In an effort to stimulate consumption amid sluggish domestic demand, Chinese policymakers are promoting the launch of new stores and products, a strategy encapsulated in the term 'shou fa jing ji' or 'first-time economy' [cbece0bf]. This initiative has seen significant developments, including the opening of Supreme's first store in China in Shanghai in March 2024, which sold out quickly, indicating a potential appetite for novelty among consumers [cbece0bf].
Despite these efforts, doubts linger regarding the long-term effectiveness of this approach. Analysts like Neil Thomas have raised concerns that merely introducing new products will not address the fundamental issue of low disposable income among consumers [cbece0bf]. In 2024, China managed to meet a 5% growth target, yet consumer confidence remains low, primarily due to job insecurity and a weak social security system [cbece0bf].
Local governments are actively incorporating the first-time economy into their 2025 plans, with Shanghai alone witnessing the opening of 1,173 first stores in 2024 [cbece0bf]. Additionally, the government has expanded a trade-in program for everyday goods, aiming to encourage consumer spending [cbece0bf]. However, experts caution that while novelty may attract initial interest, it does not guarantee repeat consumption, highlighting the need for a more sustainable approach to boosting consumer confidence and spending in the long run [cbece0bf].
Meanwhile, Beijing's retail sector continues to grapple with its own challenges in recovering from the pandemic. The historic Hongqiao Market, once bustling with visitors, now sees only around 10,000 patrons daily, a significant drop from its pre-pandemic numbers [ae2d0209]. The decline in foreign tourists, particularly from the U.S., has further exacerbated the situation, with only 2.719 million inbound tourists recorded in the first three quarters of 2024, an 18% decrease compared to 2019 [ae2d0209].
While shop owners at Hongqiao Market are adapting by integrating cultural elements and embracing e-commerce, the disparity in retail performance between Beijing and lower-tier cities is becoming increasingly evident. Consumer confidence in lower-tier cities has reached 82%, compared to only 74% in Beijing and Shanghai, indicating a shift in spending behavior across the country [fad2892c]. As China navigates these complex dynamics, the effectiveness of the novelty-driven strategy remains to be seen, particularly in the context of broader economic recovery efforts [b577e2d4].