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Chinese consumer spending will rise again once the coronavirus crisis ends. Are businesses ready?
- Purchases of consumer goods were put off first by worries over the US-China trade war, and now by the Covid-19 outbreak
- A study indicates that consumers are waiting to unleash their pent-up demand, and brands should be prepared to capitalise
Reading Time:3 minutes
Why you can trust SCMP
There is no doubt the Covid-19 outbreak has badly shaken consumers in China, with the number of infections and deaths continuing to rise and the spread of the virus sparking fears of a global pandemic.
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Yet, just as certainly, the crisis will end someday. The rise in new cases in China appears to be slowing and mortality rates have remained relatively low, especially outside the epicentre of Wuhan and Hubei province.
Across much of the mainland, people are slowly going back to work, carefully taking safety precautions but nevertheless reigniting the economy.
Indeed, many observers expect to see a rapid recovery in China once the virus is contained. As Kristalina Georgieva, who heads the International Monetary Fund, put it: “If the disruptions from the virus end quickly, we expect the Chinese economy to bounce back soon.”
Similarly, the consensus opinion of 40 economists polled by Reuters was that China would experience a slowdown during the first quarter of 2020 but recover by the second quarter.
Part of the reason for their optimism is that Chinese consumers reduced their discretionary spending last year, largely because of the US-China trade war. For instance, a survey in October 2019 found that about 40 per cent of respondents had cut back on their entertainment spending during the second quarter to save money.
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