In a survey by McKinsey released last week, young free spenders represent a quarter of the Chinese population. Also, they account for 60 percent of their spending growth. Felix Poh, McKinsey’s partner, states that there is an apparent increase spending in the fitness industry in China – specifically in categories such as health and lifestyle. This trend includes more than just young free spenders, but they are among the highest consumers of the trend.
Recently, there has been a slowdown in domestic economic growth, accompanied by the current trade tensions between the U.S. and China. However, despite these reports, young free spenders have significantly boosted their purchases in every category. That’s compared to how much they spent last year. McKinsey reports that health consciousness dominated among the top spends.
Fresh milk, skincare, sportswear, and yogurt experienced a significant spending increase.
McKinsey defines the young free spender demographic as the young people living predominantly in China’s less developed, lower-tier cities. These groups of consumers have significantly cheaper living costs and less demanding work schedules as compared to the young adults of the same age living in major cities like Shanghai and Beijing. That being said, these young free spenders have more time and more disposable income.
More Importance in Health and Wellness
According to Poh, there has been an increase in the demand for having personal trainers and conducting classes that are focusing on the latest trends like Zumba. Experts propose that there will be a continuous innovation in those categories.
The Chinese government has recently released policies promoting sports and national fitness. Thus, local investors and companies have taken notice. Currently, there have been 37,000 fitness centers within just a few years.
Other consumer groups, on the other hand, have held back on their spending. Frugal customers account for 10 percent of survey participants, lived in bigger metropolitans, and had lower incomes.
“The Chinese consumer is extremely resilient,” Poh states. “As long as you have an appealing value proposition, Chinese consumers will still spend that money.”
