Chinese consumer companies signal spending is picking up again

BEIJING — Chinese companies’ latest earnings reports point to an improvement in consumer spending, though it’s not necessarily back to pre-pandemic levels.

E-commerce giants Alibaba and JD.com both said in the last several weeks that their China retail business saw faster year-on-year revenue growth in the last three months of 2024 than in 2023.

“We think consumption growth is in a period of healthy recovery, but not [yet reaching] the high previously,” Charlie Chen, managing director and head of Asia research at China Renaissance Securities, said Wednesday in Mandarin, translated by CNBC.

For consumer spending to return to pre-pandemic growth, Chinese companies’ revenue growth likely needs to recover by double digits and consumer confidence needs to improve, Chen said. He noted that the recent real estate slump has weighed on consumers’ sense of affluence.

Chinese policymakers have emphasized that boosting consumption is their priority this year. So far, authorities have expanded a trade-in subsidy program to include smartphones, on top of home appliances and electric cars. In September, Beijing also signaled a shift in real estate policy by calling for a halt in the market decline.

JD.com has benefitted directly from the trade-in program, and reported 15.8% year-on-year growth in sales for electronics and home appliances in the fourth quarter of 2024. However, full-year segment revenue of 4.9% was only the fastest growth since 2021, when sales surged by nearly 23%.

The government has introduced consumption-stimulating policies since the second half of last year, and they have “driven a steady recovery in consumer confidence,” Sandy Xu, chief executive officer and executive director of JD.com, said in an earnings call this month, according to a FactSet transcript.

“In short-term we believe there are still challenges on the macro side, but in the long term, we remain very optimistic about consumer sentiment,” she said.

Tencent, which operates mobile payments and social media app WeChat, reported a 3% growth in fintech and businesses services to 56.1 billion yuan ($7.7 billion) in the fourth quarter of 2024, noting that “commercial payment services revenue was broadly stable year-on-year.” That compares with 39% segment growth in the fourth quarter of 2019, which Tencent had attributed to “greater revenue contributions from commercial payment.”

Certain companies have found niche areas where Chinese consumers are spending, however.

In late February, Beijing-based Laopu Gold, which makes and sells gold jewelry with Chinese designs, forecast that its net profit last year surged by at least 236% in 2024 to 1.4 billion yuan. The company is set to release full results for 2024 on Tuesday.

Toy company Pop Mart also propelled ahead, reporting on Wednesday that revenue in mainland…