---
title: "New Distribution Zhao Bo: From Scarcity to Abundance to Emotional Consumption, 40 Years of Change in Chinese Consumption"
description: "In 1978, the Engel coefficient for urban residents in China was 57.5%, and for rural residents it was as high as 67.7%, indicating that household consumption was primarily food-based. By 2020, the Engel coefficients for urban and rural residents had dropped to 29.2% and 32.7%, respectively, showing a shift in consumption structure from survival-oriented to development-oriented. As incomes rise, consumers not only purchase more goods but also demand higher quality, brand, and experience. This phase of consumption upgrade is particularly evident in the FMCG sector, where consumers are increasingly willing to pay a premium for high-quality, high-value-added products."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2025-02-16"
language: "en"
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# New Distribution Zhao Bo: From Scarcity to Abundance to Emotional Consumption, 40 Years of Change in Chinese Consumption

> In 1978, the Engel coefficient for urban residents in China was 57.5%, and for rural residents it was as high as 67.7%, indicating that household consumption was primarily food-based. By 2020, the Engel coefficients for urban and rural residents had dropped to 29.2% and 32.7%, respectively, showing a shift in consumption structure from survival-oriented to development-oriented. As incomes rise, consumers not only purchase more goods but also demand higher quality, brand, and experience. This phase of consumption upgrade is particularly evident in the FMCG sector, where consumers are increasingly willing to pay a premium for high-quality, high-value-added products.

In 1978, the Engel coefficient for urban residents in China was 57.5%, and for rural residents it was as high as 67.7%, indicating that household consumption was primarily food-based. By 2020, the Engel coefficients for urban and rural residents had dropped to 29.2% and 32.7%, respectively, showing a shift in consumption structure from survival-oriented to development-oriented.
As incomes increase, consumers not only purchase more goods but also demand higher quality, brand, and experience.
This phase of consumption upgrade is particularly evident in the FMCG sector. Consumers are increasingly willing to pay a premium for high-quality, high-value-added products. This has provided strong momentum for the sustainable development of the FMCG industry, and the leading brands in the industry today grew rapidly during this phase.
**Engel Coefficient** According to data from the National Bureau of Statistics, the Engel coefficient for urban residents in China fell from 57.5% in 1978 to 29.2% in 2020, and for rural residents from 67.7% to 32.7%. The continuous decline in the Engel coefficient marks a transition from a food-and-clothing-oriented consumption structure to a quality-oriented one. Specifically, after 2013, spending on services grew faster than spending on goods, with particularly sustained increases in the share of spending on education, culture and entertainment, and healthcare. In 2024, spending on education, culture, and entertainment accounted for 12.7%, and healthcare spending for 9.3%. The rising share of spending on education, culture, entertainment, and healthcare reflects residents' pursuit of a high-quality life. In the future, with further income growth and changing consumption attitudes, service consumption will continue to be a major driver of consumption upgrades.
**Stage Characteristics of Consumption Capacity Upgrades**
**1. 1984-2000: Stage of Essential Goods Popularization**
**Urban households' ownership of color TVs per 100 households rose from 17.2 to 116.6 units; rural residents' food expenditure share fell from 67.7% to 49.1%.** This stage marked the beginning of China's consumer market, with household consumption primarily meeting basic living needs, and the popularization of FMCG was a notable feature of this period.
At the same time, the decline in the food expenditure share reflected an improvement in the consumption structure of rural residents. With rising incomes, rural residents began to allocate more income to non-food consumption, such as home appliances and clothing.
**2. 2001-2015: Stage of Durable Goods Upgrades**
**Car ownership rose from 16.09 million to 172 million vehicles; online shopping transaction volume grew from 0 to 3.88 trillion yuan.** With further increases in residents' income levels, consumption demand shifted from necessities to durable goods, and the popularization of durables such as cars and home appliances became a notable feature of this period. In 2003, Taobao was founded, marking the beginning of China's e-commerce era. By 2015, China's online shopping transaction volume reached 3.88 trillion yuan, accounting for 12.6% of total retail sales of consumer goods. E-commerce platforms represented by Alibaba completely changed consumers' shopping habits.
