Page 252 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
brands should be optimistic about the future, and care products maintained growth of 3.6% and 7.5%,
expect a much better 2023, similar to how 2021 respectively. The sales of shampoo increased over
compared with 2020. The main takeaway from the 10% in the same period. From March 26 to April
reports was that the fundamentals of the Chinese 22, 2022, sales of fast-moving consumer goods
economy remain strong, with a growing middle- increased by 5.6% year-on-year and the average
income group, continuous urbanization, and selling price fell by 5.7%, the largest price decline
inflation under control. Brands should use the year in recent years, reflecting increasing sensitivity
2022 to prepare for a strong rebound in 2023 (Wei, of consumers to prices. E-commerce platforms
“Study: Future of Consumption Intact”). including Pinduoduo, Douyin and Kuaishou are
also becoming more popular among consumers.
China will continue to promote consumption Emerging channels such as live broadcasts and
with multiple measures in 2022 as the country faces community group buying platforms will help brands
downward pressure, according to the Ministry of expand their layout and influence, penetrate
Commerce. The Minister of Commerce explained lower-tier cities in a more direct way and soon
that China's retail sales of consumer goods, a vital enter first- and second-tier cities. Consumers are
consumption indicator, posted only a 1.7% growth expected to be more sensitive to price increases in
year-on-year in December 2021 as the whole year's many categories in the rest of 2022. The long-term
retail sales rose 12.5%, indicating a pressure of fundamentals of the Chinese market remain solid
demand contraction. To cope with the situation, the and there is reason to remain optimistic about the
ministry will secure the implementation of existing return of its healthy growth in 2023 (Yang).
supporting policies for enterprises, especially small
and medium-sized enterprises in sectors including China's factory-gate inflation eased in August
catering, hotel and retail sales. The ministry will 2022 to an 18-month low amid weak domestic
help conduct more sales-promoting activities demand, according to the National Bureau of
under sound COVID-19 control, such as shopping Statistics in mid-August. China's producer price
festivals and the China International Consumer index, which gauges factory-gate prices, increased
Products Expo as well as snow-ice consumption as 2.3% year-on-year in August, following a 4.2% rise
the Beijing 2022 Winter Olympics brought passion from the previous month. On a monthly basis, the
to the sector. The consumption platforms will PPI declined 1.2% in August. China's consumer
also be upgraded, establishing smart and green price index, a main gauge of inflation, rose by 2.5%
business districts and pedestrian streets to meet year-on-year in August, following a 2.7% rise in the
consumers' needs (Xinhua, “China Pledges More previous month, the NBS data showed. Compared
Efforts to Stimulate Consumption”). to 2021, food prices increased 6.1%, against a 6.3%
gain in July, resulting in a rise of around 1.09%
During the course of the COVID-19 pandemic, points in headline CPI. Notably, pork prices jumped
Chinese consumers have become more cautious 22.4% on a yearly basis in August, compared
and price-sensitive as turbulence becomes the with a 20.2% increase in the previous month. On
new normal, despite growing periods of stability. a month-on-month basis, the CPI fell 0.1%. The
Beverage products witnessed 5.9% growth in 2021, growth in core CPI, which excludes volatile food
reversing the downward trend of a 4.1% fall in and energy prices and is deemed as a better gauge
2020, according to a report on Chinese consumers of the supply-demand relationship in the economy,
released by Bain & Company and Kantar came in at 0.8% year-on-year in August, flat with
Worldpanel. Packaged food went in the opposite the previous month. The government has set an
direction in the same period, with sales volume annual consumer inflation target of about 3% in
down 2%, average selling price up 0.8%, and overall 2022. Despite facing rising inflationary pressure,
sales down 1.2%. Data shows the overall sales of China still enjoys many favorable conditions to keep
China's fast-moving consumer goods market overall prices stable for the rest of 2022 (Shijia).
