【Epoch Times, September 25, 2024】For 23-year-old Zheng Jiewen, the slowdown in the Chinese economy is not an abstract concept. She works as a graphic model in an advertising company in Guangzhou.
Since last year, the company’s new business has been declining, leading to a gradual reduction in Zheng Jiewen’s salary, which was significantly cut in February, ultimately halving her income. “I was very shocked,” she told CNN.
Since 2023, as Chinese consumers have changed their shopping habits amid the economic downturn, sales of “dupe” brands have soared. The term “dupe” corresponds to the Chinese term “平替” (pingti), referring to the “affordable substitute” for something, also known as a counterfeit.
Analysts say that with Chinese consumer confidence nearing historic lows, the popularity of such dupe products is skyrocketing. Laurel Gu, Shanghai director of the market research company EngMind, told CNN that the economic slowdown has led to a doubling in searches for “dupe” on social media from 2022 to 2024.
In China, more and more Gen Z buyers are opting for these “dupe” products – high-quality replicas of brand-name goods. Although these imitation products are not cheap knockoffs, they are significantly lower in price compared to the authentic ones. For example, a pair of Lululemon leggings is priced at 750 yuan (106 USD) on the official Chinese website. If someone searches for yoga pants on Chinese e-commerce sites, they will find other options priced as low as 35.21 yuan (5 USD), claiming to have the same quality.
What is causing young Chinese people to replace luxury goods with dupes? Experts say there are many reasons, starting with the slowing Chinese economy.
The stagnation of the Chinese economy has led to wage reductions, forcing many people to reconsider their consumption habits. Xinxin, a teacher from Chongqing, told CNN that she used to be a fan of Estee Lauder’s Advanced Night Repair. However, with this year’s wages decreasing by over 20%, she had to look for alternatives that were $100 cheaper.
In China’s turbulent economy, the official unemployment rate for the 18 to 24 age group reached 18.8% in August. Thousands like Xinxin are seeking replicas to replace high-end goods, aiming to sustain their livelihoods.
Zheng Jiewen told CNN that upon the decrease in her salary, she immediately reduced her expenses, meaning she could no longer afford brands like Louis Vuitton, Burberry, or Prada that she used to buy, opting for dupes instead.
It’s not just young people abandoning luxury brands; those in their 30s and 40s are also tightening their budgets.
Nicole Hall, a 33-year-old self-employed business owner in Guangzhou, told CNN that she lacks confidence in the country’s economy and, despite expecting a combined income with her husband of at least 4 million yuan, still had to significantly cut expenses.
“I have stopped buying luxury goods and expensive skincare products, including expensive clothes. I no longer dine out but cook for myself at least four days a week,” she said.
Barclays economists wrote in a September 12 report: “Unlike the massive positive wealth effect seen in the US after the pandemic, Chinese households have suffered massive wealth losses due to the sluggish real estate market, with estimated losses up to 1.8 trillion USD.”
They noted that viewed from another angle, this is equivalent to about $60,000 loss for every household of three in China, nearly five times the country’s per capita GDP.
Jessica Wang, 45, told Bloomberg that she has started purchasing dupe bags for Hermes.
As consumers gradually move away from Western brands, luxury retailers like Hugo Boss, Burberry, Richemont Group, Swatch, and LVMH have experienced declines in sales in China. British fashion brand Burberry reported a nearly 21% year-on-year drop in sales in the last quarter, which Chairman Gerry Murphy attributed to “falling consumer confidence.”
Swatch Group stated in its financial report that demand for luxury goods in China and Southeast Asia has “sharply declined,” with these markets being “heavily reliant” on Chinese tourists.
Luxury giant LVMH’s sales in the Asian region (excluding Japan) dropped by 10% in the first half of this year compared to 2023, with the market being predominantly led by China.
The dupe trend has also led to a slump in overall consumption and retail sales in China, with last month’s retail sales falling below already low expectations. This summer, a series of economic data showed considerable weakness, leading economists to believe that China may not meet its economic growth target.
Nomura Securities economists wrote in a research report earlier this month that even a year and a half after reopening following the pandemic, consumer confidence in China is still struggling to recover.
They noted that the consumer confidence index in July dropped from 86.2 in June to 86.0, marginally higher than the historic low of 85.5 set in November 2022 when China was still deeply entrenched in the pandemic crisis. This index measures consumer confidence on a scale of 0 to 200, with 100 indicating the midpoint.
Economists say that due to falling stock prices, capital outflows, and tepid wage growth, Chinese shoppers are taking a wait-and-see approach. However, according to CNN interviews with consumers in different regions of China, maintaining their current wages is already considered fortunate.