A Golden Week to Spend

By WANG JUN

A Golden Week to Spend

By WANG JUN

The weeklong National Day holiday sees a record spending blowout, displaying the huge potential of the Chinese consumption market

Rong Xinchun, 38, works at a research institute in Beijing. Recently married,he chose to have his wedding during the National Day holiday because both his family and guests had enough time to enjoy the festivities.

The couple spent 21,000 yuan($3,301.89) to buy jewelry, a tradition for newly wed couples in China; 3,600 yuan($566.04) on food and catering; 2,000 yuan($314.47) on hotel accommodations for family members; 4,000 yuan ($628.93) for a wedding dress and tuxedo; and 10,100 yuan($1,588.05) for new clothes for the couple’s parents. The wedding was held in the bride’s hometown, Shangluo of Shaanxi Province,costing the couple an additional 4,800 yuan($754.72) for a travel by plane. In total, Rong and his wife spent 45,500 yuan ($7,154.09).

Rong’s spending contributed to the growth of China’s retail and catering sectors during the National Day holiday week.According to the Ministry of Commerce(MOFCOM), on October 1-7, known as the“golden week” for business, sales revenue of the retail and catering sectors totaled 696.2 billion yuan ($109.47 billion), up 17.5 percent year on year.

Boosted sales

The MOFCOM said retail enterprises nationwide and local governments organized various promotional events to boost sales.Beijing offered subsidies on purchases of energy-saving home appliances. Tianjin and Shandong held shopping festivals or shopping month events.

According to figures from the Beijing Commercial Information Consulting Center affiliated to the Beijing Bureau of Commerce, during the October holiday week, the 121 key commercial service enterprises in Beijing realized combined sales revenue of 5.93 billion yuan ($932.39 million), an increase of 13.1 percent from last year. Of the total, sales revenues of department stores, supermarkets, catering enterprises and specialty stores all increased more than 10 percent.

The MOFCOM said on October 1-7,sales revenues of key enterprises in the Tianjin Municipality and Yunnan, Shaanxi and Hebei provinces grew by 26.5 percent,27 percent, 25 percent and 24.8 percent, respectively, year on year, and those of Gansu,Henan, Shandong, Shanxi and Heilongjiang provinces all grew by about 20 percent.

Since gold prices on international markets dropped by a large margin before the festival, jewelry sellers reduced retail prices of gold jewelry to entice consumers.According to MOFCOM figures, during the golden week, jewelry sales at Yinchuan Xinhua Department Store, Xinjiang Youhao Group and Jiangsu Central Xinya Department Store grew by 102.8 percent,69.4 percent and 67.3 percent, respectively,year on year.

With fall and winter apparel now on sale, clothes sales grew fast during the holiday week. Sample data of the MOFCOM said apparel sales at Zhuhai International Trade Shopping Plaza and Jiangsu Wuxi Commercial Mansion increased by 96.6 percent and 45.4 percent from last year,and shoe sales at Shijiazhuang Beiguo Department Store grew by more than 70 percent year on year.

Electronic and digital products—smartphones, digital cameras, iPhone 4 and iPad 2—were hot commodities. MOFCOM figures showed sales value of the Shaanxi branch of Suning Appliance, the Jiangsu branch of Gome Electric Appliance, as well as PC Mall, rose by 46.7 percent, 40.9 percent and 28.8 percent respectively.

AnEconomic Information Dailyreport, citing figures from the World Luxury Association, said during the holiday week,Chinese people spent a total of 2.6 billion euro ($3.56 billion) outside China on luxuries like watches and leather ware, equivalent to the sales volume of luxuries for three months in the Chinese market.

The catering and hotel sectors attracted consumers with special offers. According to MOFCOM figures, sales value of catering and hotel sectors in the Tianjin Municipality and Shaanxi Province grew by 40 percent and 20 percent respectively. Sales revenue of monitored key catering enterprises in Anhui Province grew by 33.1 percent, and those in Liaoning Province and the cities of Chongqing, Chengdu and Nanning all grew by more than 18 percent.

