Measures to spur consumption boost domestic demand, high-quality development and 2024 outlook

The rapid evolution of technologies and innovations has made e-commerce, which was initially a convenient tool to buy low-priced household goods, personal accessories or services like food delivery, integral to consumption in recent years, experts said.

Next came China's consumption upgrade, with quality-conscious consumers using online channels to buy even high-value goods like gadgets, appliances and vehicles, as well as intelligent and green commodities containing innovative technologies, and homegrown products. All this has been driving economic growth that was hitherto export-dependent and creating a new path to economic stability amid downward pressures, they said.

Wang Zichen, 32, a financial magazine editor in Beijing, typifies this trend. During the recently concluded Singles Day or 11-11 shopping carnival, Wang used many mobile apps to buy a range of products: a robotic vacuum cleaner, an automated dishwasher, skin care products, sportswear and what have you.

"I prefer to buy what's needed online. Some of them materialize at my door within just an hour, and that's very convenient indeed — I no longer visit supermarkets or exclusive stores for daily necessities. What's more, huge discounts, competitive prices, coupons, bundle offers, livestreaming ... they all make online shopping a thrilling experience, especially during shopping festivals," Wang said.

Efficiency in logistics and reliability of brands and e-tailers have made China's e-commerce platforms the darlings of domestic shoppers, particularly the middle- and high-income groups, experts said, stressing next-generation information technologies like 5G, AI, big data and industrial internet can help create new types of intelligent and green consumer goods, and foster fresh consumption growth points.

Tmall, Alibaba Group's online marketplace for established brands, has already tasted success by embracing that philosophy. From 8 pm on Oct 31 to midnight on Nov 11, Tmall became the e-vehicle for 402 brands, including 243 domestic ones, to drum up sales in excess of 100 million yuan ($14 million) each. Sales turnover of 38,000 brands surged more than 100 percent year-on-year during this period.

JD, another Chinese e-commerce giant, helped over 60 brands to clock combined sales of more than 1 billion yuan each during the weekslong promotional gala. Nearly 20,000 brands saw their turnover on JD rise threefold year-on-year.

Mo Daiqing, a senior analyst at domestic consultancy Internet Economy Institute, said there is no question anymore that online shopping can not only sustain, but boost consumption, making the real economy more resilient.

"Chinese e-tailers are doubling down on their pricing strategy to acquire a new breed of users and improve user loyalty and repurchase rates," Mo noted, adding both Taobao, Alibaba's preeminent e-commerce platform, and JD are up against new-age challengers like video-sharing and livestreaming platforms such as Douyin and Kuaishou, which are redefining e-commerce by integrating livestreaming into it.

"While value-based shopping is nothing new, consumers are more prudent and knowledgeable about potential purchases than ever before as they seek maximum value with every purchase," said Britton Russell, who leads the consumer and retail practice at global consulting firm AlixPartners Greater China.

Shoppers now carefully research options across channels and platforms to find true product differentiators, such as product quality and sustainability, beyond reduced-price tags, he said.

Chinese shoppers are becoming more rational, carefully reviewing their needs, with focus on quality and value. "They aspire to buy cost-effective commodities, rather than just obtaining low-priced goods at the cost of quality," said Jason Yu, general manager of Kantar Worldpanel China, a market research provider.

Agreed Wang Yun, a researcher at the Academy of Macroeconomic Research, which is affiliated with the National Development and Reform Commission, the country's top economic regulator. "The optimization of COVID-19 response measures has boosted the confidence of both consumers and market entities. Service-based consumption segments that were hard hit by the pandemic have recovered at a faster pace."

Greater efforts should be made to boost the sales of new energy vehicles in rural areas, accelerate the building of NEV charging infrastructure and provide more support for the recovery of service-based consumption sectors, including tourism and culture, she said.

Zhou Maohua, an analyst at China Everbright Bank, said e-commerce symbolizes new retail, and has been playing a vital role in reducing transaction links and information asymmetry, enhancing transaction efficiency of commodities, improving consumer shopping experience, and unleashing consumption potential.

Combined with a raft of measures, this has helped consolidate the recovery of China's consumer market, with automobiles, electronics, housing and home decor all registering growth. Retail sales, a major indicator of consumption strength, grew more than 10 percent year-on-year in November, up from 7.6 percent growth in October. In the January-November period, China's retail sales increased more than 7 percent year-on-year to about 43 trillion yuan. Online retail sales alone rose 11 percent year-on-year to nearly 14 trillion yuan, data from the National Bureau of Statistics showed.

Small wonder, the Central Economic Work Conference said China will focus on spurring domestic demand, adding efforts should be made to stimulate consumption in areas with growth potential and expand productive investment, to create a virtuous cycle of mutual promotion between consumption and investment.

The meeting also said the development of digital consumption, green consumption and health consumption should be further promoted, and new growth areas such as consumption of smart home appliances, entertainment and tourism, sports events and trendy domestic brands should be fostered.

Consumption of high-value products like NEVs and electronics should be stimulated, while efforts should be made to increase the income of urban and rural residents, and expand the scale of the middle-income group, it said.

The Bank of China Research Institute said in a report that consumption is expected to maintain growth momentum and continue to serve as the "ballast stone" in boosting the country's economic growth. Consumption will grow by about 6 percent in 2024, it estimated.

To meet consumers' growing demand for a wide range of products and nurture new consumption growth points, e-commerce platforms have accelerated steps to launch tailor-made and new products in collaboration with domestic and foreign consumer goods brands.

For example, JD is betting big on the consumer-to-manufacturer or C2M model, which leverages online retailers' big data and customer analysis capabilities to customize products that meet the demands of consumers and drive the innovation of consumption modes.

The C2M products represent the latest consumption trend, as they are designed based on what consumers want, JD said. The company has cooperated with a baby diaper brand to jointly develop new paper diapers with enhanced aeration and softness that are more comfortable for babies to wear.

The new consumption model is crucial for stimulating consumers' purchasing appetite, bolstering the intelligent transformation and upgrade of traditional industries, and creating more job opportunities for high-skilled talent, said Hong Yong, an associate research fellow at the e-commerce research department of the Ministry of Commerce.

As the Chinese consumer market gradually recovers from the impacts of the COVID-19 pandemic, it is a critical time for brands and retailers to reshape strategies and strengthen market adaptability, consultancy Bain & Co said in a report.

Retailers should focus on boosting customer loyalty and providing unique shopping experiences. This involves integrating online and offline channels effectively, especially in the growing online-to-offline market, to offer seamless and immersive shopping experiences that combine the convenience of online channels with the tangibility of in-store shopping, the report said.

Retailers also need to leverage data and technology to better understand consumer behavior, thus optimizing their product mix and promotional strategies, as well as balance the tasks of maintaining competitive pricing and focusing on product quality, product innovation, supply chain and sourcing, Bain & Co said.

To further spur consumption, more stimulus policies are needed to stabilize and expand employment, improve household incomes, boost people's ability and willingness to spend, and encourage spending on big-ticket items, said Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School.