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Rise in sales of consumer goods is welcome news for China’s SMEs

The fast-moving consumer goods (FMCG) sector is set to bounce back in 2024 in the Asia-Pacific region as the economy gradually picks up, providing opportunities for Chinese small and medium-sized enterprises to increase exports, according to the boss of a leading consumer intelligence company.

Dzung Nguyen, MD of NielsenIQ’s Asia-Pacific emerging business arm, said: “We believe buying power will be gradually back to the market as the economic situation improves. Now is good timing for Chinese small and medium enterprises (SMEs) to expand to overseas FMCG markets in the Asia-Pacific region.”

The analyst said China’s strong supply chain gives its SMEs an advantage when it comes to selling abroad, compared with their peers in other countries.

Statistics from the Ministry of Commerce show that China’s FMCG market is expected to be worth four trillion yuan ($548 million) in 2023 year, accounting for 25% of the overall consumption. It said the sector is set to continue to grow, with the annual growth rate expected to be higher than 10% over the next five years.

Joyce Zhao, head of NielsenIQ’s China emerging business segment, added that the sales of ready-to-drink alcohol jumped 55% year-on-year so far in 2023 in China, and sales of snacks also saw rapid growth.

Nguyen said such situation showed that Chinese SMEs are flexible and can make changes quickly to grasp new opportunities.

Meanwhile, younger Chinese consumers are showing a growing interest in domestic brands while imported products continue to gain popularity, according to research by Chinese e-commerce giant JD.com.

It found that around 62% of spending on domestic brands are made by consumers born in the 1990s and 2000s. JD.com analysed data from its own website during the annual online ‘Double 11’ sales promotion, where heavy discounts are offered to online shoppers.

The research also found that online supermarkets selling imported products through the JD.com platform saw their total transactions more than treble.

Products from European countries, especially France, Germany, the Netherlands, Italy and Spain sold particularly well. Cosmetics, maternal and infant products, and health products are among the best-selling goods.

Launched in 2009, the ‘Double 11’ promotion this year broke the record for sales since its inception. Sales increased by over 1.5 times compared with the event in 2023. More than 60 brands saw their sales top one billion yuan (about $137.2 million) on JD.com during the online shopping push.

The event also saw a rise in livestreaming to boost sales, attracting over 380 million visits by time it closed on 11 November, according to the company.

 

Economy show signs of improvement in October

China’s economy improved further in October, with key economic data showing signs of continued recovery.

Figures from the National Bureau of Statistics showed China’s value-added industrial output – a gauge of activity in the manufacturing, mining and utilities sectors – grew by 4.6% in October compared with the same month in 2023, and up from the 4.5% rise recorded in September 2023.

Retail sales, a key measurement of consumer spending, grew by 7.6% year-on-year in October, up from the 5.5% growth in September.

In the January-October period, fixed-asset investment – a measure of expenditure on items including infrastructure, property, machinery and equipment – grew by 2.9% compared with a year earlier, while in the January-September period it increased 3.1% year-on-year.

The surveyed urban jobless rate came in at 5% in October, the same as the figure in September, according to the NBS.

Despite fresh signs of stabilization, the NBS said the economy still faces many unstable and uncertain factors in the external environment while domestic demand remains insufficient.

“The country will ensure the implementation of macro policies in place to consolidate the foundation for recovery, with a key focus on expanding domestic demand, boosting confidence and fending off risks,” according to the NBS.