Huachuang Securities has released a research report stating that China's macroeconomic development has significantly improved residents' living standards, leading to the evolution of consumer demand and shifts in dominant consumption trends. Over the past two decades, basic survival-oriented goods consumption such as clothing, food, and daily necessities has successively reached saturation in volume and undergone price upgrades. Around 2015, sales growth rates for major consumer goods in China, including alcoholic beverages, soft drinks, air conditioners, and mobile phones, began to decline steadily. The following decade has been characterized by an emphasis on quality enhancement, with price increases becoming the dominant logic driving consumption.
Currently, slowing growth in goods consumption prices indicates that the upgrade cycle for goods consumption has matured. Compared to goods consumption that meets functional and basic survival needs, service consumption is anchored in higher-level life experiences—such as emotional resonance and social identity—and value-driven demands, including personal development and self-actualization. The report predicts that service consumption will become the central theme of China's consumption landscape over the next decade.
Key viewpoints from Huachuang Securities are as follows:
Driven by both supply and demand factors, along with supportive policies, the service consumption industry is entering a golden decade. On the demand side, two new engines are shaping the consumption industry. Lifestyle experiential consumption—such as dining, entertainment, and accommodation—and development-oriented consumption, including education, health, and wellness, are emerging sectors. Service consumption is gradually becoming the core engine of China's consumption growth. Additionally, service-driven goods consumption is rapidly expanding. While goods previously led services, the trend has now reversed, with goods serving as physical carriers for services. This is evident in the rapid development of IP-based trendy toys, offline retail and dining, and the pet economy.
As Generation Y and Z, who grew up during accelerated urbanization, become the main consumer force, their preference for experiences over material goods is expected to drive a golden decade for service consumption. Moreover, overlapping demands across different generations are creating a highly segmented market with rapidly evolving preferences, continuously inspiring innovation and specialization in service formats.
On the supply side, three key elements—industrialization, technology, and talent—are evolving synergistically to drive the upgrade of service consumption. Industrialization provides the foundation for scalable service supply, enabling expansion across regions and scenarios. Technological advancements, such as the internet and mobile payments, have reshaped the service ecosystem. The ongoing AI wave is expected to further disrupt certain platform economies in the coming years, significantly enhancing the efficiency and experience of service consumption. Improved education has also elevated the quality of service industry personnel. For example, monthly salaries for highly educated maternity matrons can reach 20,000 yuan. This "engineer dividend" is reshaping the human capital structure of the service industry, transitioning from labor-intensive to knowledge- and skill-based roles, thereby supporting higher-level consumer demands.
On the policy front, efforts on both supply and demand sides are becoming key drivers for stimulating domestic demand. Since 2025, central and local governments have introduced numerous policies to support service consumption development. This reflects a systemic shift in resource allocation under the 15th Five-Year Plan, emphasizing the integration of investment in physical assets and human capital. On the demand side, the implementation of spring and autumn breaks for primary and secondary schools in provinces such as Jiangsu, Sichuan, and Zhejiang is expected to balance tourism seasons and unleash pent-up family travel demand. On the supply side, the central government encourages local state-owned enterprises to use listed company platforms to integrate high-quality cultural and tourism assets. Provinces like Sichuan and Hubei have set trillion-yuan targets for cultural and tourism industry development, driving supply-side upgrades.
Based on this analytical framework, the report reassesses various sub-sectors of consumption to identify new industrial trends and investment opportunities under the service consumption perspective:
- **Catering**: The wave of chainization continues, with supply chain integration capabilities and service experience becoming key success factors. Chain catering brands are consolidating the market, while emotional value, spatial experience, and IP-added value serve as new engines for sustaining brand appeal and premium pricing. Recommendations include Gu Ming, Haidilao, and Bobbi, with suggestions to monitor Mixue Bingcheng, Xiaocaiyuan, and Green Tea. Upstream supply chain segments, such as seasonings and frozen foods, should focus on consumer upgrades and customized solutions for large business clients. Recommendations include Anjoy and Haitian, with attention to Li Gao.
