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Domestic demand is worrying.

If you don’t have money, go out and travel; if you have money, look around; and be cautious when buying things. This seems to have become the standard for high-end consumption.

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Two nights ago, I went to Tianzifang, one of the commercial landmarks in downtown Shanghai, and was surprised to find that many tourists had left. Looking at the high-end consumption data, it did not maintain the upward trend of last year, but instead turned downward.

First-tier high-end commercial businesses declined.

According to a report by Jiemian News on August 1, Hong Kong Hang Lung Properties released its 2024 interim results, with revenue in the first half of the year increasing by 16.7% year-on-year to HK$6.1 billion.Net profit plummeted 56% to HK$1.06 billionOverall rental income fell 7% to HK$4.89 billion, with rental income from the mainland China property portfolio falling 6%.

Luxury consumption in first-tier cities is sluggish，Hang Lung PropertiesThe overall revenue of high-end shopping malls in the mainland fell by 4%. Shanghai led the way, with the revenue of Hang Lung Plaza falling by 8% year-on-year in the first half of the year.Overall sales of tenants in the mall fell 23% year-on-yearDuring the same period, Shanghai Grand Gateway 66 saw a 4% year-on-year decline in revenue and a 14% decline in tenant sales.

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The people in Taigu are in the same boat.

becauseSwire PropertiesThe 2024 interim results have not yet been released, but we can roughly get a glimpse of whether luxury consumption has cooled down from the results in the first quarter of 2024.

Swire Properties' consolidated retail sales at its six shopping malls in Mainland China showed negative growth in the three months ending March 31, 2024Among them, only Shanghai Qiantan Taikoo Li increased slightly by 0.7% year-on-year, which was basically the same as the previous year. The other five shopping malls all experienced negative growth.

Among the important city landmarks, Chengdu Taikoo Li and Guangzhou Taikoo Li, which have a high concentration of first-tier luxury brands, saw their retail sales decline by 9.2% and 14.7% respectively in the first quarter; the mid-to-high-end Shanghai Xingye Taikoo Li fell by 19.4%; and the Beijing Sanlitun Taikoo Li, which has a large flow of people, saw a decline of 5.4% in the quarter.

Swire Properties is expected to release its interim report in mid-August 2024. CCB International published a research report saying that due to the sluggish retail market in Hong Kong and mainland China, coupled with a surge in interest expenses, the bank has lowered Swire Properties' profit forecast for 2024-2026 by 12%-14.9%.The report also stressed that Swire Properties’ dividend yield is expected to be more attractive than its peers in the coming years.

The above phenomenon can be matched with the data from the National Bureau of Statistics.

The latest data released by the National Bureau of Statistics show that in June 2024, the growth rate of retail sales of goods hit a new low.

As the engine of China's consumption, the situation in several first-tier cities is particularly grim.

August 3,Tianfeng SecuritiesAfter collecting consumption data from Beijing, Shanghai, Guangzhou and Shenzhen, it was found that the consumption data in the four first-tier cities fell sharply in June.

Compared with May, the year-on-year growth rate of retail sales in Shanghai, Beijing, Guangzhou and Shenzhen dropped by 11, 12.8, 10.2 and 3.2 percentage points respectively, resulting in the month-on-month year-on-year growth rates of -9.4%, -6.3%, -9.3% and -2.2% in June.

The growth rate of retail sales in first-tier cities has not only failed to drive national consumption up, but has instead become a downward pull on China's consumption.

Many people analyzed that the mismatch was caused by the early release of 618.

The reason is that online shopping accounts for a high proportion in Beijing, Shanghai and other places. The advance of 618 means that consumption power is advanced, so it was high in May and fell in June.

Taking Beijing as an example, according to public information from the Beijing Statistics Bureau and other sources, the proportion of online retail sales in Beijing in 2021 had reached 36.3%.After the liberalization, the proportion of online sales in Beijing is still increasing.

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Data released by the Beijing Statistics Bureau showed that in the first half of this year, the city's total retail sales of consumer goods was 698.24 billion yuan, of which online retail sales was 262.27 billion yuan, accounting for 37.5%, setting a new record.

