China’s economic slowdown is not an abstract concept for Zheng Jiewen, 23, who works full-time at an advertising agency in the southern metropolis of Guangzhou.
Zheng is primarily a print model, earning 30,000 yuan ($4,230) a month when she started working two years ago. But when new business at the company she worked for began to slow last year, her salary was gradually reduced, culminating in a major cut in February that left her earnings at half her previous salary.
“I was absolutely shocked,” she told CNN. She said she immediately cut back on her spending to match her new salary. That meant no more Louis Vuitton, Chanel or Prada, previously her favorite brands.
The “clear” economic slowdown has led to a tripling of social media searches for dupes between 2022 and 2024, according to Laurel Gu, managing director of Mintel, a Shanghai-based market research firm.
These days, she and her friends are spending their more limited funds on so-called “pingti” products, high-end replicas of brand-name items known in English as dupes. Some are virtually indistinguishable from the original, while others are inspired by the original design and offer more colors or textures. The popularity of the product category is soaring as consumer confidence in China nears an all-time low, analysts say.
She said that unlike 10 years ago, when Chinese shoppers, the world’s biggest luxury spenders, clamored for Western-style goods from big-name brands, consumers are now increasingly turning to cheaper alternatives, a trend that is becoming “the new mainstream.”
Dupes can be significantly cheaper than their brand name rivals. A pair of Lululemon’s (LULU) Aligning Yoga Pants costs 750 yuan ($106) on the official Chinese website. However, a search on popular e-commerce sites including Tmall yields dozens of other options, many of which use Lulu in their store names, tout similar leggings for as little as $5 and claim to be of comparable quality.
China’s growing love affair with dupes isn’t just a problem for established brands like Louis Vuitton. Sales at luxury giant LVMH fell 10% in the first six months of this year in the Asia Pacific region excluding Japan, a market dominated by China, compared with 2023.
The pingti trend is contributing to the overall lackluster consumption and retail sales, which rose just 2.1% last month, missing the already low expectations of 2.5% growth among economists polled by Reuters. And Beijing’s failure to stimulate strong, sustainable growth in household consumption amid an ongoing property crisis also has huge global implications.
Cautious consumers
A year and a half after China reopened its borders following the Covid-19 pandemic, consumer confidence is still struggling to recover, economists at investment bank Nomura wrote in a research report on Sept. 4.
The consumer confidence index fell to 86.0 in July from 86.2 in June, the report said. That’s only slightly higher than the historic low of 85.5 in November 2022, when the country was still battling the pandemic. (The index measures consumer confidence on a scale of zero to 200, with 100 indicating neutrality.)
Buyers remain on the sidelines due to a combination of falling stock prices, capital flight and “lukewarm” wage growth, the economists said. However, according to CNN interviews with consumers in various parts of China, keeping your current salary is considered a victory.
A primary school math teacher from Chongqing, in southwest China, who called herself Xinxin, told CNN she used to be a loyal fan of Estée Lauder’s Advanced Night Repair serum.
But after a “brutal” pay cut of over 20% this year, which she attributed to “tax issues“In her school district, caused by economic challenges, she turned to budget-friendly alternatives. She found one with the same key ingredients, priced at a huge discount of about 100 yuan (about $14) for 20 milliliters (a little over half an ounce), compared to Estée Lauder’s 720 yuan ($100) for 30 milliliters (one ounce).
“Why joke? Pay cut, of course!” she joked.
Xinxin and Zheng, the model, consider themselves lucky to have jobs. On Friday, China revealed that the unemployment rate The rate for people aged 18 to 24, excluding students, rose to 18.8% in August, the highest level since the figure was reintroduced in January. China stopped releasing the metric for several months after hitting consecutive record highs last summer.
A steep fall
Many economists believe the root cause of China’s many economic woes is its ailing real estate sector, which once accounted for as much as 30% of economic activity. The industry began to cool in 2019 and fell into a deep slump about two years later, following a government-led clampdown on developer lending.
The resulting crisis has resulted in a steep decline in property prices and a loss of consumer confidence. Individuals and businesses have tried to preserve their wealth by selling assets and reducing consumption and investment.
Nomura said existing home prices fell nearly 30% from 2021, citing research from Beike, a platform that tracks housing transactions, based on a sample of 25 major cities.
“In contrast to the huge positive wealth effect we saw in the US post-Covid, Chinese households have suffered a huge wealth loss from the housing crisis, estimated at $18 trillion,” Barclays economists wrote in a Sept. 12 research note.
To put that in perspective, they said, it amounts to every three-person household in China losing about $60,000, an amount nearly five times China’s gross domestic product per capita.
Nicole Hal, a 33-year-old self-employed businesswoman from Guangzhou, told CNN that her lack of confidence in the country’s economy has led her to drastically cut back on her spending, even though she and her husband expect to earn at least four million yuan ($570,000) this year.
“I stopped buying luxury goods and expensive skin care products, including expensive clothing. I stopped eating out, instead I cook for myself, at least four days a week,” she said.
That “vicious circle” of reduced consumption, which has contributed to a series of pessimistic economic data, has prompted some investment banks to further cut their forecasts for China’s growth. 5% target percentage announced in March.
To make up for the deficit caused by the real estate sector, Chinese leaders have largely focused on promoting manufacturing, including in the electric vehicle (EV) sector. But the strategy of flooding overseas markets has led to global backlashespecially among EV manufacturers in Europe.
“In China, weak domestic demand and strong manufacturing growth have pushed the goods trade surplus to extremely high levels,” Goldman Sachs economists wrote in a Sept. 13 report, adding that Beijing is likely to face further tariffs from trading partners if the country continues to export its surplus.
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