer and business confidence, noted Ben Cavender, managing director of the China Market Research Group. He points out that both small business owners and consumers are hesitant to spend or invest, a sentiment exacerbated by the government’s modest stimulus efforts.
“Any small-scale stimulus is essentially being saved by recipients who still await further signs of economic prosperity,” says Cavender. “With weak domestic and international demand, China grapples with an oversupply issue that proves challenging to address.”
Cavender believes that consumer confidence in China has reached a low point, causing individuals to postpone major purchases, seek more affordable alternatives, and limit spending to essentials.
“For luxury brands, this shift holds particular significance. Relying solely on exclusivity or high prices is no longer adequate; they must cultivate deeper connections with consumers to inspire trust and stimulate spending,” he says.
Young spenders in China, in particular, face mounting pressure to curtail their expenses. In June, the unemployment rate for urban workers aged 16 to 24 hit a record high at 21.3 percent. Furthermore, starting in July, the government stopped publishing breakdowns of unemployment data by age groups, adding to the challenge of assessing the employment situation for this demographic.
Cavender says: “Youth unemployment, coupled with unease about the real estate market, will both have effects. Gen Z consumers were already looking for a more authentic connection with brands before the economy slowed down and this trend has accelerated as their job prospects have waned.”
As such, being expensive or seen as a luxury brand alone is no longer sufficient. “The market is still there,” says Cavender.
“However, brands will have to work much harder to resonate with consumers and get them to spend.”
Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers request form.
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