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Explainer: Why Consumer Sentiment Remains Subdued in China

A real estate slump, high youth unemployment and lingering anxiety over Covid-19 are some of the factors behind the tepid results from this month’s 618 shopping festival.
Workers sort parcels at an express delivery center in Nantong, Jiangsu province, China. After the ''618'' online shopping Festival, the volume of Haian Express parcels increased significantly.
Workers sort parcels at an express delivery centre in Nantong, Jiangsu province, China during the 618 shopping festival in June 2023. (Getty Images)

Key insights

  • A bellwether for China’s consumer market, the 618 shopping festival registered slower sales growth this year than in recent years.
  • Chinese consumer sentiment has been affected by macroeconomic challenges such as a weak housing market and high youth unemployment.
  • Recent data shows signs of an economic slowdown and the government’s delay announcing a stimulus package has concerned some observers.

Spending on China’s major e-commerce platforms for 618, one of the key shopping festivals on the retail calendar, rose 5.4 percent year over year, according to Syntun, a third-party retail data provider collating estimated GMV from, Alibaba’s Tmall and Pinduoduo. The figure represents the slowest growth rate in three years.

The day originated as a celebration of’s founding on June 18 but it has since become a widely-adopted promotional event across many retailers and provides a bellwether to the overall health of China’s consumer market.

The country’s two e-commerce giants, and Alibaba, in headier days used to trumpet their GMV results on major shopping festivals but since last year’s Singles’ Day the platforms have stopped releasing those figures as they no longer provide showstopping growth.

“We [were] not expecting an overall GMV number from the major platforms,” said Jacob Cooke, the Beijing-based cofounder of WPIC Marketing and Technologies, a China e-commerce strategy firm. “We will be looking at category-based growth, as well as numbers from [social platforms] Douyin and Kuaishou to see if they have captured more market share in certain categories.”


While the wealthiest are helping to drive an uneven recovery in the luxury sector, other consumers remain cautious. May brought a raft of disappointing economic data fuelling concerns that China’s wider fashion market recovery is not taking shape as expected. It’s looking unlikely that June will see a reversal of that trend.

The Broader Economic Picture

National retail sales growth slowed to 12.7 percent in May from a year earlier, a marked deceleration from the 18.4 percent in April.

That and other weaker-than-expected data for May spurred economists at several key banks to lower their growth forecasts for the year. JPMorgan Chase, UBS, Standard Chartered, Nomura and Bank of America all trimmed their 2023 GDP growth forecasts to between 5.1 and 5.7 percent, down from between 5.5 and 7 percent. The Chinese government has set its target at 5 percent for this year.

The country’s official manufacturing purchasing managers index — a measure of manufacturing activity which is often used as a bellwether for the wider economy — contracted for the second consecutive month in May.

Among the more troubling indicators is China’s youth jobless rate which rose to 20.8 percent in May, a rate four times the country’s overall unemployment level, and once again setting a fresh record.

Anxiety over Covid-19 is also playing a part. Half a year after China’s ‘zero-Covid’ restrictions were lifted, another variant has been spreading, creating more uncertainty. Chinese health authorities warned that the ongoing wave is forecasted to peak at the end of June with roughly 65 million weekly cases.

But these concerns seem to have petered out with no major disruptions seen yet. For the most part, people are experiencing mild symptoms and, after staying at home for a few days, are then back to work and normal activities.

“It hasn’t impacted the results so far,” said Cooke. “This wave seems to be dispersed so it’s not having a concentrated economic impact.”


However, according to Iris Chan, head of international client development at Digital Luxury Group which advises brands on operating in China, “the confidence of the consumer is not really fully there yet for everyone across the board,” she said.

In the luxury sector at least, “it’s being compensated by the fact that the high net worth [individuals] are still able to make up for the 20 bags that isn’t being bought by the mass consumer. It’s still overall not as high as it should be. There’s an uneasiness in some fundamental parts of life for consumers inside [China],” said Chan.