The degree of data disclosure varies in different regions. Some cities do not have online sales data in recent years. Considering that online sales are well developed in first-tier free shipping areas such as Beijing, Shanghai, Guangzhou and Shenzhen, it is reasonable to speculate that the situation is similar to that in Beijing.

If it is because of 618, then the online sales in Beijing, Shanghai, Guangzhou and Shenzhen in May should be abnormal, not only compared with themselves, but also compared with the whole country.

The reality is not the case.

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Let's take Beijing, where data is most available, as an example. According to the Beijing Statistics Bureau, Beijing's online retail sales in the first quarter were 125.42 billion yuan, 162.44 billion yuan in the first four months, 206.44 billion yuan in the first five months, and 262.27 billion yuan in the first half of the year.

Calculated on a monthly basis, online sales in April were 37 billion, in May they were 44 billion, and in June they were 56 billion.There was no abnormality in May, and there was no decline in June.。

In addition, from the comparison between Beijing and the whole country, the national online retail sales growth rate in May was 11.5%, while that in Beijing was only 5.4%.Much lower than the national growth rate。

In fact, according to the promotions on various platforms during 618, the Tmall system started on 520, without pre-sales, and sold directly, which is not a few days earlier than the start on 526, 2023.JD.comThe products were not put on sale until 8 p.m. on May 31. Logically, the bulk of the sales should have been in June.

In summary, it is untenable to say that the sharp drop in sales in first-tier cities in June was due to 618 or online shopping factors.

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Could it be that the income in first-tier cities is declining too quickly?

These years,In terms of income, the growth rate of rural residents’ income has always been higher than that of urban residents.As the top of the urban resident sequence, it seems reasonable that the income growth rate in first-tier cities has slowed down. Is this really the case?

We checked the first-tier cities with available data, and found that Beijing, Shanghai and Guangzhou have all released their semi-annual revenue information.

In the first half of 2024, the per capita disposable income in Beijing was 43,084 yuan, a year-on-year increase of4.2%Among them, the per capita disposable income of urban residents was 46,524 yuan, an increase of4.0%The per capita disposable income of rural residents was 20,852 yuan, an increase of6.7%。

Guangzhou's income growth rate is similar to that of BeijingIn the first half of 2024, the per capita disposable income of urban residents in Guangzhou was 44,771 yuan, a year-on-year increase of 4.0%; the per capita disposable income of rural residents was 22,314 yuan, a year-on-year increase of 6.4%.

What about Shanghai?

The income changes in Shanghai are also very close to those in Beijing and Guangzhou.The growth rate for urban residents was 4.2%, and for rural residents it was 6.1%.

According to statistics from the National Bureau of Statistics, in the first half of 2024, the per capita disposable income of urban residents nationwide was 27,561 yuan, an increase of 4.6%; the per capita disposable income of rural residents was 11,272 yuan, an increase of 6.8%.

The national average growth rate is 0.1 percentage point higher than that of Beijing, Shanghai and Guangzhou.Will these few tenths of a percentage point cause the retail sales growth rate in first-tier cities in June to be far lower than the national level?

It's far-fetched.

From the perspective of comparing first-tier cities with the whole country, the main reasons for the large gap in income growth areNet property income and net operating income。

According to the definition of the National Bureau of Statistics, net operating income refers to the net income obtained from production and operation activities; net property income refers to the interest, rent and other income obtained by residents from non-financial assets such as financial assets and housing.

In the first half of 2024, the national residents' net operating income grew by 6.4%, and their net property income grew by 2.1%.

Among the first-tier cities, only Beijing has released detailed data on net property income, etc. It is surprising to see the difference between Beijing and the rest of the country in terms of non-wage income.

From the data of the National Bureau of Statistics, we can see that in the first half of 2024, the national per capita net property income increased by 2.1%, which is basically consistent with the growth rate of property income such as medium- and long-term treasury bond interest rates and rental returns in low-level cities. To some extent, it reflects the status of residents in the country in terms of financial management.

What is the situation in Beijing?