- **Retail**: Offline supermarkets are undergoing renovations, and chain collection stores are creating enjoyable shopping experiences. Supermarkets are transitioning from being mere landlords to acting as consumer agents. Companies like Yonghui are actively reforming supply chains, shifting from key account models to direct procurement, optimizing product selection, and developing private labels to enhance the shopping experience. It is advised to monitor Yonghui Superstore's renovation progress. Snack retail is evolving from selling products to selling experiences, with a focus on rich SKUs, efficient product iteration, store upgrades, and IP collaborations. Attention should be paid to leading snack retailers such as Mingmang Hen Mang and Wanchen Group. Ingredient retail, led by Guo Quan, focuses on hotpot and barbecue ingredients, continuously expanding categories and scenarios. Guo Quan is recommended.
- **Cultural Tourism**: The shift from sightseeing to experiential economy is accelerating. Domestic tourism has maintained growth since rebounding in 2023, driven by demand from younger and older demographics, as well as inbound tourism. Policy support through capital markets and REITs is driving refined supply iterations. Recommendations include BTG Hotels and Jinjiang Hotels; suggestions to monitor Songcheng Performance, Three Gorges Tourism, Sante Cableway, Junting Hotels, Huazhu Group, Tongcheng Travel, and Trip.com.
- **Education**: AI is reshaping educational experiences, while the shift toward service consumption is driving changes in vocational education. Overall demand in the education sector has stabilized, with AI enhancing efficiency and experience. Vocational education is being reshaped by employment structure changes, creating new growth opportunities. It is advised to monitor Fenbi and China East Education.
- **IP Trendy Toys**: The paradigm is shifting from toys to emotional assets, with significant growth potential in overseas markets. Bubble Mart's IP operation model has inspired breakthroughs in sub-sectors, such as block leader BLOKS, creative cultural brand Chuangyuan, and emerging vinyl plush brand TNT Space. Chinese trendy toy companies are adapting to local cultures overseas, signing local artists and integrating core IPs with cultural symbols. Suggestions include Bubble Mart, Chuangyuan, and BLOKS.
- **Pet Hospitals**: Demand upgrades and supply improvements are driving the next phase of growth. Pet healthcare involves holistic life-cycle health management. Aging pets and the humanization of pet care are fueling demand for precision medicine. Supply-side upgrades in equipment and technology are meeting unmet needs. Specialization and chainization remain key. It is advised to monitor the listing progress of Ruipeng Pet Hospital.
- **Gaming**: Opportunities lie in new markets, users, and channels. Overseas casual gaming offers significant penetration potential for Chinese developers, potentially replicating the success of SLG games abroad. Attention should be paid to Century Huatong and 37 Interactive Entertainment, which have rich casual game pipelines. Demand from younger and female users is creating new genre opportunities. Companies like Giant Network, Kingnet, XD, and Baioo Family Interactive are well-positioned. Growth in domestic PC and console markets, along with cross-platform games, offers global opportunities. Perfect World and Shunwang Technology are worth monitoring.
- **Health and Wellness**: Services are driving the transformation toward "insurance+" models. Traditional insurance, centered on products, often leads to poor customer engagement. With an aging population and rising health awareness, integrated models like "insurance + healthcare" and "insurance + elderly care" are emerging. Leading insurers are building service ecosystems and are expected to benefit first. Suggestions include Ping An, China Life, and CPIC.
- **Goods Consumption**: The shift from selling products to selling lifestyles is generating service-driven goods demand. Home appliance companies like Haier and Midea are leveraging smart home systems to create service demands such as AI cooking assistance and smart security, enhancing user loyalty. Midea Group is recommended. Baijiu producer Maotai is elevating its brand through cultural experience halls and online platforms, developing cultural IP products to reshape its value matrix. Other producers like Langjiu, Zhenjiu, and Jingjiu are following suit, integrating services such as gourmet dining, tourism, and wellness. Recommendations include Maotai and Zhenjiu.
Risks include slower-than-expected recovery in macro consumer demand and discrepancies between macro perspectives and micro-level corporate operations.
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