increased by 3.1% in 2021, continuing the trend of
fast-moving consumer goods market growth being China's consumer market has logged rapid
lower than that of GDP during the epidemic. In development in the last decade, with its structure
2021, the sales volume of personal care and home becoming more balanced and new business forms
252
brands should be optimistic about the future, and care products maintained growth of 3.6% and 7.5%,
expect a much better 2023, similar to how 2021 respectively. The sales of shampoo increased over
compared with 2020. The main takeaway from the 10% in the same period. From March 26 to April
reports was that the fundamentals of the Chinese 22, 2022, sales of fast-moving consumer goods
economy remain strong, with a growing middle- increased by 5.6% year-on-year and the average
income group, continuous urbanization, and selling price fell by 5.7%, the largest price decline
inflation under control. Brands should use the year in recent years, reflecting increasing sensitivity
2022 to prepare for a strong rebound in 2023 (Wei, of consumers to prices. E-commerce platforms
“Study: Future of Consumption Intact”). including Pinduoduo, Douyin and Kuaishou are
also becoming more popular among consumers.
China will continue to promote consumption Emerging channels such as live broadcasts and
with multiple measures in 2022 as the country faces community group buying platforms will help brands
downward pressure, according to the Ministry of expand their layout and influence, penetrate
Commerce. The Minister of Commerce explained lower-tier cities in a more direct way and soon
that China's retail sales of consumer goods, a vital enter first- and second-tier cities. Consumers are
consumption indicator, posted only a 1.7% growth expected to be more sensitive to price increases in
year-on-year in December 2021 as the whole year's many categories in the rest of 2022. The long-term
retail sales rose 12.5%, indicating a pressure of fundamentals of the Chinese market remain solid
demand contraction. To cope with the situation, the and there is reason to remain optimistic about the
ministry will secure the implementation of existing return of its healthy growth in 2023 (Yang).
supporting policies for enterprises, especially small
and medium-sized enterprises in sectors including China's factory-gate inflation eased in August
catering, hotel and retail sales. The ministry will 2022 to an 18-month low amid weak domestic
help conduct more sales-promoting activities demand, according to the National Bureau of
under sound COVID-19 control, such as shopping Statistics in mid-August. China's producer price
festivals and the China International Consumer index, which gauges factory-gate prices, increased
Products Expo as well as snow-ice consumption as 2.3% year-on-year in August, following a 4.2% rise
the Beijing 2022 Winter Olympics brought passion from the previous month. On a monthly basis, the
to the sector. The consumption platforms will PPI declined 1.2% in August. China's consumer
also be upgraded, establishing smart and green price index, a main gauge of inflation, rose by 2.5%
business districts and pedestrian streets to meet year-on-year in August, following a 2.7% rise in the
consumers' needs (Xinhua, “China Pledges More previous month, the NBS data showed. Compared
Efforts to Stimulate Consumption”). to 2021, food prices increased 6.1%, against a 6.3%
gain in July, resulting in a rise of around 1.09%
During the course of the COVID-19 pandemic, points in headline CPI. Notably, pork prices jumped
Chinese consumers have become more cautious 22.4% on a yearly basis in August, compared
and price-sensitive as turbulence becomes the with a 20.2% increase in the previous month. On
new normal, despite growing periods of stability. a month-on-month basis, the CPI fell 0.1%. The
Beverage products witnessed 5.9% growth in 2021, growth in core CPI, which excludes volatile food
reversing the downward trend of a 4.1% fall in and energy prices and is deemed as a better gauge
2020, according to a report on Chinese consumers of the supply-demand relationship in the economy,
released by Bain & Company and Kantar came in at 0.8% year-on-year in August, flat with
Worldpanel. Packaged food went in the opposite the previous month. The government has set an
direction in the same period, with sales volume annual consumer inflation target of about 3% in
down 2%, average selling price up 0.8%, and overall 2022. Despite facing rising inflationary pressure,
sales down 1.2%. Data shows the overall sales of China still enjoys many favorable conditions to keep
China's fast-moving consumer goods market overall prices stable for the rest of 2022 (Shijia).
increased by 3.1% in 2021, continuing the trend of
fast-moving consumer goods market growth being China's consumer market has logged rapid
lower than that of GDP during the epidemic. In development in the last decade, with its structure
2021, the sales volume of personal care and home becoming more balanced and new business forms
252
