This article is from WeChat public account: Suning wealth of information (ID: SuningWealthInsights) , author: Fu Yifu (Su Ning, director of financial Research Institute of consumer financial Center Assistant, senior Fellow) The title picture comes from: Visual China

As we approach the end of the year, we have reached the point of review and reflection.

As we all know, “consumption upgrade” has been a market buzz word in recent years. Whether it is the trend of the Engel coefficient, the completeness and quality of various consumer goods categories, or the emergence of new retail formats, the enrichment of consumers’ shopping methods and the enhancement of experience, they can all confirm the occurrence of consumption upgrades.

However, since 2019, China’s consumer market has frequently seen “visions”, and many plots of “rebellious” consumption upgrades have been staged.

How should we look at the Chinese consumer market in 2019? This is the question this article will explore and answer.

I. Three “Visions” of the Consumer Market in 2019

After combing, I have summarized the “vision” of the domestic consumer market this year into three categories:

First, revenue growth is low, and “low-end” products are selling well.

On the one hand, in the first three quarters of 2019, the per capita disposable income of residents nationwide was 22,882 yuan, a nominal increase of 8.8% over the same period of the previous year. After deducting price factors, the actual increase was 6.1%, while the GDP during the same period was 69.78 trillion yuan. , Calculated at comparable prices, a year-on-year increase of 6.2%.International income failed to outperform GDP growth.

On the other hand, some “low-end” products that people don’t pay attention to on weekdays continue to sell well. Since 2018, the sales of Erguotou, mustard, instant noodles and other products have attracted heated market discussions. This year, this situation has continued, attracting people’s opinions on “consumption degradation.”

Second, the growth rate of total retail sales of consumer goods continued to decline.

When measuring the degree of prosperity of the consumer market, the growth rate of total retail sales of consumer goods is a commonly used indicator in the industry. However, the slowdown of this indicator has become more significant in recent years, and it is still the case in 2019.

Data from the National Bureau of Statistics show that in October, the year-on-year growth rate of total retail sales of consumer goods in the country was 7.2%, and the actual growth rate after deducting price increases was a record low; the cumulative growth rate from the previous 10 months Looking at it, the nominal and actual increases were 8.1% and 6.3%, respectively. (see Figure 1) . Both sets of data are significantly lower than the same period in 2018. Although the growth rate in individual months this year has rebounded slightly, it is difficult to conceal its downward trend.

Third, the automotive consumer market has encountered a cold winter.

The production and sales of automobiles have always been regarded as the vane of the domestic demand market. It can enter 2019. Whether in the current month ’s production or sales volume, compared with the same period in the past two years, China ’s automobiles have shown a very obvious downward trend.

From the data point of view, in 2017, 2018 and October 2019, China’s monthly output of vehicles was 2.601 million, 2.37 million and 2.279 million, and monthly sales were 2.704 million and 2.38 million. And 2.284 million (see Figures 2 and 3) , both have declined year by year. In fact, the overall downturn in the automotive market is the primary crux of slowing down the growth of total retail sales of consumer goods.

At present, China is in a critical period of “releasing potential, expanding domestic demand, and stabilizing growth”, and the above three “foreign visions” have injected a lot of worry into the market.

However, in my opinion, these seemingly bluffing “visions” can’t withstand scrutiny. If you go deeper, the situation is not so pessimistic. Furthermore, in order to truly understand the current real situation of Chinese people’s consumption, it is necessary to make scientific, comprehensive, and systematic judgments, and one should not fall into myths or even make misjudgments because of obstacles.

Let ’s read them one by one.

Second, is consumption “up” or “down”?

Before in-depth discussion, you must first clear the source and clarify the most basic concepts, so as to avoid being troubled by the chaotic and superficial consumption phenomenon from the root.

Judgement on whether consumption is upgrading should be based on examining whether consumer welfare has been improved; and the so-called “consumer welfare” includes, in addition to the increase in total consumption and the optimization of consumption structure, as is well known In addition to content, it should also cover multiple areas such as the improvement of consumer quality, the enrichment of consumer content, and the diversification of consumer forms..

