With the continuous deterioration of the economy, more and more Chinese people are choosing to downgrade their consumption habits, with the rise in popularity of “parity replacement” and “low-cost replacement”. White-label products are gradually becoming a new favorite in the market. A survey on Wednesday showed that 80% of Chinese consumers acknowledge their own “consumption downgrade”.
White-label products refer to goods that are not branded, directly manufactured and marketed by small to medium-sized companies. “Parity replacement” refers to affordable substitutes that are functionally and effectively similar to well-known brands or high-priced products. “Low-cost replacement” involves replacing products with cheaper alternatives without imitating major brands.
According to a survey released on Wednesday, January 15th, by Hakuhodo Living Comprehensive Research (Shanghai), 80% of Chinese consumers believe they are experiencing “consumption downgrade”. The average score for consumers’ willingness to spend in 2024 was 67.3 points out of 100, lower than the pre-pandemic score of 74 in 2019.
Established in 2012, Hakuhodo Living Comprehensive Research (Shanghai) is a wholly-owned subsidiary of Hakuhodo, an advertising company with over 100 years of history in Japan, registered in China.
The research was carried out in collaboration with the School of Advertising at the Communication University of China and surveyed 3000 Chinese residents aged between 20 and 59.
Among the 400 consumers aged 20 to 50 surveyed, 42% of respondents said their spending in 2024 decreased compared to the previous year. The highest reason cited for reduced spending was a decrease in personal or household income or assets, accounting for 59%. Additionally, 47% of respondents said they were influenced by the consumption habits of those around them.
Chinese consumers are no longer keen on hoarding goods during e-commerce promotional events but are more inclined towards a “low-cost replacement” and a consumption strategy of “not buying non-essential items”. Some consumers even opt for “parity” or “low-cost replacement” due to the high prices of down jackets, making military coats and other low-cost items popular choices.
Blogger “Gossiping Pineapple Emperor” remarked that with the trend of consumption downgrading and the popularity of “parity replacement”, white-label products are gradually gaining traction in the market.
Over the past four quarters, Pinduoduo has achieved an average revenue growth rate of over 50%, which is attributed to the power of white-label products.
The rise of white-label products is not accidental; it is a natural outcome of the market demand for consumption downgrade. Consumers’ pursuit of high-value products has made white-label products popular, and the business profits are gradually shifting from brand manufacturers to distributors and e-commerce platforms.
The consumption downgrade in China has also affected the relatively resilient cosmetics market. According to data released by the National Bureau of Statistics of China, cosmetics consumption saw a year-on-year decrease of 26% in November 2024. White-label cosmetics brand “Haijieya” achieved monthly sales on Douyin exceeding 1 billion yuan, surpassing well-known brands like P&G, Estée Lauder, and Florasis.