The rise of China’s female consumers

Higher education and workforce participation fuel financial independence. By Christina Chen

Young Chinese women are an increasingly important force in the world’s consumer markets. Females are responsible for three-quarters of household purchasing decisions in mainland China and their spending is expected to rise from 3.3 trillion yuan in 2017 to 8.6 trillion (about US$1.2 trillion) by 2022.

The coronavirus outbreak has cast a near-term shadow on consumer spending in mainland China. But there are a number of structural factors likely to support longer-term growth in the market.

Women account for a relatively high proportion of China’s workforce. The labour participation rate was 80% for women aged 25 to 54 in 2018 compared with a global average of 62%. And better education has given rise to greater financial autonomy: 56% of women completing secondary school now enrol in tertiary education, compared with 46% of men.

Later marriage and a lower birth rate, meanwhile, mean smaller households. China’s average household size fell from 4.4 people to 3.3 between 1982 and 2017. Marriage registrations for people aged 20-24 fell from 47% in 2005 to 26% in 2018. The birth rate is now just 1.0% compared with 2.2% in 1982.

Meanwhile social commerce — online shopping driven by or taking place through social media platforms — is increasingly popular with female shoppers. It was worth 21 trillion yuan in 2019, more than 20% of all online sales.

From fashion to fitness to health and family care, companies need to tailor their products and services to meet the changing demand of Chinese women. But they also need to be nimble as preferences change.

“Premiumisation” — a switch towards brands promising higher quality or exclusivity — value for money, a rising interest in self-improvement and experiences are key trends shaping the market.

While some women in lower-tier cities still spend relatively freely, the country’s consumption habits are diversifying. An increasing proportion of consumers, especially those in higher-tier cities, are becoming more discerning or frugal about spending amid an economic slowdown.

Consumers who are busy and affluent continue trading up for better quality, while shoppers with less income but more time are carefully choosing better quality goods offering value for money.

Women in mainland China are spending more on themselves, especially on beauty and fitness. Working women increasingly use gyms. Cosmetic sales in mainland China rose 13% in 2019 while “aesthetic” medical services — such as anti-wrinkle treatment or plastic surgery — have grown by 24% a year over the past five years. Hong Kong is a big beneficiary of medical tourism by mainland Chinese women.

Female consumers don’t spend money only on themselves, though. They influence the majority of household spending decisions and buy a wide range of goods related to maternity, babies and children. Sales of such products were 367 billion yuan in 2016 but could double by the end of 2021.

For many retailers in mainland China, whether online or in-store, one trend is clear: the future is female.

Christina Chen is an analyst with HSBC.