Economy

Markets

Industries

Insights

Reports

Events

Leisure spending still unaffected

By Wang Bo and Li Pan (China Daily)
Updated: 2008-12-30 07:55

Special Coverage: Coping with Financial Crisis Related readings:  Special supplement: Leisure market mirrors provincial progress  Sichuan's 'capital of leisure'  Chengdu renowned for leisure - and glittering literati  Legends and leisure mix in Qinhuangdao

The financial crisis that is threatening to plunge the world into a deep recession seems nothing but distant rumblings to Zhao Yunan, a sales executive at an exhibition organizer in Beijing.

Although she has read and heard much about the crisis that is wrecking the livelihoods of many people in some of the most powerful nations on earth, "I just can't see or sense much change around me," the 27-year-old Zhao said. "It's life as normal."

Zhao and many thousands of young Chinese executives and professionals are keeping retailers and caterers in many major cities happy and content, at least for now. Although winter is not the best season for bars, Zhang Quanwei, a manager at Red Moon club in Beijing's Sanlitun entertainment district, can't complain. "We are doing well, especially on weekends," he said.

To be sure, the Chinese economy is feeling the chill of the global financial crisis. Despite the latest spurt, the mainland stock market has plunged more than 50 percent from its peak in October 2007. Property prices in many major and secondary cities have declined and so also have corporate profits

The hardest hit has been the Chinese manufacturing sector where hundreds of thousands of migrant workers in the Pearl River Delta region in southern China have been laid off as overseas demand dwindled. Heavy equipment manufacturers and steel mills are cutting output as they grapple with rising inventories.

But the economic contraction, so far, hasn't really affected middle-class jobs because the demand for managerial and professional talents still exceeds supply, although the gap has certainly narrowed in the past 12 months. Cushioned by a high level of household savings, the urban middle class in China are not scrimping on food, clothing and entertainment.

Latest available statistics show that China's retail sales in November surged 20.8 percent from a year earlier to 979.08 billion yuan, with sales of the hotel and catering sector growing 25.1 percent, higher than the 21.6 percent increase in November 2007.

"It is not easy for people to change their spending habits, unless they feel a real threat to their livelihood," said Carol Jiang, who works for an IT company in Beijing.

"Now I have a stable job and a good income. So I won't let the so-called 'financial tsunami' affect my personal life-style," she added. Instead, she plans to spend some money on further education to prepare for a better job when the economy improves.

As for Zhao, there is no cut down in partying and going out with friends during the weekend. "I only spend a small part of my salary on entertainment," she said. "Saving that (money) would not make much of a difference," she said.

On a Friday night in Guijie, one of the most well-known dining streets in Beijing, nearly all the restaurants were doing roaring business, as usual. In the hotpot restaurant Haidilao, customers waited patiently in the lobby for tables. An hour-long wait was common and nobody seemed too annoyed.

Although both Jiang and Zhao said they are not spending less than before, they observed that the companies they work for are cutting back on expenses. "My company is reining in spending," Zhao said.

She has stopped meeting customers at cafeterias because getting approvals for reimbursement of the expense is becoming difficult.

The corporate cost-cutting measures have also raised concerns among managers of up-scale hotels and restaurants that cater largely to business functions. A sales manager of Beijing Beichen InterContinental Hotel said it is not easy to find new clients even with offers of high discounts and other incentives.

"There have been many cancellations of conferences and large events by our corporate clients, especially those in the finance and IT sectors, in the past few months," he said.

South Beauty restaurant in Beijing is also changing its sales strategy with the focus shifting more to families. In the past, business banquets constituted a large part of the restaurant's revenue.

"We are launching special offers to attract individual customers," said Rong Xuejing, the restaurant's external affairs manager. For example, the restaurant is giving a 32-percent discount to its festive cardholders who reserve banquets for family gatherings on weekends and festive holidays.