Lingering Effects on Consumer Psychology

According to Christopher Wood, the Hong Kong-based global head of equity strategy at Jefferies, there was “massive damage done by last year’s Covid policy in China, not only in terms of the concrete economic impact but also in terms of the damage done to general consumer psychology.”

“There is no doubt that Chinese people have lost their previous unbridled confidence in the future and are also much more focused than prior to the pandemic on the country’s negative demographics,” Wood said.

For younger Chinese consumers this is the first time they’ve ever experienced a slowdown, said Brian Busse, head of Kirk Palmer Associates’ Asia practice.

“Unlike the cyclical economic downturns experienced by the US and Europe every seven to eight years, China has enjoyed continuous high growth since the 1990s, making people now somewhat apprehensive about the future.” Busse said. “Adjusting to this new normal will require time, as people learn that life goes on even amidst uncertainty and that they can still spend and weather economic fluctuations.”

The government may also be able to step in. Whereas Hong Kong’s local government has repeatedly handed out cash payments to stimulate local spending, mainland Chinese authorities have resisted so far. But Beijing is believed to be considering issuing roughly one trillion yuan, equivalent to about $140 billion to help boost confidence, The Wall Street Journal reported citing sources.

An announcement about the stimulus was expected before now but has not yet materialised, causing concern among some observers of the Chinese economy.


Implications for Fashion and Beauty

Although a full recovery of the Chinese fashion market hasn’t yet come to pass in aggregate numbers, brands, especially new and niche ones, still have opportunities to gain traction. As customers become more value-orientated, they are showing more interest in product quality and features, instead of defaulting to big labels.

In addition, certain categories related to beauty and wellness are outperforming in China such as health supplements and outdoor sports products such as cycling apparel.

“If you look at sector-by-sector, we’re seeing double digit growth in categories like nutraceuticals and pet, which reflect dominant lifestyle trends that seem to be insulated against economic headwinds,” said Cooke.

“We’re seeing some real strength in health supplements because there’s this whole trend of self-care and is starting to mimic what’s been going on in the US,” said Franklin Chu, the US managing director of Chinese e-commerce enabler and consultancy Azoya Group. “There’s much much more attention being paid, especially among young people and the middle-class, for physical conditioning or appearances.

Fragrances are another bright spot, according to Azoya data.

“Fragrances have become increasingly viewed as an affordable luxury. Consumers can buy something that they view as a luxury product but still be somewhat budget conscious,” said Chu. “And there’s just been a proliferation of brands in the fragrance area from the budget-end to the prestige so there’s been a lot of new choices for the Chinese consumer to select from.”

“The [youth un]employment situation clearly is a big demographic issue [for example] but people are trying to find ways [like this] to make themselves feel better while spending.”




Anta Boss Tops China’s Richest in Fashion

A Caixin list of China’s 500 Richest put Anta Group founder Ding Shizhong’s wealth at 90.3 billion yuan ($12.7 billion), making him the wealthiest in the fashion industry and number 21 on the list overall. Other top fashion industry HNWIs include the family of Ma Jianrong, who own Shenzhou International, a Nike supplier, Bosideng founder Gao Dekang and Li Ning, who founded China’s leading sportswear group of the same name. Up until recently, Shenzhou’s Ma was the long-running richest fashion entrepreneur in China. (Ladymax)

Angelababy Endorsement Fails to Halt Marubi Decline

Angelababy’s reported 24-million-yuan ($3.4 million) deal with Chinese beauty brand Marubi was a trending topic of discussion on Weibo as online netizens pointed out that despite the company hiring the actress for a three-year contract between 2020 and 2022, net profit declined 9.8 percent, 46.6 percent and 29.7 percent respectively, going from 515 million yuan in 2019 to 170 million yuan at the end of last year. (Jiemian)

Dickson Concepts Annual Profit Rises 26 Percent

Dickson Concepts, which owns Harvey Nichols and operates St Dupont in mainland China, announced its net profit for the year ended March was $252.6 million Hong Kong dollars, up 25.7 percent. It said Hong Kong’s retail environment remained “extremely difficult” and expects it to remain so but that mainland Chinese sales rose by 7.6 percent. (Dickson Concepts)

