It is time to travel for Chinese consumers

As incomes rise for Chinese consumers, the “good life” is becoming about much more than just being able to afford material objects, according to the results of a new McKinsey survey. 

The consulting firm’s newly released report “The Modernization of the Chinese Consumer” finds that confidence in future income growth is shrinking, but those who are seeing rising income are investing more in their health and leisure time with family.

55 percent of Chinese consumers still agree with the statement “My household income will significantly increase in the next five years” and geographic pockets including Xiamen, Chongqing, Kunming, and Nanning are more optimistic than this average.

When asked what they’ll be spending more on if their income increases, Chinese consumers continue to prioritize material goods like clothes, but are “allocating more of their income to lifestyle services and experiences such as spas, travel, and entertainment,” says the report. While food and apparel were the top two product categories they’ll spend more on at 46 percent and 37 percent, respectively, the “service” categories “leisure and entertainment” and “travel” came next on the list at 25 and 23 percent. 

The increased spending on food is tied to a growing focus on healthy living—when asked about their spending on a wide range of household goods and foods, the majority of consumers said they wished to “trade up” to premium brands. This includes categories such as fresh produce, milk, rice, and bottled water, which have all had safety issues in China in recent years. The report says that “organic/green food” was a top criteria for evaluating safety of food, with 38 percent listing it in their top three criteria.  The emphasis on safety has particularly benefited foreign food brands.

Growing travel spending is connected to family time, as 74 percent of of consumers say “travel helps them to better connect with their family,” while the percentage of international trips taken with family has risen to 45 percent from 39 percent in 2012.

But retailers will be happy to learn that spending time with families doesn’t exclude shopping, and the pursuit of status and wealth are still alive and well in the Chinese consumer market. A total of 64 percent of Chinese consumers agree that, “Going shopping with my family is one of the best ways to spend time with them.