Consumer spending to stay robust, report says

China is expected to lead emerging economies in spending on consumable products, with an estimated average annual increase in total consumer spending of 15 percent every year to 2016, according to a report released on Thursday by the Economist Intelligence Unit and the UK-based market research firm Mintel.

But the projections of consumer spending have been questioned by some Chinese economists, who said they were exaggerated.

They said the predicted increase was impossible to achieve from a much enlarged base resulting from the huge increase in consumer spending in 2012.

In addition, the slowdown in the nation's GDP growth and the maturing market are expected to depress the growth in consumer spending on what the report termed as fast-moving consumer goods, or FMCG.

The study shows, five emerging markets will experience a 7.7 percent to 15.2 percent annual growth rate in consumer spending from 2013 to 2016 amid changing household spending patterns.

The report aimed to draw a picture of FMCG trends in emerging markets by analyzing how household spending in China, India, Mexico, Turkey and South Africa will change over the next three years in comparison with the United States and the United Kingdom.

Qi Xiaozhai, director of the Shanghai Commercial Economic Research Center, said China's consumer spending grew 14 percent in 2012, and with the growth of the base number, it is unlikely to grow at a faster rate. "It is impossible for foreign organizations to get first-hand information about the ever-changing consumer market. Instead, a Chinese organization's report should be seen as more reliable."

Yin Xingmin, a professor from the China Center for Economic Studies at Fudan University, said the consumer market may have experienced annual growth of 15 percent over the past decade.

However, as GDP growth started to slow to around 7.5 percent from 2012, consumer spending cannot sustain such high growth in the coming years, said Yin.

According to the report, many emerging markets have experienced robust growth in economic development and consumer spending, and this will provide huge opportunities for FMCG enterprises looking to enter new markets.

Peter Ayton, global consumer analyst at Mintel, said there is still huge potential for the transition from unpacked food to packaged products in China.

In the tea market, for instance, supply is extremely fragmented and still largely based on loose products. Even if a small percentage is converted to packet and ready-to-drink teas, this creates huge potential for suppliers.

The report expects Chinese consumers to shift from commodity food to prepared food as incomes continue to rise and lifestyle spending increases among middle-income families.

"In China, we expect total expenditure to grow by more than 15 percent a year. Key areas of growth in China will be household products and prepared food, as Chinese consumers have increased incomes and less free time on their hands," said Jon Copestake, retail and consumer goods analyst at the Economist Intelligence Unit.

Yin questioned the reliability of reported from Western analysts. "There are two extreme trends when foreign organizations try to appraise China's market, either the best or the worst," Yin said.

wang_ying@chinadaily.com.cn

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