Chinese consumers gradually regaining confidence as COVID-19 crisis subsides in China – McKinsey

A survey of 2,500 people in China by McKinsey & Company found consumer confidence creeping back in as the crisis starts to subside in the country.

McKinsey warns that the sentiments expressed in the survey should be viewed as “directional” rather than conclusive and should not be interpreted as an indication of wider economic trends, “partly because severely affected regions such as Hubei were difficult to survey”, it said.

The survey from Feb 21-24 and Mar 20-23 polled respondents across eight product categories: alcohol, make-up, skincare, snacks, home cleaning, personal care, fresh food, and baby care.

The consultancy firm says responses suggest a majority of consumers will resume higher levels of spending in some categories over the coming months but also that a significant minority is less confident about the future.

China is reporting a decline in the number of daily cases, prompting an improved consumer sentiment as reflected in McKinsey’s survey findings.

“Around 50 percent of respondents to our March survey say they are optimistic that the economy may recover two to three months after the end of the outbreak (a five-percentage-point increase from the February snapshot),” said McKinsey.

“Respondents in higher-tier cities tend to be more positive, with around 55 percent saying they are optimistic, compared with around 40 percent in lower-tier cities.”

However, the survey findings also point to signs of “increasing polarity”.

“While more people are optimistic, higher numbers are pessimistic. This may reflect concern over the emergence of a global pandemic and its potential impact on the economy,” said the company.

“Some 6 percent of respondents indicate they are pessimistic about economic recovery, compared with 1 percent in February. The divergence is also manifested in consumption attitudes, with a group of potentially higher-spending customers postcrisis offset by a smaller group of more frugal consumers, who say they may cut back.”

The survey found a surge in digital engagement, with consumer businesses ramping up investment in social, e-commerce and O2O (online-to-offline).

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