Unilever sees Chinese consumer confidence at ‘historical low point’

UNILEVER said on Tuesday (Jul 25) that China’s declining property market and exports have sent its consumer sentiment to a historic low.

This came after the British consumer goods giant forecast a Chinese “consumption boom” earlier this year.

The maker of Dove soap and Ben & Jerry’s ice cream in February flagged between US$1.5 trillion and US$2 trillion of “excess household savings” in China, which it believed could boost its sales in the country and in South-east Asia.

At the time, Beijing, after almost three years of a “zero-Covid” strategy, had just dropped its restrictions almost completely and said it would boost imports and promote a consumption recovery to boost the economy.

But a lot has changed in the region since then.

Economic data from China this month showed its post-pandemic surge was quickly fizzling out, raising expectations that the government needs to bring out more stimulus measures to drive activity and bolster tepid consumer confidence.

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“What we’re seeing is a very cautious consumer in China, a declining property market and reduced export demand in China – a lot of demand has shifted into the markets of South-east Asia. Thailand (and) Vietnam in particular benefit quite a bit from that,” Unilever finance chief Graeme Pitkethly said on a call with journalists.

“And there is high unemployment in China, particularly youth unemployment… As much as we can tell, we’re at the historical low point in terms of Chinese consumer confidence.”

Nonetheless, Unilever said underlying sales growth in China recovered in the second quarter, with volume-led, double-digit growth against a softer year-ago figure that was impacted by lockdowns.

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