During the National Day holiday, commodity prices were stable thanks to sufficient supplies, said the MOFCOM.According to the fi gures released by the ministry on the prices in 36 monitored large and mediumsized cities during the holiday week, compared with September 30, the average retail price of eggs dropped by 0.4 percent, the retail price of colza oil dropped by 0.1 percent, the price of peanut oil remained unchanged, while the price of soybean oil rose by 0.2 percent. The wholesale price of pork remained stable, while that of mutton and beef rose by 0.3 percent and 0.5 percent respectively. The wholesale price of 18 kinds of vegetables rose by 1.4 percent on average.

More tourists

According to fi gures released by the National Holiday Tourism Inter-Ministerial Coordination Meeting, from October 1-7, the country received 302 million tourists, a year-on-year increase of 18.8 percent. The revenues totaled 145.8 billion yuan ($22.92 billion), growing 25.1 percent from last year. On average, each tourist spent 483 yuan ($75.94).

Of the total tourism revenues, the civil aviation sector gained 6.5 billion yuan ($1.02 billion), the railway sector gained 2.75 billion yuan ($432.39 million), the 39 monitored key cities gained 58.1 billion yuan ($9.14 billion),and other cities and tourist sites earned 78.4 billion yuan ($12.33 billion).

The 119 tourist sites incorporated in the national holiday tourism forecast system received altogether 24.33 million tourists, and the ticket revenues totaled 1.25 billion yuan($196.54 million).

Spending potential

Liang Da, a senior statistician and columnist withShanghai Securities News,said after more than 30 years of reform and opening up to the outside world, the Chinese people have accumulated some amount of wealth and, as their consumption concepts have changed, their purchasing power is being released.

SHOPPING PARADISE: Shanghai’s Nanjinglu Shopping Street on October 4. The city’s consumer sales reached 23.2 billion yuan ($3.65 billion) between September 10 and October 7, a year-on-year increase of 17.1 percent

Liang said according to international practices, when the per-capita GDP of a country surpasses $3,000, the country will be in a new round of economic growth.With both of the country’s industrial and consumption structures changing greatly,the consumption capability will also be increased markedly.

In 2010 China’s per-capita GDP reached$4,382, and in some large cities such as Shenzhen, Shanghai and Guangzhou, the per-capita GDP even surpassed $10,000.

According to Liang, the frugal character of Asian people makes the Chinese accumulate quite handsome wealth, offering huge potential to further expand consumption demand. From 1979 to 2010 the balance of renminbi deposits of urban and rural residents grew at an average annual rate of 25.5 percent. By the end of August 2011 Chinese people had deposited 32.7 trillion yuan ($5.14 trillion) in banks,with the per-capita deposit hitting 22,619 yuan ($3,556.45). In comparison,every American owes the bank$15,000.

“In recent years Chinese social security has developed rapidly,alleviating people’s burden on education, health care and pension.If the government can formulate proper policies to further guide and encourage the people to expand consumption, it will significantly promote the growth of consumption demand,” Liang said.

Since China began its reform and opening up in the late 1970s, consumption of durables by the Chinese people has increased fast. However,the absolute consumption volumes of some durables, such as cars and communication products, still fall behind those of developed countries and even some developing countries, with space of further growth.

Consumption of durables in rural areas is even lower than in urban areas.According to fi gures from the National Bureau of Statistics, by the end of 2010, every 100 rural families had 111.8 color TV sets, just 81.3 percent of the fi gure by urban families. Every 100 rural families had 57.3 washing machines and 136.5 mobile phones,about half of the fi gures by urban families. Among every 100 rural families there were only 10.4 personal computers, far lower than the number of 71.2 in urban areas.

“Compared with urban areas,there are even bigger spaces to increase consumption of durables,housing and apparels in the rural market,” Liang said.