By Liangping GAO and Casey Hall
Beijing/Shanghai (Reuters) -Chinese employee of the energy sector Mandy Li likes to treat himself occasionally to a luxury brand handbag. But because her employer has reduced her wages by 10% in state ownership and owns the characteristics that her family owns, she only buys second -hand.
“I am cutting great editions,” said 28-year-old Li, surfing items in the Super Zhuanzhuan-Luxe items of Beijing in Beijing that was opened in May.
“The economy is absolutely in a recession,” she said, adding, “The wealth of my family has shrunk a lot” because of the real estate crisis that China has been struggling with since 2021.
As deflatory pressure is stimulated in the second largest economy in the world, consumer behavior changes to ways that can lead to further downward pressure on prices, which expresses concern that deflation can be called in, which would put more headaches for the Chinese policy makers.
Data showed Monday that consumer prices fell by 0.1% a year earlier, with price wars that raged in a number of sectors, from cars to e-commerce to coffee in the midst of concern about oversupply and slow domestic demand.
“We still think that stubborn overcapacity China will have both this year and the next deflation,” Capital Economics said in a research memorandum.
New companies are looking for success by directing Penny-Pinchers, from restaurants that sell 3 Yuan ($ 0.40) breakfast menus to supermarkets that offer flash sales four times a day. But this trend is worrying economists who do not ultimately see Price Wars -striking if losing companies may have to close and people can lose their jobs, thereby fueling further deflation.
The sensitivities of the consumer price have accelerated the growth of the Chinese second -hand luxury market since the pandemic, with an annual growth rates that surpass 20% in 2023, according to an industrial report from Zhiyan Consulting from last year.
But that growth has also led to a peak in the volumes of such items that are for sale – which is noticeable in the level of discounts offered.
Some new stores, including Super Zhuanzhuan, offer items with discounts up to 90% of their original price, compared to the industrial standards of 30-40% in recent years. Discounts of 70% or more are now also common on large second -hand platforms, such as Xianyu, Feiyu, Ponhu and Plum.
“In the current economic environment we see more existing luxury consumers shifting to the second-hand market,” says Lisa Zhang, an expert at Daxue Consulting, a market research and strategy company focused on China.
