LONDON — A new study around China’s outlook for 2022 from consultancy firm Agility Research shows that the country’s road to recovery to pre-pandemic levels appears to be leveling off, with even the nation’s affluent and above class remaining optimistic and willing to spend.
Based on interviews with 1,000 affluent consumers who have 400,000 renminbi, or $62,500 at current exchange, in household income, and high-net-worth consumers, who have a minimum of $1 million in assets under management, the study found that the recovery trend, which emerged after the Wuhan lockdown in March 2020, appears to have paused, with consumers’ luxury spending expectations remaining at similar levels to the first quarter of 2020.
This comes as China’s GDP growth slowed in the third quarter of 2021 to 4.9 percent year-over-year and only 0.2 percent compared with the previous quarter. Growth was impacted by energy shortages, worries surrounding the property sector and bond market, and local shutdowns prompted by small COVID-19 outbreaks.
The good news is that the wealthy in China remain resilient spenders. The study sees a diverging trend between the affluent and high-net-worth groups. The latter’s optimism is continuing to trend upward from six months ago, while affluent consumers’ outlook has stayed the same. Cars and watches are categories where the high-net-worth group showed significantly higher willingness to increase spending.
Consumers are becoming more rational and are looking for timeless products, especially Gen Z. Those who said they prefer luxury items over new and trendy ones from this age group jumped from 26 percent to 44 percent, compared to six months ago. Interest in secondhand luxury goods, renting luxury and vintage luxury is also growing.
The study also found that its participants showed a strong desire for immersion in luxury brands and to be treated specially. Both affluent and high-net-worth consumers rated brand experiences as the top factor influencing luxury purchase decisions. The in-store experience and direct brand “touch” are particularly critical for big-ticket purchases or buying a brand for the first time.
Lastly, it showed that sustainability has become a salient factor in luxury considerations, especially for the younger generation. More than half of Gen Z consumers in the study said sustainability influences luxury purchase decisions “a lot” and a further 44 percent said it influences them “somewhat.”
The study is a part of Agility Research’s biannual TrendLens research, which covers more than 12 key markets globally and leverages respondents across the world from its high net worth community.