The Chinese New Year holiday is traditionally a time to buy gifts, food and clothes and travel, making it an important and profitable sales period across China and South East Asia.
For the last few years, the holiday has been significantly impacted by Covid. But as Asia starts to slowly bounce back from the pandemic, what could this year’s Chinese New Year have in store for brands?
Chinese New Year is an important festival for shopping
Traditionally, Chinese New Year is synonymous with shopping. As well as buying food to celebrate and gifts for family, buying new items, such as clothes and shoes, is seen as the embodiment of a fresh start for a new year.
Typically the top selling products in Chinese New Year include festive food, flowers, accessories, clothes, furniture, and electric appliances.
For the decade up to 2020, when Covid hit, Chinese New Year retail sales rose year-on-year. When the pandemic arrived, it prevented people from being able to return to their home town or village during the Spring Festival to reunite with their family. This had an understandable impact on sales of festive foods and gifts.
How e-commerce saved the day during the pandemic
In 2021, while people in China were obeying the call to remain at home for Chinese New Year, the government worked with local online marketplaces and logistics companies to launch an online Spring Festival shopping event. This event ran for 30 days and brought in RMB 906 billion (USD 140.2 billion).
It was so successful that it was repeated in 2022. And, during the first five days of that month-long event, the People’s Bank of China’s clearinghouse platform processed online payment transactions worth RMB 4.2 trillion (USD 660.3 billion). This was an increase of 11.6% on the previous year.
The leading Chinese marketplace, JD.com also revealed that its turnover during the first six days of the holiday had grown by more than 50% on 2021.
What can we expect from Chinese New Year this Year?
So what can we expect from Chinese New Year this Year? Analysts are paying close attention to this year’s Lunar New Year holiday for signs of consumer sentiment.
This year, the travel season for Chinese New Year is estimated to be from around 7 January to 15 February. According to China’s Ministry of Transport, this is twice as long as last year, and 70% of 2019 levels.
Most of the trips are likely to be visiting family, with just 10% estimated to be for leisure or business travel. For the first time on almost three years, Chinese citizens will be able to go abroad for leisure, and China has also removed quarantine requirements for inbound travellers.
However, Chen Xin, head of China leisure and transport research at UBS Securities, thinks that it is unlikely that travel overseas for the Chinese will really pick up until the next public holiday in early April. By that time, passport applications will have been processed and the number of international flights could potentially have recovered to 50% or 60% of 2019 levels.
What will consumers in South East Asia be spending on this Chinese New Year?
A study by Milieu Insight, conducted on 1,000 respondents each from Singapore, Thailand, Vietnam, Malaysia and the Philippines who intend to celebrate Chinese New Year this year, unearthed more insights into what we might expect this year from consumers in South East Asia.
The study discovered that Singaporeans are more likely to travel overseas during the celebrations compared to others in the region. Consumers in Singapore and Malaysia still prefer to shop in-person for fashion, while Filipino consumers opt for online marketplace ecommerce sites or retailers’ websites.
And 53% of people anticipate that their spending this year is likely to be higher than last year, partly due to inflation and increasing prices.
So what will people be buying? Here are the most common food products and services that South East Asian consumers will spend on for Chinese New Year:
- Fresh fruits and vegetables (63%)
- Sweet snacks and confectioneries (50%)
- Non-alcoholic beverages (44%)
There were some key regional differences. In Vietnam, preferences are for food hampers, alcoholic beverages, and food catering services. In Thailand, it is fresh fruits and vegetables and ready-to-eat meals. While in Singapore, it is sweet snacks and confectioneries, chips and crackers, and frozen food.
With restrictions easing, it is likely that many people will want to celebrate the Lunar New Year with their family this year, and make up for the last few years. Let’s hope it is a bumper year for everyone.