**3. 2016-2024: Stage of Service Consumption Explosion** Per capita spending on education, culture, and entertainment grew by 178%; healthcare spending exceeded 10% of total spending. During this stage, consumption demand shifted from the material level to the service level, with service consumption such as education, culture and entertainment, and healthcare becoming new growth points. From 1984 to 2024, the core drivers of China's consumer market underwent a transformation from necessities to durables and then to service consumption. In particular, in 2024, service consumption accounted for more than 45% of total consumption expenditure, indicating the maturity and diversification of consumer demand.
**Structural Challenges and Trends**
1. Urban-Rural Dual Structure In 2024, per capita consumption expenditure of urban residents was 2.3 times that of rural residents, and the gap in service consumption was as high as 2.8 times. However, with the spread of the internet, the online shopping penetration rate in rural areas increased from 17% in 2015 to 68% in 2024. **This phenomenon demonstrates the huge potential of the lower-tier market, indicating that even though the urban-rural gap still exists, the rise of the internet and e-commerce platforms is narrowing this gap.**
2. Rise of New Consumption Forms In 2024, the GMV of live-streaming e-commerce exceeded 5 trillion yuan, while the silver economy reached a scale of 12 trillion yuan. **These emerging consumption forms reflect the continuous refinement and personalization of consumer demand, especially in live-streaming e-commerce and consumption in an aging society, showing deep differentiation in consumption scenarios.**
**Changes in Consumption Attitudes** Against the backdrop of sustained economic growth, consumer demand has gradually shifted from meeting basic survival needs to pursuing quality and diversity.
**1. Consumption patterns shift from material-oriented to service-oriented.**
**Education consumption:** Parents' emphasis on children's education has driven rapid growth in education spending. In 2020, online education platforms such as Yuanfudao and Zuoyebang saw a surge in users and rising valuations.
**Cultural and entertainment consumption:** Spending on cultural and entertainment activities such as movies and tourism continued to grow. In 2019, China's box office revenue exceeded 64 billion yuan, making it the world's second-largest film market.
**Healthcare consumption:** The arrival of an aging society and increased health awareness among residents have driven rapid growth in healthcare spending. In 2020, Ping An Good Doctor's annual revenue reached 6.87 billion yuan, a year-on-year increase of 35.5%.
Consumer demand has shifted from material products to service experiences, and service consumption has become a new growth point.
**2. Consumption methods shift from offline to integrated online-offline.**
**Rise of e-commerce platforms:** In 2003, Taobao was founded, marking the beginning of China's e-commerce era. By 2024, China's online shopping transaction volume exceeded 15.5225 trillion yuan, accounting for 26.8% of total retail sales of consumer goods.
**Explosion of live-streaming e-commerce:** According to iiMedia Research statistics, the market size of China's live-streaming e-commerce is expected to reach 1.9083 trillion yuan in 2024. Streamers like Li Jiaqi have become phenomenal figures.
**Rise of new retail models:** Various new retail models have emerged, providing consumers with convenient shopping experiences through online-offline integration, such as Hema and flash warehouses.
**3. Consumer behavior shifts from conformity and imitation to personalized experience.** With changing consumption attitudes, consumers increasingly value personalization and experience, and customized and differentiated products have become market trends.
**Consumption Attitudes in the Era of Scarcity (from the start of reform and opening-up to the end of the 20th century)** In the early stages of China's reform and opening-up, the economic base was weak and material resources were scarce. Household consumption was mainly focused on meeting basic survival needs. According to data from the National Bureau of Statistics, in 1978, the per capita disposable income of national residents was only 171 yuan, and the Engel coefficient was as high as 57.5%, indicating that food expenditure accounted for a large proportion of household consumption expenditure, and the consumption structure was primarily survival-oriented.
**1. Definition and manifestation of scarcity** Material scarcity: Consumers had limited choices, products were primarily functional, and demand was concentrated on survival and basic materials. Engel coefficient: A high proportion of household food expenditure reflected a weak economic base, with daily consumption biased toward basic living needs.
**2. Impact of scarcity on consumer behavior** Frugality and saving mentality: In an unstable economic environment, consumers tend to save and be conservative in consumption. Limited choices and price sensitivity: With few product varieties in the market, consumers focus on cost-effectiveness and practicality. Collective consumption: Due to material scarcity, collective consumption became common, with centralized procurement and cooperative consumption emerging.
**3. Consumption phenomena in the era of scarcity** Consumption restrictions under the planned economy: Market supply was limited, consumers could only choose from a limited range of products, and brand awareness was low. Price-led consumption decisions: Consumers valued basic product functions, and price was often the main factor in consumption decisions. Survival-oriented consumption: Consumer behavior was more focused on meeting basic survival needs, such as food, clothing, and home appliances.
