She-conomy on the march

March 08, 2022 09:38
Photo: Reuters

Times are changing dramatically for women in China. Their values, aspirations, passions as well as their spending behaviour, are rapidly evolving. The women-targeted market or “She-conomy” proposed by the Chinese Ministry of Education in 2007 will continue to flourish in the years to come.

The “She-conomy” has become an integral part of China's economy. Currently, 56% of Chinese women have higher education compared to 46% of men. According to Lean in China, a platform that focuses on women’s development, nearly 63.3% of Chinese women are employed, far higher than the recorded average level in the Asia-Pacific region. There are 400 million female consumers aged 20-60 in China. The annual consumption expenditure of Chinese women alone is as high as 10 trillion yuan, which is close to the combined European retail markets of Germany, the United Kingdom and France.

It is estimated that in 2019, female consumers in China spent approximately US$700 billion on luxury goods globally. As a result of this huge spending power and in order to capitalise on “her spending power,” luxury brands announced price increases in early 2021 despite the pandemic. Gucci raised the prices of its handbags by 20% while other luxury companies such as Hermès, Louis Vuitton and Chanel hiked prices by between 1% and 13%.

Female consumers are even making their imprint on brands that are traditionally male-centric such as automobiles, investments, and technology. An example of this is Mercedes-Benz, which launched a successful “she” campaign on Chinese social media platform Xiaohongshu with the theme “Independent Women”. Nasdaq-listed financial company Futu, which offers online securities trading in Hong Kong, mainland China, the US and Singapore, said its female clientele in Hong Kong had grown five-fold year-on-year as of March 2021, whilst male customers had a lower growth rate of three-fold during the same period.

“She power” is also on the rise on the video games front. In 2019, the number of women who played video games grew to account for 46% of China’s 650 million players, and in January 2021, Chinese female users spent an average of 48.8 hours on short video apps, up from 32.6 hours in 2020, according to a report by QuestMobile. Each female user spent a monthly average of 7 hours on e-commerce applications, an increase of 10% year-on-year, with Taobao and Pinduoduo being top active applications. According to Mob Tech Report, women’s consumption on e-commerce platforms is largely driven by the sheer number of female netizens: it reached a whopping 530 million by 2020, accounting for 45.4% of all netizens, with 100 million active female users accounting for 58.5% of total users.

Other than spending on luxury goods, young women are also concerned with their health. The craze has now broadened into a more general health focus, touching every aspect of life — from mental health to organic cosmetics and food. The combination of financial means and social change has created a new wave of female consumer culture, labelled “Please Myself” or chǒngài zìjǐ. The number of women buying boxing gloves on Tmall has doubled in the past year. Half of China’s online health supplement consumers are women under 30. All of this points to a new concept of “punk health” or péngkè yǎngshēng, a trend that revolves around the addition of Chinese herbs combined with typical urban lifestyle products such as coffee and soda in hopes of achieving healthier outcomes.

Chinese women are expected to spend around US$1.2 trillion in 2022, according to Emerging Communications, a Chinese digital marketing consultancy and full-service agency serving B2B, education, property and retail brands. It will be a meaningful boost to consumer discretionary spending, including cars, smartphones, luxury goods and lifestyle-related services. This, coupled with a policy shift towards growth and a more comprehensive recovery in China's financial liquidity, should put consumer stocks back in the spotlight for investors.

The growing spending savviness of Chinese females demands more attention. Gone are the days when they were satisfied with being “the housewife” and “the loving mother.” These days, they are infatuated with the pursuit of personal autonomy and the freedom to pursue their lifestyles, interests and aspirations. Even then, they may not be entirely fulfilled.

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Senior Equity Analyst, Indosuez Wealth Management Hong Kong Branch