Consumption upgrading accelerates in China’s county seats

Upscale products – goods that signal a desire for higher quality and a better living standard, such as fresh cherries, dishwashers, and home theatre projectors – have been well received in China’s county seats in recent years.

Workers are busy sorting packages at a logistics park in Hanbang village, Zhangbang town, Qichun county, central China’s Hubei Province. In recent years, the county has built an efficient rural delivery logistics system, helping boost rural consumption upgrading. (Photo/Chen Dingyun)

As the livelihoods of Chinese residents living in county seats continue to improve, they have placed higher expectations on food, clothing, housing, and transport conditions. Counties and rural areas are going through comprehensive consumption upgrading in terms of daily necessities, according to a report issued by the JD Research Institute for Consumption and Industrial Development under Chinese e-commerce giant JD.com.

The most obvious change is what people eat, with fresh food having a strong seasonality becoming an important driver of food consumption in counties and rural areas, the report said. For example, the average annual growth rate in the turnover for tropical fruits as represented by lychee soared 152 percent in the most recent three years.

In addition, residents living in county seats also expect to have a more comfortable modern living environment. Sun Pei, a resident in Sheyang county, Yancheng city, east China’s Jiangsu Province, recently finished the decoration of his new home, which is equipped with a home theatre projector worth 3,099 yuan (about $465), a robot vacuum worth more than 1,000 yuan, and a food processor valued at nearly 5,000 yuan, among other items.

“These new small home appliances, which are easy to operate and can improve one’s quality of life and give people a greater sense of happiness, are very popular in the county seat,” Sun said.

The consumption of intelligent, personalized, and medium- and high-end home appliances has become a hotspot trend in county seats. Online retailer Suning registered steady growth in sales of high-end home appliances and smart small home appliances in county seats, an executive at the company revealed.

Sales of Casarte’s triple-door fridges, a high-end home appliance brand owned by China’s home appliance giant Haier, surged 156 percent year-on-year in the first quarter of the year, while sales of wall-mounted air conditioners produced by another Chinese home appliance giant Midea Group under the premium brand COLMO grew 98 percent year-on-year, the executive introduced. Meanwhile, sales of dryers, integrated cookers, water purifiers, and dishwashers rose 363 percent, 138 percent, 78 percent and 65 percent, respectively.

Consumption upgrading in county seats can be partly attributed to the influence of consumption trends in major cities, according to Jiang Zhao, an expert at the Circulation and Consumption Research Institute of the Ministry of Commerce.

“New forms and models of consumption such as e-commerce live-streaming and group buying keep emerging, while consumption concepts and models in major cities are brought to county seats at a faster pace through social media and other means,” Jiang explained.

In keeping pace with new consumption trends in county seats, many enterprises have worked faster to expand into lower-tier markets, providing customers with diverse products and services. Suning, for example, has opened 11,000 retail cloud stores across the country, covering over 85 percent of county seats.

Besides, faster logistics services also contribute to consumption upgrading in county seats. Liang Wei from JD Logistics, the logistics arm of JD.com, introduced that JD Logistics’ orders could be scheduled for same-day or next-day delivery in 93 percent of districts and county seats as well as 84 percent of towns as of 2021. Last year, the number of JD’s active purchasing users was around 570 million, a net growth of nearly 100 million in one year, with 70 percent of the new users coming from China’s lower-tier markets.

The General Office of the Communist Party of China Central Committee and the General Office of the State Council recently released guidelines on advancing urbanization with a focus on county seats, with measures to promote consumption in county seats.

According to the guidelines, China will improve consumption-related infrastructure and improve the consumption environment in county seats based on the needs for industrial and consumption upgrading. The country will upgrade department stores, large stores and distinctive commercial streets, and build new consumption clusters, while improving consumer service centers, public transportation stations, and other relevant facilities.

These targeted measures will help boost consumption in county seats, said Ma Cheng’en, director of the county economic research center under CCID Consulting, a leading Chinese think tank.