14
Feb
2013

Chinese New Year: a relaxed time for all

During Chinese New Year, there are usually two choices for non-Chinese residents; stay at home and avoid the masses travelling around the country, or leave China and go somewhere else in the world for a week. This year I chose the former.

It has been interesting to see the mood of the populous and to watch them in and around the stores. My impression has been that everyone appears very happy. Supermarkets were full of consumers with trolleys stacked high, and children being bought treats for the holidays. People smiled at me and even said hello in English. Of course the holiday effect makes most feel more relaxed than usual, but still, people seem comfortable with 2013 and what it holds.

In the luxury stores there was plenty of footfall, and what appeared to be consumers buying for themselves and their loved ones, the results next week will give us an indication of the real holiday business levels. Although not obvious, luxury brands were offering discounts on some products, and as I have mentioned before, the senior executives must be holding their breaths hoping for what I would expect to be an improvement in sales. Of course they may be out of the country taking a well-earned rest, letting others do the worrying.

So, on the one hand the government is asking people to be more frugal in terms of gift giving, as I mentioned in a recent blog, yet they really do want to see higher domestic consumption, so how can they achieve the best of both worlds? My view is that a balance will be created naturally, as the middle classes earn more money and will want to spend it here and now in China rather than saving up to dispose of it overseas.

The affluent and wealthy consumers will spend their money wherever and however they choose, but the burgeoning middle class will start to outweigh them in numbers and spending power in the coming years, so in time an equilibrium will be reached. And as we know, China is a long game, and no doubt the government have a suitable long-term plan for such.

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