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 becoming more confident in the market, including spending on luxury items like vacations, clothing, and entertainment.
A MasterCard survey portrayed that entertainment and dining is where Asia Pacific consumers will invest 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 turned from recession to recovery. In this economic climate, sentiment is correlated with actual sales. In Australia, for example, consumer confidence rose eleven points in the third quarter of last year.
Strengthening economic conditions prompted the Reserve Bank of Australia to raise its rates, becoming the first country to do so. This resulted in a 2% increase in sales in both August and September 2009 in FMCG or fast moving consumer goods. Since Nielsen tracked the recession in January 2009, it is currently rumored to be at its lowest levels.
Asia Pacific spending has always been a key indicator of business confidence and has recovered faster than analysts expected. In many Asia Pacific markets, FMCG sales have increased significantly as Asian consumers begin to purchase discretionary items after a long period of spending within the parameters of a budget.
In October 2009, sixty-six percent of global consumers said their economy was in recession, up from seventy-seven percent in April 2009. However, for many Asia Pacific consumers, 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 the Indians believe that the recession is over in their country too.
According to another survey conducted by the 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 private education for their children, 34% in extra curricular 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 Hong Kong consumers said they are in a recession compared with sixty percent in June 2009. After containing spending for many quarters, with the Hang Seng on the rise, Hong Kong consumers are currently beginning to open up their wallets once again.
Increased spending on discretionary items like home entertainment, technology, vacations, and new clothing is on the rise, contrasting with reduced spending on these items a year earlier. Consequently, many other sectors of the economy are seeing a new recovery, including finance, property, and high-cost retail. However, a recovery in the FMCG remains to be seen as sales of these goods have held somewhat steady.
The 6 point increase last quarter in China was driven by significant improvements in personal income and local job opportunities in the country. Six in ten Chinese describe their job prospects as excellent when asked to rate how they envision the next 12 months, an increase of fourteen percent compared to the second quarter. China’s two-tier cities saw an increase of up to 22 percent in consumer confidence compared to the previous quarter.
Nielsen witnessed in July that Chinese consumers felt the economy was at an all time low and on the road to recovery. In the 3rd quarter, there is an extension of this optimism. Chinese consumers are still hesitant to spend money, but there is a willingness to try new products. Therefore, 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 least confident.
Among all Asia Pacific markets, the largest increase in confidence came from Hong Kong, as evidenced 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 a 21-point increase in Hong Kong.
According to Nielsen, local Hong Kong consumers are planning to increase their spending on entertainment, vacations and new clothes in the next six months if overall consumer confidence improves from seventy to ninety-nine points.
However, despite a further general increase in consumer confidence, ‘saving for a rainy day’ has remained at number one on the list of priorities for consumers in Hong Kong, with seventy-one per cent investing. your extra money in savings.
Due to the stability of the stock market, the confidence of consumers in investments is also strengthened. More than half of those surveyed (51%) say they will invest their excess money in mutual funds and stocks.
According to James Russo, vice president of global consumer information at The Nielsen Company, this is a great sign that the overall recovery from the global recession is headed in the right direction.
“The Nielsen survey shows that over 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 the portfolio strings may be loosening in some markets, there is clearly a big difference in the pace of expected recovery between emerging and developed markets, and increased consumer confidence has yet to translate into a general willingness to start spending. adds Nielsen.
Compared to 90% of Mexican, American and British consumers who feel they are still in the depths of recession, 60% of Singaporean consumers, 73% of Hong Kong consumers and 83% of Chinese consumers they believe that in the fourth quarter of 2009, the recession was over. ended up in your country.
Also leading the way into discretionary types of spending, Asia topped the global rankings for mutual funds and equity investments with China topping the rankings. Chinese consumers account for 44% of the world in spending on technology products, 57% in spending on mutual funds, 50% on vacations and 53% on new clothes. The survey also found that Hong Kong consumers are starting to spend on new clothes, new technology and entertainment outside the home.
In India, concerns about rising food prices are undermining their confidence. Russo says that “although the Indian economy is expected to grow in 2010, India has experienced a poor monsoon season which has led to higher food prices and higher bills for consumers. This has had an 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 are looking to spend their money on new technologies. Tech-savvy consumers in Korea and Japan don’t want to wait much longer to upgrade their current cell 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 reveals that Singaporeans remain conservative with their money.
Focusing more on saving their income compared to just six months ago (34.2%), 45.8% of respondents said they plan to increase the amount they save in the first six months of 2010. Compared to 54, 4% in the latest survey, 45% currently 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 economic outlook’. 35.3% said they plan to save for personal international air travel and 37.9% to buy consumer electronics.
In the next six months, 28% of Singaporeans plan to save around 11-20% of their income and 21% plan to save around 21-30%.
South Korea’s Kospi Index has risen nearly fifty percent since early 2010 and its weak Won has given a big boost to its manufacturing and export industries, as well as its key export commodity sectors, which are automobiles. and consumer electronics.
Africa, Middle East and Asia Pacific economic adviser Dr. Yuwa Hendrick-Wong said that “consumer confidence here fell sharply in 2008 and early 2009, but is now experiencing a V-shaped rebound.” Persistent uncertainty in the outlook for the global economy, however, continues to affect consumer saving and spending behavior, demonstrating that most consumers continue to save for precautionary reasons.”
It adds that “for the Asia Pacific region as a whole, the robust recovery in both economic conditions and consumer confidence can only be characterized as a ‘partial decoupling’ from the rest of the global economy.”
