According to the latest official data, China’s final consumption accounted for 63.4 percent of gross domestic product (Chart 2). Household consumption experienced exponential growth and climbed to $4.5 trillion (Chart 3). Retails sales have been growing at healthy pace of about 10 percent. Spending on Singles’ Day this year (Nov. 11), is impressive, registering $25 billion, almost double U.S. Black Friday online sales of $14 billion (Chart 4).
I have mentioned on multiple occasions how much of a transformation has occurred in China over the last few years where customer service has evolved out of nowhere. Our trip to Guangzhou in July provided a number of examples of this. We used ele.me to order a fruit platter. When the person at the store saw that the delivery address was a hotel they called and asked if we would like the fruit chopped because we probably wouldn’t have a knife in our room and at no additional charge. When Mrs. Treacy was buying a phone, my girls were playing on grab machines a little way off. They were getting frustrated by their unrelenting failure to win a toy so one of the girls from the phone store came over to show them how to pick the right machine so they could win.
Purchases from Taobao from anywhere in Guangzhou arrived on the same day, those from Beijing arrived either next day or within two days and for no additional charge.
I’ve been travelling to China reasonably regularly for 12 years and believe me this kind of consumer experience was inconceivable only a couple of years ago. The review system consumers have come to rely on via WeChat, Taobao and other sites has transformed the retail experience by giving power of choice to the consumer and this has enhanced spending.
The Global X China Consumer ETF has been trending highs since early 2016 and broke the six-year downtrend in August. A sustained move below the trend mean would be required to question medium-term scope for additional upside.