Finance
China’s Golden Week holiday signals persistent consumer caution
Passengers line up to check in at Chengdu Tianfu International Airport on October 6, 2024 as China’s week-long National Day holiday draws to a close.
China News Service | China News Service | Getty Images
BEIJING — China’s Golden Week holiday affirmed a trend in more cautious spending, while consumers put greater emphasis on experiences.
The seven-day public holiday that ended Monday recorded about 2% less spending per domestic trip than the pre-pandemic level, according to Goldman Sachs analysis published Tuesday.
“Low tourism spending per head and subdued services prices highlighted still weak domestic demand and continued consumption downgrading,” the analysts said.
The decline was an improvement from a gap of more than 10% during holidays in the spring, the Goldman report said.
The Golden Week holiday in China commemorates the founding of the People’s Republic of China on Oct. 1. It is the last public holiday of the year for the country.
Nearly one-fifth of bookings on Trip.com for the holiday came from users ages 20 to 25, making them the main consumer group, the company said. It noted more than 90 concerts were held during the holiday, and that daily growth in orders for performances and exhibitions grew by an average of more than 80% during the period.
However, a lack of blockbusters resulted in a drop in box office earnings, to 2.1 billion yuan ($300 million) this year, from 2.7 billion yuan last year, according to state media, citing the China Film Administration.
Consumers were also more spontaneous.
Trip.com said nearly 30% of travelers booked travel on the same day, or one day in advance, a 6 percentage point increase from last year. The average number of days customers booked in advance fell to 6 days this year, down from 6.8 days last year, the company said.
The holiday this year followed a flurry of policy announcements and promises, and a stock market surge. Consumer spending in China has been lackluster since the pandemic due to uncertainty about future income and economic growth.
“People become more cautious with spending. Also they opt for more affordable options of travel and affordable locations,” Kenneth Chow, principal at Oliver Wyman, told CNBC on Wednesday.
“People are much more interested in spending on things they can talk about, things they can post [on social media] about, rather than just the big ticket items,” he said. He said such shifts mean brands, including luxury ones, need to focus more on communicating the benefits to potential Chinese consumers.
“When people are becoming much more sophisticated, the proposition has to change, and whoever is able to adapt to that new trend first will be able to win,” Chow said. “It’s not just about Chinese brands. It’s not just about overseas brands. It’s about who’s going to react first and who’s going to capture the attention of Chinese consumers first.”
Appliance sales climb
Christine Peng, head of the Greater China consumer sector at UBS, pointed out Wednesday that Golden Week figures indicated recovery in spending was tied to trade-in policies for appliances.
Retail sales rose by 9% during the holiday, while sales of home appliances surged by 149.1%, according to state media, citing figures from the tax administration. It did not provide the amount spent.
“The Golden Week consumption could still suggest a modest recovery versus August, in our view, due to trade-in subsidies (for appliances and autos) and consumption vouchers issued by the local governments,” Peng said. “For example, Shanghai’s retail sales rose 3%, a recovery versus -3% YoY this August.”
During Golden Week, mainland China recorded 765 million domestic trips, up from both the prior year and before the pandemic, according to the Ministry of Culture and Tourism.
However, by another measure of counting from the ministry, China had received 782 million domestic visits in 2019. It was not immediately clear whether the figures were comparable.
The average number of mainland China residents traveling across the border rose to 1.08 million a day during this year’s holiday, up from 1.01 million a day in 2019, according to CNBC calculations of official data.
Japan, Thailand and the U.K. were among the more popular destinations, according to booking site Trip.com.
Chinese mobile pay expands
Overseas transactions by China’s Alipay users surged by 60% during the first four days of the holiday versus the year-ago period, according to the mobile payments operator, owned by Alibaba-affiliate Ant Group.
Malaysia, Korea, Thailand, Hong Kong and Singapore were the top destinations for Chinese tourists by transaction volume growth, Alipay said. It noted that rather than shopping, the Chinese travelers also spent significantly on entertainment, food and beverage, services and transportation.
Foreign visitors to mainland China using Alipay spent more than twice the amount during the first four days of the holiday, versus a year ago, the company said. China has introduced visa-free travel for more countries, while Alipay and WeChat Pay — the two dominant mobile pay apps in the country — have in the last two years made it easier for foreigners to use the apps.
Hong Kong said that visitors from mainland China visitors averaged 170,000 per day during the holiday, 27% more than a year ago. On Oct. 1, Hong Kong said it received 220,000 visitors from the mainland, the highest since the end of Covid-19 border controls.
Oliver Wyman’s Chow noted how hotels, especially those in Hong Kong, were adapting to lower prices per night by selling more food or other experiences.
‘The Big Money Show’ co-hosts discuss buy now, pay later spending options and the impact it will now have on your credit score.
Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”
“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday.
“This is predatory, and it’s going to get a lot of people in deep trouble.”
RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS
DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)
Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.
Consumers may risk getting hit with late fees and interest rates, similar to credit cards.
“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.
EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER
Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic.
Ramsey Solutions personal finance expert and ‘The Ramsey Show’ co-host George Kamel discusses the ‘buy now, pay later’ craze and the trend that celebrates the financial benefits of being childless.
“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want.
“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers.
“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”
FOX Business’ Daniella Genovese contributed to this report.
U.S. tariff rates under Trump will be higher than the Smoot-Hawley levels from Great Depression era
Accountants tackle tariff increases after ‘Liberation Day’
How to use opportunity zone tax credits in the ‘Heartland’
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Economics1 week agoYoung Americans are losing confidence in economy, and it shows online
-
Personal Finance1 week agoStudent loans could be managed by the Small Business Administration
-
Economics6 days agoPCE inflation February 2025:
-
Accounting6 days agoIRS sets new initiative with banks to uncover fraud
-
Economics1 week agoWhite House denials over the Signal snafu ring hollow
-
Economics6 days agoConsumer sentiment worsens as inflation fears grow, University of Michigan survey shows
-
Economics1 week agoTexas troopers are in more and more lethal car chases
-
Personal Finance1 week agoSocial Security delays date for new ID policies following complaints