In summary, in the early stages of reform and opening-up, consumption in China was mainly focused on meeting basic survival needs, the consumption structure was primarily survival-oriented, and consumer behavior was constrained by material scarcity and economic conditions. With economic development, the consumption structure gradually shifted toward development-oriented consumption, and consumer needs and behaviors underwent profound changes.
**Consumption Phenomena in the Era of Abundance (from the early 21st century to the present)** In the 21st century, China's economy continued to grow, residents' income levels improved significantly, and the consumption structure underwent profound changes. According to data from the National Bureau of Statistics, in 2020, the Engel coefficient for urban households in China had dropped to 29.2%, declining for many consecutive years, indicating an upgrade in residents' consumption structure.
**1. Definition and manifestation of abundance** Material abundance: Consumers have diverse choices, product functionality and quality become the focus, and demand shifts from survival-oriented to development-oriented. Engel coefficient: A low proportion of household food expenditure reflects economic development, with daily consumption biased toward quality and diverse needs.
**2. Impact of abundance on consumer behavior** Quality and brand awareness: Consumers pay more attention to product quality and brand value, and are willing to pay a premium for high quality and brand. Personalization and experiential consumption: Pursuit of personalization and unique experiences, with increased demand for customized products and services. Online-offline integration: Combining online shopping with offline experiences to form an omnichannel consumption model.
**3. Consumption phenomena in the era of abundance** Service consumption upgrade: The share of service consumption such as education, culture and entertainment, and healthcare continues to rise, meeting residents' pursuit of a high-quality life. Growth in high-end consumption: Demand for high-end consumer goods and services such as luxury goods, tourism, and health increases, reflecting the trend of consumption upgrade. Digital consumption: The development of internet technology has given rise to new consumption models such as e-commerce and live-streaming commerce, with online shopping becoming mainstream.
**Comparative Analysis of Scarcity and Abundance Consumption Phenomena** With the rapid development of China's economy, the consumption structure has undergone a transformation from scarcity to abundance. This transformation is not only reflected in material abundance but also has profound impacts on consumer behavior, psychology, and social culture.
**1. Changes in consumer behavior** From survival-oriented to development-oriented consumption: In the era of scarcity, consumers mainly focused on meeting basic survival needs, such as food, clothing, and housing. In the era of abundance, with rising income levels, consumers began to pursue quality and diverse products and services, shifting from survival-oriented to development-oriented consumption. From frugality to hedonism: In the era of scarcity, frugality was the main consumption attitude, with consumers tending to save and avoid unnecessary spending. In the era of abundance, hedonism gradually emerged, and consumers are more willing to spend to improve quality of life and enjoy experiences.
**2. Changes in consumer psychology** From scarcity mentality to abundance mentality: In the era of scarcity, consumers often faced limited resources, showing frugal and cautious consumption psychology. In the era of abundance, with abundant resources, consumers' mentality tends to be more relaxed, more willing to try new things and enjoy life. From short-sightedness to long-term planning: In a state of scarcity, consumers may exhibit short-sighted behavior due to limited resources, focusing on immediate needs. In a state of abundance, consumers have more capacity for long-term financial planning and investment.
**Conclusion** China's consumer market has undergone a profound transformation from scarcity to abundance, with significant changes in consumer behavior and consumption structure. In the post-abundance era, emotional consumption and attention to value-for-money have become new consumption trends. However, recent changes in the economic environment, such as the downturn in the real estate market and the impact of the pandemic, have led to a decline in consumer confidence and weakened consumption willingness. For example, in December 2024, media reports indicated that consumers have become more cautious when shopping, tending to save and reduce spending on non-essential items. Facing these challenges, the government and enterprises need to take effective measures to boost consumer confidence and promote consumption growth. This includes providing more consumption stimulus policies, improving consumers' economic expectations, and meeting consumers' increasingly diverse and personalized needs through innovation and improving product and service quality. In short, the development of China's consumer market reflects the profound impact of economic growth and social change on consumer behavior. In the future, as the economic environment changes, consumer behavior may exhibit new trends and characteristics that require ongoing attention and research.
**[New Order · Symbiosis]**
**The 10th China FMCG Innovation Conference**
**Date: March 17-19, 2025**
**Location: Chengdu, China**


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