According to the research report of Guotai Junan Securities, there are two mechanisms for improving consumer welfare: one is the “wealth effect” caused by the increase in residents’ income, and the other is the change in the production curve caused by technological advancement, which in turn leads to consumer choice and consumption The “progressive effect” of mode changes (see Figure 4, Figure 5) . And various complex consumption upgrade phenomena and market behaviors can almost all find reasonable explanations from these two aspects.

However, many people focus too much on the short-term changes in consumption phenomena, or judge the upgrade or downgrade of consumption from the dimensions of product quality, price, sales, etc., so they are often confronted by a one-sided understanding. Misjudgment of current consumption status of residents.

In general, the misunderstandings in the market about consumption upgrade mainly focus on the following two aspects:

(1) Judging by commodity price

For a considerable number of people, selling low-priced items means “degrading.” In fact, the reason is not that there are many factors that lead to the reduction of commodity prices, such as changes in consumer spending habits, technological advances, and the decline in the cost of goods manufacturing. From the perspective of income, both per capita GDP and per capita disposable income have risen steadily, which will continue to push the income expectation curve outward and increase consumer welfare. <

According to the official statistical caliber, the total retail sales of social consumer goods refers to enterprises (units, self-employed individuals) are sold directly to individuals and social groups through production. , The amount of non-operational physical goods, and the amount of income obtained from the provision of catering services; it should be noted that the statistical process of this indicator does not cover service consumption such as education, medical care, culture, art, finance, etc. Underestimated the real situation of household consumption.

In fact, the growth of service consumption of Chinese residents has been quite rapid. The growth rate of catering, online retail and other areas has been significantly higher than the growth rate of total retail sales of consumer goods. The situation is even more visible to the naked eye. According to the experience of developed countries, the gradual replacement of service consumption by service consumption is almost an inevitable trend of resident consumption upgrade, which also reflects that the consumption upgrade of residents in China is still continuing.

Further, we can change our mind and trace the source from the “final consumption expenditure” indicator.

Data from the National Bureau of Statistics show that the contribution of final consumption expenditure in the composition of China’s GDP in recent years has always been in a “troika” (referring to consumption, investment , Export) . In 2018, the contribution of final consumption expenditure to GDP was as high as 76.2% (see Figure 6) . It is true that this has something to do with the weakness of the other two carriages, but it cannot be denied that consumption is the number one driving force for macroeconomic growth.

(see Figure 8) ;

Second, since this year, the country has implemented a large-scale tax and fee reduction policy, and the personal income tax reform has enhanced the sense of gain for the people. No more than 100 million people need to pay a tax on their salaries;

Third, the eight regions have adjusted their minimum wage standards, wage income has increased further, and residents ’sense of gain has increased.

Those are where we should be happy.

As for the geometry of future residents’ income growth, it depends on the future development of the national economy. From the current point of view, China’s economy as a whole is developing steadily and with full resilience: the macroeconomic operation is in line with expectations, and GDP is still in the mid-high-speed growth range; the employment situation is relatively stable, and the urban unemployment rate remains at a reasonable level; the international balance of payments is basically balanced, and foreign exchange The overall scale of reserves has increased, and the foreign exchange market and stock market have also been relatively stable; the social security system has been continuously improved, and the public’s sense of gain has increased. In addition, the transformation of old and new kinetic energy in the national economy is accelerating. Innovative development injects new kinetic energy into the economy. The vitality of market players is constantly being released. Strategic emerging industries and high-tech industries are developing rapidly. Industrial transformation and upgrading have a good momentum …

It is foreseeable that China’s economic prospects remain bright and promising; and the income of residents will further increase, which is expected to continue to grow in synchronization with the national economy.

六 、 Conclusion

This article strives to examine the “vision” of the consumer market in 2019 from a comprehensive and objective perspective, but the above thinking does not conceal the existence of the problem. In fact, although there is no sign of stagnation in the pace of consumption upgrade by Chinese people, there are still three obstacles that need to be resolved in the future on the road to promoting consumption and expanding domestic demand in China: