Consecutive epidemics have occurred in China, and the government’s strict epidemic control measures have made it impossible for many firms to survive. On July 21, the vacancy rate of retailers in Shanghai hit 9.8 percent, according to China’s “Guyu Data,” and the trend is growing. In addition, Hexun said, according to the “Investigative Survey Report for Urban Savers in the Second Quarter of 2022” by the Central Bank of China, 58.3% of people do not want to spend, preferring to save their money.

According to the report, from January to April this year, the average daily visitor traffic to China’s shopping malls reached 12,861, down 19% from last year. In particular, the high-end shopping centers were affected the most; the number of visitors decreased by 24% compared to the same period the previous year. Even the lower-end mass-market shopping centers saw an 18% drop in visitor traffic compared to last year.

The report points out that when the vacancy rate of shopping centers reaches 6%, there is a need to be concerned.

During the pre-pandemic period of 2019, the vacancy rate of shopping centers in China’s first and second-tier cities was around 6.1%. The vacancy rate rose to 11.0% in 2020 and 9.0% in 2021, respectively. So, what will the scenario be in 2022? Although the majority of cities’ data has not yet been released, vacancy rates for shopping centers in Shanghai and Chengdu are now 9.8% and 8.7%, respectively, while in Guangzhou, the vacancy rate is as high as 14.1%.

Traditional retailers selling watches, fashion accessories, and eyeglasses quickly closed, while well-known brands like Haidilao and Dicos closed hundreds of branches between 2021 and 2022. However, an increasing number of car yards, digital and luxury goods stores have bucked the trend.

In 2020, China’s sales of personal luxury goods increased 36% year on year, hitting $70 billion, more than double the pre-pandemic level. On the other hand, consumption of everyday essentials has reached a low. This illustrates the shift in consumption patterns of various groups of people due to the epidemic; ordinary people’s pockets are “tighter.”

According to NetEase, China’s National Bureau of Statistics reported that total retail sales of consumer goods in April this year were $445 million, down 11.1% year on year, indicating that Chinese consumers can be in one of two situations: having no opportunity to consume or giving up the chance to buy.

According to the expenditure ratio between income and expenditure of Chinese people in recent years, from 2017 to 2021, China’s per capita disposable income increased every year, reaching 350 million yuan. However, compared to the spending data in the same period, there is a downward trend, reflecting that many households tend to save rather than consume.

Furthermore, according to China’s “Investigative Survey Report for Urban Savers in the Second Quarter of 2022”, just 23.8% of Chinese citizens spend, while 58.3% save.

The decline in Chinese consumption is not limited to traditional shopping centers but also online shopping. Affected by the epidemic, a survey by Guotai Junan Securities indicates that nearly 60% of respondents have experienced a sharp drop in income during the epidemic, which affects their willingness to spend, according to NetEase.

After Shanghai reopened, rents rose sharply. In previous years the increase was 1-5%, but this year it has increased by 10%, according to People’s Daily. Students and migrant workers leave Shanghai one after another because they cannot afford the increasingly heavy rent pressure. It seems that a wave of “leaving Shanghai” is also starting.

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