If we don’t look at the data, I, for one, would assume that Beijing residents’ property income should be better than the national average.The actual situation is shocking。

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In the first half of 2024, the per capita net property income of Beijing residents was 6,240 yuan, a year-on-year decrease of 0.3%. Looking back, it was found that the net property income of Beijing residents in the first quarter was still growing, with a growth rate of 2.2%.

It dropped from 2.2% to -0.3% in one quarter, which is far below the national average. This result is really unexpected.

Another unexpected thing is thatThe growth rate of Beijing's per capita net operating income is also significantly lower than the national average.In the first half of the year, the national per capita net operating income growth rate was 6.4%, while that in Beijing was 2.4%, a difference of 4 percentage points.

You know,When wages are relatively stable, the willingness to spend is often determined by the value of assets.。

Americans are willing to consume. In addition to the consumption concept, the long-term bull market in the stock market and high real estate prices have given Americans the psychological and financial basis for their love of consumption.

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The negative growth in net property income of Beijing residents in the second quarter may mean thatFirst-tier cities are more susceptible to turbulence in financial markets such as the stock market and are more financially vulnerable than other cities.And this vulnerability may be directly transmitted to the consumer market.

Considering that the main battlefield of high-end consumption such as Moutai is also in the top cities, there was also a price correction in the second quarter. Coupled with the disenchantment of financial attributes, these combined effects may be the result of first-tier cities being affected by the financial market, causing a decline in purchasing power.

In addition to property income, operating income is also worthy of attention.

In the context of economic slowdown,Business income will be a powerful supplement to wage income, encouraging street stall economy and relaxing restrictions on small businesses can improve the income level of some people.

But this has little impact on the income of residents in Beijing or first-tier cities.In the first half of 2024, the operating income of Beijing residents was only a "pitiful" 502 yuan, one-sixth of the national average.

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Beijing's operating income has a low base and a low growth rate, which means that office workers with unstable jobs and declining incomes have less of a hedging method.

This is the case in Beijing, and I guess other first-tier cities are similar.

In addition to the above analysis, there are some recent phenomena that make us even more worried about consumption in first-tier cities.

for example,A series of catering companies’ financial reports have been released recently, and most of them performed below expectations.。

On August 5, the share price of Ajisen (China) plummeted by more than 20% due to the very bad financial report released on August 2 (Friday). Its performance in the first half of 2024 was a loss of 20 million, while in the same period of 2023 it made a profit of 133 million.

The restaurant chain that has always been favored in the past99The performance forecast is not ideal. According to the announcement of Jiu Mao Jiu, the company's profit in the first half of the year fell by nearly 70% year-on-year.

In order to cope with the changes in consumers, the core brand Tai Er Pickled Fish has had to adjust its prices again and again. According to Dolphin Investment Research, Tai Er Pickled Fish stores are mainly opened in first- and second-tier cities, accounting for more than 60%.

It can be roughly understood as,Consumption in core areas represented by first-tier cities fell short of expectations, leading to a sharp decline in Jiu Mao Jiu's performance。

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A similar situation also occurred inNayuki's TeaAnd other companies related to food and drink.

On August 2, Nayuki's Tea released its earnings forecast, predicting an adjusted net loss of about 420 million to 490 million yuan in the first half of 2024. Like Tai Er Pickled Fish, Nayuki's Tea's main stores are also in first- and second-tier cities, accounting for the same 60%.

Such a huge loss also proves that high-end tea drinks like Nayuki’s Tea cannot be accepted by consumers in leading cities.

Why does observing consumption from the perspective of food make people more worried?

Chinese people believe that food is the most important thing for the people, and eating is the most rigid consumption for Chinese people.If you start to save on food, it means that the consumption situation has reached a very serious level.

According to statistics from Debon Securities, Shanghai, which has the strongest consumption power in China, has begun to reduce spending on food, and the growth rate of food expenses turned from positive to negative in June.

Perhaps because the Chinese people have stopped eating, on August 3, the State Council issued the "Opinions on Promoting the High-Quality Development of Service Consumption" (commonly known as the Twenty Articles on Promoting Consumption), which placed catering consumption in a very important position.

