What is 'sensory-based consumption' and how does it affect consumer behavior in China?

'Sensory-based consumption' categorizes consumer goods and experiences by the primary sense they engage: tasting, seeing, hearing, touching, and smelling, with a mixture sense encompassing digital consumption, travel, and more. The valuation of these categories, from highest to lowest, is Seeing > Hearing > Smelling > Touching > Tasting. This classification helps in understanding how consumer preferences and valuations are linked to sensory satisfaction, which is crucial for assessing consumer behavior and valuation rules in the Chinese market.

How does the 'Digital Consumption Index' play a role in understanding China's consumer market, and what does it include?

The Digital Consumption Index is significant due to the substantial impact of digital consumption on the overall consumer sector in China. It encompasses various aspects of digital engagement, such as cell phones and computers (engaging sight, hearing, and touch), which have a high valuation weight. This index helps in assessing the dynamics of digital spending and its influence on broader consumer trends and market valuations.

What implications does the asynchronous rotation effect have on investment strategies in China's consumer sectors?

The asynchronous rotation effect, influenced by emotional factors and diverse fund strategies, creates clear trends across sectors in China's consumer market. This means different sectors rise and fall at different times, influenced by investor sentiment and fund movements. Therefore, retail investors should focus on patient, strategic positioning rather than chasing short-term gains, and understand the underlying dynamics of the Chinese consumer market and the role of government policies.

In what ways can businesses and investors navigate the future of Chinese consumption, considering the discussed trends and indices?

Businesses and investors can navigate the future of Chinese consumption by understanding the nuances of 'sensory-based consumption', closely monitoring the 'Digital Consumption Index', and being aware of the asynchronous rotation effect. By recognizing how sensory satisfaction influences consumer preferences, assessing the impact of digital spending, and adopting a patient, strategic approach to investments, they can better capitalize on emerging opportunities in the evolving Chinese market. Awareness of government policies is also crucial for informed decision-making.

Illustration of China's consumer recovery with digital icons and market stalls.

Decoding China's Consumer Comeback: Will Spending Rebound in 2024?

Q: What are the main shifts in Chinese consumer behavior following the pandemic?

Following the pandemic, China has seen a shift from high to lower consumption, a reduction in cross-border activities favoring local spending, and present consumption preferences influencing long-term spending. Initially, high-end hospitality and tourism saw gains, which expanded to luxury food and wine sectors, eventually permeating local industries like restaurants and film. These changes highlight a more localized and cautious approach to spending among Chinese consumers.

Nico Varela in Business & Economy December 2025 • 4 min read.

"An in-depth look at the forces shaping China's post-pandemic consumer recovery, from digital trends to government policies."

The global pandemic dramatically altered consumer behavior worldwide, and China was no exception. As the country emerges from pandemic restrictions, understanding the trajectory of its consumer recovery is crucial for businesses and investors alike. This article delves into the multifaceted dynamics influencing China's consumer sector, examining everything from evolving consumption patterns to the role of government policies and the rise of digital economies.

Unlike other regions, China's recovery presents unique characteristics. We'll explore the concept of 'sensory-based consumption,' analyze the Digital Consumption Index, and unpack how these factors interact with China's specific economic conditions. By understanding these nuances, businesses can better navigate the Chinese market and capitalize on emerging opportunities.

This analysis will not only provide a snapshot of the current landscape but also offer insights into the potential future of consumer spending in China. What are the key trends to watch? How will government initiatives shape the market? And what strategies can businesses employ to thrive in this evolving environment? We aim to answer these questions and more.

Understanding China's Unique Consumption Landscape

Illustration of China's consumer recovery with digital icons and market stalls.

Following the pandemic, the recovery of the consumer sector in various regions has revealed a specific pattern: a shift from high consumption to lower consumption, cross-border activities reducing in favor of local spending, and present consumption preferences impacting long-term spending. Initially, high-end hospitality and tourism saw gains, which expanded to luxury food and wine sectors, and eventually permeated local industries like restaurants and film. Investment strategies have mirrored these patterns.

However, focusing solely on these patterns overlooks critical differences in industry sector valuations. To address this, we introduce the concept of sensory- and gesture-based consumption. This classification acknowledges that consumer utility is linked to sensory satisfaction, with the five senses—sight, sound, smell, touch, and taste—playing different roles. Understanding the varying utility of each sense is vital for assessing consumer behavior and valuation rules.

Tasting: Includes fast-moving consumer goods (FMCG) like beverages, food items, and medical products.
Seeing: Focuses on film, television, events, and related equipment like AR/VR devices.
Hearing: Covers music, concerts, and audio equipment such as headphones and speakers.
Touching: Involves durable goods, household equipment, massage products, and certain types of clothing.
Smelling: Centers on perfumes, luxury items, and specific FMCG products.
Mixture Sense: Encompasses digital consumption (cell phones, computers), travel, home purchases, décor, transportation, high-end clothing, medical beauty, healthcare, sports equipment, and education.

Based on observed valuation weights and stock price behaviors, the sensory categories rank as follows: Seeing > Hearing > Smelling > Touching > Tasting. The comprehensive service sense relies on a combination of these senses, influencing valuation. For instance, cell phones, which engage sight, hearing, and touch, have a higher valuation weight. Furthermore, digital consumption significantly impacts the overall consumer sector, meriting a separate Digital Consumption Index.

Navigating the Future of Chinese Consumption

While predicting financial asset prices is always challenging, historical patterns provide valuable insights. The asynchronous rotation effect, influenced by emotional factors and diverse fund strategies, creates clear trends across sectors. Investors, particularly retail investors, should focus on patient, strategic positioning rather than chasing short-term gains. By understanding the underlying dynamics of the Chinese consumer market and the role of government policies, businesses and investors can better navigate the path ahead and capitalize on the opportunities that emerge.