BEIJING, Aug 19 - Unlike free-wheeling, credit-addicted Western shoppers, Chinese consumers remain pragmatic and conservative, and these habits are unlikely to change overnight, according to new research by McKinsey & Co.
But households still save more than a third of their incomes and buying on credit remains the exception rather than the rule, raising the possibility that government policies to boost spending will take time to work.
Household consumption last year was just 35.6 percent of China's gross domestic product. That was up from 35.1 percent in 2008, but in the late 1980s the proportion was over 50 percent.
"It should go back in the next 10 years to the low 40s, but the consumer trends that we are seeing this year are not suggesting that you're going to see anything drastic in the next couple of years," said Yuval Atsmon, one of the authors of McKinsey's Annual Chinese Consumer Study.
(For a story on Asian consumer spending, click on [ID:nSGE67H09V])
McKinsey found that, despite rising disposable incomes, Chinese consumers are not trading up indiscriminately to more expensive products. A shopper who splashes out on something will typically compensate by trading down on other goods.
Max Magni, who leads McKinsey's consumer goods practice in Greater China, said this pragmatic, thrifty trait was unique to China and deeply engrained in the culture.
"It will not disappear tomorrow morning," Magni said. "The Chinese consumer remains extremely anchored to what they can afford at the moment."
Other findings of the survey include:
-- Brands in China are very important to consumers, but loyalty to any one brand is often a secondary consideration to value for money. Indeed, Magni said brand loyalty is dropping.
-- Consumers make much more use of the Internet to research purchases than in the West; 56 percent of respondents said they regarded online advertising as credible, up from 29 percent in 2009, and 70 percent said the same about retailers' websites. In the West, by contrast, shoppers put more trust in third-party sites.
"The fact that online information is held in such high regard in China makes the Internet an extremely important medium for shaping consumer opinion," the report said.