Strong recovery in high-end spending
Mass low-end consumption is still gaining pace
Recovery in consumer goods should broaden out gradually
As China continues to emerge from the pandemic, many are
expecting a surge in consumer spending. Since the start of 2023,
the high-end spending, leisure travel, and restaurants have been
bouncing back quickly. The V shaped rebound effect has also
been reflected on their share price considerably.
In the meantime, the consumption section is experiencing a
nuanced recovery. The low-end consumer goods sector has been
lagged behind comparatively considering that the majority of
consumer's income has been hit badly due to 3-years of
Notwithstanding the mixed outlook, BEA Union Investment
maintains a sanguine view on China's vast consumer market
potential, which we gauge to be valued at USD6 trillion. Our
investment team holds the view that there will be an acceleration
in the growth of retail sales in the forthcoming months, propelled
by additional stimulus measures, capital expenditures, and private
We anticipate a more widespread recovery as economic activity gradually returns to normalcy. We maintain the view that the Chinese consumer market presents a wealth of opportunities for investors, particularly within the sportswear and cosmetics industries even if the economy stays in L shape.
Thanks to the government-backed exercise boom, local sportswear companies have successfully captured market share from casual wear brands. Prominent players in this sector possess formidable brand power, extensive distribution networks, and astute branding strategies, which create significant barriers to entry for domestic competitors.
Domestic cosmetic brands are securing market share from international rivals, primarily due to their superior comprehension of the local market and commanding presence within key distribution channels.
In summary, although recovery may be gradual in certain segments, we remain confident that
the immense potential of the country will persistently fuel growth and foster innovation.