A research analyst at RNCOS is optimistic of a 15% hike in retail sales in consumer goods in 2007, rising 13.7% gain in 2006 and surpassing the 12.8% growth in 2005.
Rising consumer demand spells good news for the companies catering to the booming Chinese middle class, improving their prospects for yet another year of record-breaking profits.
During the holidays for May Day, China's retail sales crossed the 320 billion yuan (US$ 42 billion, rising 15.5 percent from the previous year as per the Ministry of Commerce in the news on English People.
Sales of air conditioners, LCD TVs, clothing and jewelry escalated for large retailers. Major retailers in Guangdong, Shandong, and Guizhou provinces increased turnover by 41%, 24%, and 25%, respectively, from the previous year.
The runaway sales tripled from 2000 during the weeklong holiday that China declared as a means to boost its domestic consumption. Shanghai registered record inflow of tourists during the week marking a 20% hike to over 4.8 million visitors.
In departmental stores and shopping malls sales skyrocketed 22.9% to hit 1.07 billion yuan, thanks to major discounts and lavish spending in restaurants for weddings and family banquets contributed to the 91 million yuan revenue posted by the catering sector. It was boom time for the catering sector with heavy demand for wedding banquets.
The May Day holidays last week have left travel agents, restaurant owners and souvenir peddlers flushed with revenue. The Office for Nationwide tourism co-ordination estimated nearly 30 percent of the urban population in China opted for recreation travel during the holiday week. The favorite purchases for Chinese mainland tourists are usually digital cameras, cosmetic and jewelry products in downtown sections or tourist locales in China.
Growth of over ten percent in consumption was common to both urban and rural areas. This is unusually high for rural areas. Among the main reasons behind the solid consumption are the strong economic growth and rising incomes in the country.
In the opinion of certain industry experts, the May Day holiday period was the direct cause of rising retail sales, acting as the second consumption spurt following the Chinese Spring Festival. At the same time, the abnormally high temperature in China in May spurred early summer consumption.
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