First-tier cities are not doing well, and other places are limited in their goodness. Compared with the same period in 2023, in the first half of 2024, the growth rate of retail sales in almost all regions declined.

The growth rates in only two places are positive.One is Ningxia and the other is Fujian。

On August 3, according to statistics from Debon Securities, the growth rate of retail sales in various parts of the country changed.Only Fujian and Ningxia will have a higher growth rate in the first half of 2024 than in the first half of 2023。

Ningxia’s retail scale is relatively small, so I will not analyze it in detail, but will focus on Fujian.

On July 22, Fujian Statistics Bureau announced consumption data for the first half of 2024. The data from Fujian is really a bit incredible.

In the first half of the year, the total retail sales of consumer goods in Fujian reached 1,145.014 billion yuan, a year-on-year increase of 5.0%. The growth rate in urban areas was 5%, while that in rural areas was 5.2%, which was about the same.

When the catering industry in Shanghai and other places began to decline,Fujian's catering industry growth rate remains above 7%。

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Specifically for products, in the first half of 2024, the retail sales of communication equipment in Fujian Province increased by 10.9% year-on-year, among which smartphones increased by 30.3%, an increase of 19.1 percentage points faster than the first quarter; household appliances and audio-visual equipment increased by 14.1%.

In the field of new energy, Fujian's new energy retail sales will increase by nearly 30% year-on-year in 2024, an increase of 2.6% over the first quarter and 5.6% over 2023, which is exactly the opposite of the national growth rate.

In the post-epidemic era, popular categories such as cultural and entertainment products are also performing relatively well, with cultural and office supplies growing by 13.9% and photographic equipment growing by 48.1%, both of which are very good growth rates.

Why Fujian has performed well in consumption for two consecutive years is worth exploring.

We tried to start with Fujian’s unique policies, but found that except for Fujian defining 2024 as the year of consumption promotion, the policy measures are almost the same as those in other regions.

If it is not a policy factor, it may be the unexpected economic situation or residents' income.

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Let's first look at the income situation. According to data from the Fujian Statistics Department, in the first half of 2024, the per capita disposable income of residents in Fujian Province was 25,122 yuan, a year-on-year increase of 5.5%, a higher growth rate than first-tier cities and higher than the national average.

In terms of income sources, the province's wage income was 14,994 yuan, up 5.6%, similar to the national level and higher than first-tier cities;

Non-wage income is enviable.In the first half of 2024, the per capita net property income in Fujian Province was 3,045 yuan, a year-on-year increase of 5.9%. This level is much higher than the national growth rate of 2% and the negative growth of first-tier cities.

Why is the growth rate of property income in Fujian so much higher than the national average?

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We tried to get answers from many angles, but unfortunately, there were no clear clues. The relevant Fujian authorities did not provide much explanation either.

As we said before,When the expected property income of a place rises, it often helps to increase consumption willingness, which is the case in Fujian.。

In addition, Fujian Province's per capita operating income is not bad either. In the first half of 2024, the per capita net operating income was 4,313 yuan, a year-on-year increase of 5.5%. The growth rate was weaker than the national average, but higher than that of first-tier cities.

Wage income + property income + operating income, these three dimensions are online at the same time. This is not easy to achieve under today's economic conditions.

From an economic perspective, we have also discovered some outstanding advantages of Fujian. In the first half of 2024, Fujian's GDP growth rate was 5.6%, ranking among the top in the country.

To be fair, in today's environment, it is not very meaningful to just look at the GDP growth rate. We have witnessed too many cases where there is scale but no profit, and there is volume but no price, which can also be seen from the table above.There are many provinces with a GDP growth rate of more than 5.6%.。

We have written many articles in the past, calling on everyone to pursue profits and quality. An economy where no one makes money is a waste.In Fujian, we observe something more important behind scale - profit.

According to figures from the Fujian Statistics Bureau, in the first half of 2024, the total profits of industrial enterprises above designated size in Fujian province increased by 34.6% year-on-year.Very exaggerated!