SK-II Tries to Allay Product Safety Concerns of Chinese Customers

A viral hashtag has sparked debate on social media platform Weibo about the safety of one of the Japanese beauty brand’s products, causing its parent P&G to issue a statement reassuring that all its products have been tested and are safe. There have been concerns in China and South Korea over Japan’s recent discharge into the Pacific of treated radioactive water from the Fukushima nuclear power plant that was hit by an earthquake and tsunami in 2011. (36KR, Global Times)



China Reportedly Planning 1 Trillion Yuan Stimulus

The Chinese central government is considering issuing special treasury bonds worth roughly 1 trillion yuan ($140 billion) to stimulate the economy, the Wall Street Journal reported citing sources. It also is potentially considering loosening property rules to allow people to purchase more than one residence. (WSJ, WSJ)

May Retail Sales Growth Slows to 12.7 Percent

National retail sales expanded by 12.7 percent year-on-year in May, according to data from the National Bureau of Statistics, a marked deceleration from the 18.4 percent seen in April. Year to date, China’s retail sales have grown 9.3 percent year-on-year. (Global Times, SCMP)

Hong Kong Land Plans $8 Billion Mainland Chinese Expansion

Upscale mall developer Hong Kong Land is planning to open a total of 11 new properties in mainland China over the next three years, an investment of 60 billion yuan ($8.4 billion). The development includes two malls in Shanghai and span nine other cities including Beijing, Nanjing, Chengdu, and Hangzhou. (



US Apparel Imports from China Drop by One Third

Apparel imports from China to the United States fell 34 percent year over year to $3.5 billion during the first quarter of this year. That level is 14.6 percent below the last quarter of 2022. (Fibre2Fashion)

Alibaba Replaces Chief Executive Daniel Zhang

Zhang will be replaced by Eddie Yongming Wu, the chair of Alibaba’s e-commerce sites Taobao and Tmall, will replace Zhang in September. Joseph Tsai, the firm’s co-founder and vice-chair will take Zhang’s position as board chair. (FT)

Temu US Revenue Surpasses Shein’s in May

Spending on Temu, the PDD Holdings-owned budget marketplace, was 20 percent higher than Shein in the US in May, according to a Bloomberg data analysis. Temu has been Apple’s top-downloaded iOS app in America during most days this year. (Bloomberg)

Nearshoring Pushes Demand for Europe Factory Space Up

The continued shift away from sole reliance on China for global supply chains has sent demand for European factory space up by 29 percent, despite an economic downturn in the region. (FT)



Multiple Major Banks Cut China GDP Forecast

Softer than expected May data has led multiple major banks to cut their China GDP growth forecast for the year. UBS, Standard Chartered, Bank of America, JP Morgan and Nomura all trimmed their expectations to a range of 5.1 percent and 5.7 percent this year, down from 5.5 percent to 6.3 percent. (Reuters)

Blinken Holds ‘Constructive’ US-China Trade Talks

US Secretary of State Antony Blinken held “constructive” and “candid” talks with his Chinese counterpart over the course of two days in China, signalling a potential thaw in tensions. Meanwhile, Chinese president Xi Jinping met with Bill Gates, the first meeting with an American business leader in years, calling the Microsoft founder an “old friend.” (BBC, Reuters)

China Sees Largest Number of Millionaires Moving Elsewhere

China is forecasted to see the biggest net loss of millionaires this year out of any country now that its borders are open. It’s expected to lose 13,500 high-net-worth individuals with investable wealth of at least $1 million in 2023, according to a report compiled by Henley & Partners. (Fortune)

Unofficial Hong Kong Anthem Banned from Streaming

“Glory to Hong Kong”, which emerged as a popular anthem to the city’s pro-democracy protests, has disappeared from iTunes and Spotify after Chinese authorities indicated their intention to crackdown on the song. Under Hong Kong’s National Security Law, anyone involved in its broadcast, performance, sale or distribution can be charged. (BBC)

China Decoded wants to hear from you. Send tips, suggestions, complaints and compliments to our Senior Correspondent Tiffany Ap at

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