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November 6 2008
Hong Kong
Consumer confidence dives around the world, with the latest Nielsen Global Consumer Confidence Index hitting an all-time low of 84 since 2006 according to The Nielsen Company.
A twice-yearly study, the Nielsen Global Consumer Confidence study polled more than 26,000 consumers in 52 markets from 22 Sept to 6 Oct 2008 about their confidence levels and economic outlook since the last survey in May 2008.
Conducted in the midst of the global financial crisis, the latest survey reveals that global consumer confidence has taken a further beating, dropping from its peak of 99 in 2006 to 84 this time round. Of the 52 markets surveyed, 43 (or 82%) have recorded a decline in the Consumer Confidence Index from the first half of 2008. The consumer sentiment is gloomy globally, with 62 percent thinking local job prospects are not looking good and more than two thirds not considering the next 12 months a good time to spend.
It is the fast developing markets that are turmoil proof with their consumers appear to be more optimistic, as evidenced by the performance of the BRIC markets – India tops the world as the most optimistic, Brazil and China recorded an increase in their Index score and Russia ranked the 5th most optimistic – all gained pace as the global top 10 most optimistic countries. (Chart 1)
“In the growing economies of BRIC countries, many products and services continue to post strong double digit growth and consumer spending has not been affected to the same extent as Western economies,” said Angel Young, Executive Director, The Nielsen Company Hong Kong. “Despite being impacted by the current global conditions, corporations and consumers in these large developing countries are aware that their medium-to-long-term prospects remain strong.”
In the US where the credit crunch originated, consumer confidence dropped further, with its Index hitting a new low of 82, down from 100 in the same period last year. The majority of US consumers (86%) think their country is in an economic recession and over half of those think the recession will linger for the next 12 months.
And neither is Hong Kong, with its financial center status benchmarked against New York and London, immune from the spill over, with the level of confidence among Hong Kong people continuing to fall. According to the Nielsen Consumer Confidence Index, Hong Kong declined from 118 in 2007 to 109 in the first half of 2008 and registered a further 21-point decrease to an all-time low of 88 by end of 2008 (Chart 2). Hong Kong now ranks 16th globally, falling off the global top 10 most optimistic list. In tandem with falling confidence levels, a respective 70 percent of Hong Kong people are skeptical about the local job prospects and do not consider the next 12 months a good time to spend.
“For global consumers, the last 12 months have been challenging and turbulent and Hong Kong is no exception, with an economy that is closely intertwined with world demand,” said Ms Young. “On a positive note, over half of people in Hong Kong remain quite optimistic about the state of their personal finances in the next 12 months and Hong Kong has the least number of people who claimed not to have any spare cash.”
Major concerns in the next six months
Globally – and unsurprisingly, one third of consumers are most concerned about the Economy, with one fifth concerned about Increasing Food Prices, followed by Work/Life Balance (18%), Job Security, Health and Increasing Utility Bills (@17%). (Chart 3)
Concerns among people in Hong Kong are quite in line with global trends, although to a greater extent. About half are concerned about the Economy, followed by Increasing Food Prices (30%), Health and Increasing Utility Bills (@22%), and Work Life Balance (21%).
Opportunities in difficult times
Saving for a rainy day is again the top priority for consumers around the world, led by Hong Kong where three quarters of people will put their spare cash into saving.
Consumers in Hong Kong in the meantime remain passionate about creating or perhaps ‘recreating’ wealth in an economic downturn, with 46 percent claim to be investing in shares or stocks and mutual funds if they have spare cash - the world’s second highest after their Indian counterparts (Chart 4).
When asked about their spending intentions after covering essential living expenses, about a third of global consumers choose to go for holidays/vacations, buying new clothes and paying off debts/credit card bills respectively.
Judging by Nielsen’s survey findings, people in Hong Kong are not holding back from spending entirely but are willing to open their purse strings for good bargains. Despite a more cautious spending sentiment, there are opportunities for companies in the leisure, retail and entertainment sectors, with spending options like Holidays/Vacations (40%), Out of Home Entertainment (36%), and buying New Clothes (30%) continuing to sit at the top of Hong Kong people’s shopping lists when they have spare cash (Chart 5).
“Even during economic slowdowns there are opportunities for companies, and continuing to invest in the brands and products during a downturn has never been more important to drive and secure brand loyalty for better days ahead,” advised Ms Young. “Companies that stay constantly engaged with their target customers will come out of this downturn as winners. Consumers will remember the companies and products which best understand their changing needs and demands during a slowdown.”
The most pessimistic
According to the Nielsen Global Consumer Confidence survey, South Korea which recently saw its stock market close at its lowest in four years languished at the bottom of the global rankings with an index score of 36, a loss of 14 points since the first half of 2008. Its neighboring country Japan came in second last at 44. Taiwan, despite a short-lived spike in consumer sentiment in the first half of the year resulting from the change of the local political scene, recorded a significant 23-point decrease to 60, the biggest single drop of all in its Consumer Confidence Index.
REMARKS: More country or regional specific information for the respective regions are available upon request.
About The Nielsen Global Online Consumer Survey
The Nielsen Global Online Consumer Survey was conducted from Sept 22 – October 6th 2008 among 26,202 Internet users in 52 markets in Europe, Asia Pacific, North America and the Middle East. The largest half-yearly survey of its kind, the Nielsen Global Online Consumer Confidence and Opinion Survey provides insight into current confidence levels, spending habits/intentions and the major concerns of consumers across the globe. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, status of their personal finances and readiness to spend.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions in marketing information, media information, online intelligence, mobile measurement, trade shows and business publications (Billboard, The Hollywood Reporter, Adweek). The privately held company is active in more than 100 countries, with headquarters in New York, USA. For more information, please visit, www.nielsen.com
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