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You should know that according to data from the National Bureau of Statistics, in the first six months of 2024, the profit growth rate of large and medium-sized industrial enterprises nationwide was only 3.5%.The profit growth rate of industrial enterprises in Fujian is ten times that of the national average.

Only when there is profit will people be willing to spend.

Why is Fujian's profit growth so fast? Fujian gave a detailed explanation. The reasons given by the Fujian Statistics Bureau are as follows:

First, the profits of the high-end manufacturing industry are growing rapidly.

High-tech manufacturing grew by 80.2%; equipment manufacturing grew by 67.4%;

The electrical machinery and equipment manufacturing industry also benefited from the decline in costs, with profit growth reaching 97.6%;

The profit growth of high-end manufacturing industry drove the profit growth of Fujian Province by 18 percentage points.

Second, the raw materials manufacturing industry is growing rapidly.

According to data from the Fujian Statistics Department, profits in Fujian’s raw material manufacturing industry increased by 30.8% in the first half of 2024;

Among them, industries such as ferrous metal smelting turned from losses to profits, profits of the chemical raw materials and chemical products manufacturing industry increased by 1.5 times, and profits of non-ferrous metal smelting and rolling processing industry increased by 66.9%.

Third, the consumer goods manufacturing industry has picked up.

Under the dual effects of domestic consumption recovery and exports, the profits of consumer goods manufacturing industry in Fujian Province increased by 9.2% year-on-year;

in,Industries that benefit most from exports, such as furniture manufacturing, have seen profit growth rates of over 15%.

We found the top ten Fujian companies by market capitalization, which basically reflect the significant increase in Fujian's industrial profits.

Zijin MiningIt is the leader in the raw materials industry and the leader in China's nonferrous metal mining industry. According to the performance forecast, Zijin Mining's profit growth rate in the first half of 2024 will be 41% to 50%, and the profit scale will reach 14.5 billion to 15.4 billion.

In the field of high-end manufacturing, although the automotive industry is very competitive,Fuyao GlassThe profit growth rate is still very impressive, with a profit growth rate of 23.35% in the first half of 2024.

CATLAs China's most powerful new energy battery company, it is still making a lot of money when others are losing money. According to the announcement of CATL, in the first half of 2024, its net profit growth rate was 10%, and the profit scale exceeded 22 billion.

There are many other noteworthy companies, which I will not list one by one.

When enterprises have the profit-making effect, private investment will naturally increase, which is extremely valuable in today's environment.

According to the Fujian Statistics Bureau, in the first half of 2024, the growth rate of private investment in Fujian's industry reached an astonishing 17.5%, which is 17.5 times the growth rate of private investment nationwide!

Figures from the National Bureau of Statistics show that in the first half of 2024, private investment grew by only 0.1%.

This is not all. Fujian has another industry that is equally worthy of praise.Tourism industry.

Fujian's situation is somewhat similar to that of Japan at present. In 2023, Fujian's tourism industry accounted for 10% of GDP, while the national average was only 4% during the same period.

Careful readers will find thatThe growth rate of total tourism expenditure in most areas of Fujian is higher than the growth rate of touristsAccording to statistics from Xiamen University's Cultural Tourism Research Center, Fujian's per capita spending during the 2024 Spring Festival was the highest in history. This means thatFujian tourism consumption upgrade。

At the end of 2023, when ice and snow tourism was booming, we analyzed that, except for the Northeast, most regions were experiencing consumption downgrades, spending less and experiencing more.

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On August 3, as the external environment continued to deteriorate, the country issued the "Opinions on Promoting the High-Quality Development of Service Consumption" (Twenty Articles on Consumption), which mainly involve service consumption, catering consumption, etc. Many consumption areas that have been tightened in the past have shown signs of relaxation.

Similar opinions on promoting consumption in the past did not seem to have any obvious effect. Perhaps,The problem is not the incentive, but the willingness。

How to change people’s willingness to consume?

Just like in Fujian, if companies can make money, private individuals are willing to invest, and people’s assets can appreciate in value, then will we still have to worry about consumption?