Lunar New Year, also known as Spring Festival is the grandest festival in China, with a 7-day long holiday. This week-long holiday is famously known as the “Golden Week”, where people across China spend lavishly on travel, food, shopping and recreational activities.
According to the Ministry of Commerce, people in China spent 1.01 trillion yuan at restaurants, shopping malls and online outlets over the week-long holiday. That is 8.5 percent more than the same period last year. Many are increasingly doing their shopping online, with JD.com reporting a 43 percent jump in sales around the holiday period as compared to a year earlier.
In addition to restaurants and shopping malls, airline companies and travel booking websites such as Ctrip also enjoyed a fair share of the pie during the Golden Week. The China Tourism Academy reported the number of domestic trips made by Chinese reached 415 million, a 7.7 percent year-on-year increase. Their spending on these trips amounted to almost 513.9 billion yuan. Not only that, the number of outbound travel also increased by 16 percent, with 7.22 million trips made, as reported by Xinhua News Agency.
The key factors propelling this consumption spree are the burgeoning middle-class, pervasiveness of internet and smartphone use, the strong continuation of opening-up and reform policies, and recent tax cuts.
China’s middle class is booming. According to a study by McKinsey & Company, 76 percent of China’s urban population will be considered middle class by 2022. The evolution of the middle class means higher spending power with more sophisticated, seasoned shoppers. Also, internet penetration rate has seen a fivefold expansion from the level of just 10.5 percent recorded in 2006.
Furthermore, the Chinese government have been providing a conducive environment for foreign businesses to reach out to Chinese consumers. For instance, refining policies on retail imports via-cross-border e-commerce to raise level of openness and unlock the potential of consumption.
This has improved the availability of global products for Chinese consumers and along with changing demographic and consumer behaviour; it is propelling China to become the world’s biggest market in products and services.