A recent Nielsen survey shows that Asia Pacific consumers are willing to spend their way out of the recession. The renewed willingness to spend as 2010 progresses is found in China, Brazil, India, Singapore and Hong Kong. Investments in the stock market and increased savings are the result of consumers having more confidence in the market, including spending on luxury items such as vacations, clothing, and entertainment.
A MasterCard survey described entertainment and dining as where Asia Pacific consumers will put their money in the next six months, showing extreme resilience in the face of the global recession.
Consumer confidence has increased in the first quarter of 2010, returning consumers to positive territory. In the last 6 months, most of the consumer confidence in Asia Pacific has shifted gears from recession to recovery. In this economic climate, sentiment correlates with actual sales. In Australia, for example, consumer confidence increased eleven points in the third quarter of last year.
Strengthening economic conditions caused the Reserve Bank of Australia to raise its rates, becoming the first country to do this. This resulted in a 2% sales increase in both August and September 2009 in consumer goods or fast-moving consumer goods. Since Nielsen tracked the recession in January 2009, it is rumored to be currently at its lowest levels.
Spending in Asia Pacific has always been a key indicator of business confidence and has recovered faster than analysts expected. In many Asia Pacific markets, consumer goods sales have increased significantly as Asian consumers begin to purchase items that are discretionary after a long period of spending within budget parameters.
In October 2009, sixty-six percent of consumers around the world said their economy was in recession compared to seventy-seven percent in April 2009. For many consumers in Asia Pacific, however, the recession has become a thing of the past. 87% of Chinese say their country is out of recession, while 60% of Hong Kong and Australian citizens say the same. Half of Indians believe that the recession is over in their country too.
According to another survey by MasterCard Worldwide Index of Consumer Purchasing Priorities, the top spending priorities of Asia Pacific consumers are 49% on fashion and accessories, 36% on wellness and fitness, 34% on their children’s private enrollment, 34 % in extracurricular activities. activities and 34% also in consumer electronics.
In Hong Kong, thirty percent fewer consumers say their country is in recession. In the most recent survey, thirty-two percent of Honk Kong consumers said they are in recession compared to sixty percent in June 2009. After containing spending for many quarters, with the Hang Property Index Seng on the rise, Hong Kong consumers are beginning to open their wallets once again.
The increase in spending on discretionary items such as home entertainment, technology, vacations and new clothing is on the rise, in contrast to the reduction in spending on these items a year earlier. Consequently, many other sectors of the economy are experiencing a new recovery, including finance, property, and high-priced retail. However, a recovery of the FMCG remains to be seen, as sales of these goods have remained somewhat unchanged.
The 6-point increase in the last quarter in China was driven by significant improvements in personal income and local employment opportunities in the country. Six out of ten Chinese describe their job prospects as excellent when asked to rate the way they envision the next 12 months, representing a fourteen percent increase compared to the second quarter. The two Chinese cities recorded an increase in consumer confidence of up to 22 percent compared to the previous quarter.
Nielsen witnessed in July that Chinese consumers felt the economy was at its lowest level and on the way to recovery. In the third quarter, there is an extension of this optimism. Chinese consumers are still hesitant to spend money, but are willing to try new products. Therefore, the companies that will focus on introducing innovative new products may be the ones that drive consumers to buy more items across the country.
The survey further says that in the last quarter of 2009, Asia Pacific markets emerged to become eight of the ten most confident consumer markets compared to South Korea, Japan, Indonesia and India, which were the most trusted. less confidence.
Among all Asia Pacific markets, the biggest increase in confidence came from Hong Kong, as shown by a seven-point rise in the index in the fourth quarter from 93 to 100 on a 200-point scale. Since June 2009, there has been an increase of 21 points in Hong Kong.
According to Nielsen, local Hong Kong consumers are planning to increase their spending on entertainment, vacations and new clothing in the next six months if overall consumer confidence has improved from seventy to ninety-nine points.
However, regardless of a larger overall rise in consumer confidence, ‘saving for a rainy day’ has remained at number one on Hong Kong’s consumer priority list, with seventy-one percent dedicating their extra money to savings.
Due to the stability of the stock market, consumer confidence in investments is also strengthened. More than half of those surveyed (51%) say they will invest additional cash in mutual funds and stocks.
According to James Russo, vice president of global consumer insight at The Nielsen Company, this is a great sign that the global recession from the recession is heading in the right direction.
“The Nielsen survey shows that in the past six months, consumers have become more optimistic about their countries emerging from recession with better job prospects and personal finances,” says Nielsen.
“However, while pocket strings may be loosening in some markets, there is clearly a big difference in the expected pace of recovery between emerging and developed markets, and increased consumer confidence is not yet being translated into widespread readiness. to start spending. ” Nielsen adds.
Compared to the 90% of Mexican, American and English consumers who feel they are still mired in recession, 60% of Singaporeans, 73% of Hong Kong and 83% of Chinese consumers believe that in the fourth quarter of 2009, the recession had ended in his country.
Also leading the way towards discretionary types of spending, Asia topped the global rankings for mutual funds and equity investments, with China topping the ranking. Chinese consumers occupy 44% of the world for spending on technology products, 57% for spending on mutual funds, 50% for vacations and 53% for new clothes. The survey also found that Hong Kong consumers are beginning to spend on new clothing, new technology, and entertainment outside the home.
In India, concerns about rising food prices hamper their confidence. Russo says that “although the Indian economy is expected to grow in 2010, India has experienced a poor monsoon season which has resulted in higher food prices and higher consumer bills. This has had a immediate impact on consumer confidence and the availability of discretionary income. “
According to a Nielsen Report from the last quarter of 2009, consumers in both China and the Philippines intend to spend their money on new technology. Tech-savvy consumers in Korea and Japan don’t want to wait much longer to upgrade their current mobile phones and PCs. Alternatively, ten percent of Chinese consumers say they can wait to delay their technology purchases.
Sensitive Singaporeans
Despite the recovery in confidence levels in 2008, a MasterCard survey finds that Singaporeans remain conservative with their money.
Focusing more on saving their income compared to just six months ago (34.2%), 45.8% of survey participants said they plan to increase the amount they save in the first six months of 2010. Compared to 54.4% in the latest survey, currently 45% say they plan to save an equal amount of cash.
72.8% of respondents who said they plan to save the same amount, if not more, said the reason for this was to save for unforeseen emergency expenses, due to an “uncertain financial outlook.” 35.3% said they plan to save for personal international air travel and 37.9% for the purchase of consumer electronics.
In the next six months, 28% of Singaporeans plan to save approximately 11-20% of their income and 21% plan to save approximately 21-30%.
South Korea’s Kospi Index has risen nearly fifty percent since early 2010 and its weak Won has given a major boost to its export and manufacturing industries, as well as its key export product sectors, which are automobiles. and consumer electronics.
Africa, Middle East and Asia Pacific Economic Advisor Dr. Yuwa Hendrick-Wong said “Consumer confidence here plummeted in 2008 and early 2009, but is now experiencing a V-shaped rebound. Uncertainty The persistent outlook for the global economy, however, continues to affect consumer spending and saving behavior, showing that most consumers are still saving for precautionary reasons. “
It adds that “for the Asia Pacific region as a whole, the strong recovery in both economic conditions and consumer confidence can therefore be characterized only as a ‘partial decoupling’ from the rest of the world economy.”