Consumer confidence returning in China according to McKinsey survey

06 April 2020 Consultancy.asia

Consumer confidence is returning in China in stride with the country’s recovery from the peak of its coronavirus outbreak, according to a recent poll from McKinsey & Company.

In the month of February, global strategy and management consultancy McKinsey & Company released its annual consumer confidence survey report, which was originally fielded in September of last year. Despite a slowing home economy, citizens in China recorded the highest jump in economic positivity among the nations canvassed. The outbreak of the global coronavirus pandemic since has rendered the previous survey findings effectively redundant.

A new survey from the firm has found that barely one in ten consumers in Italy for example expect the economy to rebound within two to three months and return to a former rate of growth once the coronavirus crisis subsides. That figure stood at just 6 percent in Japan as of late March when the poll was conducted. Barring Saudi Arabia and the UAE, where the virus has yet to fully take hold, confidence was below 50 percent in all of the countries sampled.

Europe, which became the new viral epicenter following Asia, is particularly pessimistic. Expectations for a swift economic rebound in Spain were at 16 percent, 14 percent in the UK, and 18 percent in France. In China however, less than 20 percent of those surveyed expressed especial concern for the economy, and almost half believe that within eight to twelve weeks from the passing of the crisis the economy will rebound to growth as at least as strong as before.

Confidence in own countrys economic recovery after COVID-19

Notably, this figure stood at 43 percent a month prior, toward the end of February. As stated by McKinsey, consumer optimism by country is typically higher at the start and end life stages on contagion curve. In the US, the world’s current baton-holder for the spread of the virus, confidence levels for an economic rebound in the two-to-three month timeframe were at 41 percent as of the end of March, not too far off the sentiment expressed in China.

In the US however, the data revealed a caveat; 44 percent of Americans said that they would reduce their spending over the following two weeks, with a similar number delaying purchases due to the uncertainty of the economic outlook – forwarded by McKinsey as signs for concern. Meanwhile in China, there’s a suggestion that the majority of consumers will resume higher levels of spending in some categories over the coming months as it continues past the hump.

Around 60 to 70 percent of local respondents expected to return to normal or slightly higher consumption patterns, while 10 percent are ready to splurge. Yet a local divide has also started to arise, with 6 percent of respondents now indicating that they are pessimistic about economic recovery, expecting a regression or long lasting recession, up from just 1 percent in February. Consumer caution among the less optimistic could offset higher spending among others.

“Despite a broadly positive snapshot of Chinese consumer confidence, variability across geographies, products, and consumer groups suggests that brands cannot take a full recovery in demand for granted,” concludes McKinsey, with the firm intending to make regular updates. “Further, there is likely to be continuing uncertainty as the global situation evolves. The message for brands is to tailor their marketing and remain flexible as the COVID-19 crisis plays out.”