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News    >    15 November 2012

NIELSEN: CHINESE CONSUMER CONFIDENCE STABILIZED IN Q3 2012

Tier 1 and Rural Areas continue to be the most optimistic

15 November 2012
Chengdu

Nielsen, a leading global provider of information and insights into what consumers watch and buy, today reported that consumer confidence in China increased one point to 106 in the third quarter of 2012 -- two points higher than same time last year, and 14 points ahead of the global average (92). Less concern for inflation last quarter drove up confidence among Tier 1 consumers to 111 points ( 4 points up from last quarter) who posted a 10 points gain for willingness to spend in 2013.

“While retail sales growth have slowed slightly this year, consumer confidence is stable and willingness to spend is increasing which shows a rebound is likely as consumers start to feel more positive about the future. The result shows an encouraging indication for China’s economic trend next year.” said Yan Xuan, president, Nielsen Greater China.

“From Nielsen’s latest data, we see that Chinese Consumer Confidence stabilized in Q3 as a result of lower inflation , double digit disposable income growth in urban and rural regions combined with consumption stimulation by some of the government rebate programs,” said Yan Xuan.

Rural Chinese consumers remained the most confident segment of the population last quarter at 113 points (same level as last quarter) and 3 points year-on-year increase, followed by Tier 4 consumers at 102 points (one point increase, and +2points increased year on year).Confidence in Tier 3 dropped one percentage point to 98 followed by Tier 2 consumers at 96 points (one point increase). “Confidence in rural continues to be the highest in all regions in China as government spending and policies continue to put more cash in the pockets of the rural consumers ” said Yan Xuan.

“Tier 2 and Tier 3 cities have been the most affected by the export slowdown since start of this year,” observed Yan Xuan. “Tier1 cities on the other hand are making progress towards a more service-based economy and thus seemed better at insulating workers from some of the manufacturing doldrums that China experienced earlier in the year.”

Regionally, Eastern China continued to lead consumer confidence at 114 followed by South at 106 points. The West (95) and North (98) regions saw an improvement in consumer confidence last quarter of 3 points increase respectively

Despite quarterly declines in national employment outlook (3 points decreased to 69), and income expectation (decreased one point to 65) , Chinese consumers’ willingness to spend increased by two points to 36 with a significant 10 points jump among Tier 1 consumers to 58 points. Fifty –six percent of Consumers are anticipating housing prices to rise next year (compared to 42% in Q2).

Job optimism for the next year fell six points to 54 percent last quarter in Tier 1 and 86 percent in rural areas though income expectations rose slightly in Tier 1 and Tier 4 cities.

Chinese consumers are more willing to purchase. Digital device and home appliances purchase set to rise.

Nielsen’s latest information shows that consumers from mid-level income families with an annual monthly income of RMB 7,000-9,999 in Tier 1 cities benefited the most from lower CPI and consumption stimulation measures with a 11 points (30% increased) jump on willingness to spend in 2013. Consumers’ willingness to spend in Tier 2 cites also rose from 36 % quarterly to 42%. Willingness to purchase in tier 3 cites was 42 percent (+5%) and at 40 percent in Tier 4 cities (+3%) while spending intentions remained unchanged in rural areas at 28 percent.

Personal digital appliances such as tablet and digital camera ranked high on shopping lists for the next 12 months as 31 percent of consumers said they are planning to purchase these items led by Tier 1 consumers (66%) , Tier 4 consumers (47%), Tier 2 consumers (45%) and Tier 3 consumers (42%). The demand for home appliances such as television and washing machines is also on the rise as 29 percent of consumers indicated they are planning to make a purchase in the next 12 months, led by 60 percent of Tier 1 consumers. Thirty-eight percent of Tier 2 consumers and 37 percent of Tier 3 consumers are also planning to add home appliances to their shopping list next year.

“We saw active promotion activities in Q3 strengthen consumers’ willingness to spend, especially in key cities.” said Yan Xuan.

MAIN CONCERNS: While income (46%), health and increasing food prices continued to top consumers’ main concerns last quarter, personal career and parents’ welfare and happiness posted increases of 3 points and 2 points respectively. While the economy ranked the top concern in Q3 for most global markets in the 58 markets Nielsen measures, in China the economy ranked tenth out of sixteenth concerns among consumers.

Retail sales growth slowed down
While consumers indicated a willingness to spend in next twelve months, cutbacks and budget restrains this year have impacted total retail sales of consumer goods which saw growth declined 3.5 percent year on year. Nielsen’s retail measurement information suggests that fast-moving consumer goods (FMCG) sales growth slowed nationally last quarter from 16 percent to 14 percent, our data showed that Tier 2 city consumers were most impacted by the economic slowdown with a four percent drop in FMCG sales, said Dale Preston, senior vice president, Nielsen Grater China. “While on the other hand, growth in Tier 1 cities stayed considerably steady and consistent with confidence levels and recorded a minimal one percent year on year decline.”

"It is common to find that manufacturers and retailers chase growth in a slowing market through strategies like up-sizing and aggressive promotions. We saw this occurring in both food and personal care categories which posted higher volume growth than value growth in recent months. This trend was particularly evident in Tier 1 markets," observed Preston. "We also saw Hypermarkets continuing to drive overall growth through new store openings while growth rates in existing stores were much slower" said Dale Preston, Senior Vice President, Nielsen Grater China.

Chengdu consumers are more optimistic about job prospects
Despite a two point consumer confidence decline in Chengdu (now at 97 points), consumers showed higher employment expectation (with a 7% increase of percentage point to 58%) and willingness to spend (+4% to 43%) a result of continued economic growth. With a higher than national average economic growth rate and income levels, Chengdu CCI is above the average CCI level for Tier 2 cities (95).

About Nielsen Global Survey
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted August 10 – September 7, 2012 and polled more than 29,000 online consumers in 58 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10M online population for survey inclusion. The China Consumer Confidence Index is compiled from a separate mixed methodology survey conducted among 3,500 respondents in China. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.

About Nielsen
Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, visit www.nielsen.com.


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