Despite Higher Inflation Consumers Remain Positive: 80% Plan to Spend More, But 70 % Will Need Loans

SHANGHAI, Dec. 6, 2011 /PRNewswire-Asia/ -- In a recent survey of 380,000 people on the theme of "investment and consumption in times of higher inflation," nearly 80% of respondents declared they intended to invest and consume more next year. But over 70% said they would need loans.

Despite Higher Inflation Consumers Remain Positive: 80% Plan to Spend More, But 70 % Will Need Loans (Click on picture to view full-size image)

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The survey was conducted over the last 4 weeks by Touchmedia, China's largest in-taxi media company, on its interactive screens in Shanghai, Beijing, Guangzhou, Shenzhen and Hangzhou and shows that consumers remain positive and optimistic. However, there were noticeable differences in their priorities against the current background of higher inflation.

Real Estate Remains Popular

For those planning to invest, purchasing real estate was the most popular option (15.3%), followed by buying gold and jewelry (13.0%). Other choices included purchasing more antiques or paintings, stocks, equity funds and financial products. But 1 in 5 (20.9 %) intend to simply save more and almost as many (15.8 %), seemingly untroubled by the future, just plan to consume more. (Chart I)

More Than 70% Need Loans in the Next 6 Months

The steady increase in consumer spending, together with greater access to credit have significantly increased people's willingness to borrow. Touchmedia's survey reveals that nearly one forth of respondents (24.1%) are planning to apply for a home loan; one fifth (20.9%) will borrow to establish or develop a business; and 13.8% are planning on a car loan. Only 26.4 % anticipate no need for borrowing money of any sort. (Chart II)

Credit Cards Take More than Half of Their Income

Credit cards are convenient and popular, especially among the younger generation, but is this entirely healthy? Nearly 70% said that they have one or more credit cards. Of these, 51.3% always pay their bill in full and on time. But 31.1% sometimes or always pay only the minimum, 10 % use one card to pay off another and 8 % have been caught by late fines. (Chart III) Further, for 44.3% of respondents, their credit card expenses account for over half of their total income. For almost a quarter, 21.7%, those expenses may sometimes exceed their monthly income. (Chart IV)

Economists emphasize that too little credit inhibits an economy, but too much threatens inflation and a bubble. For most developing economies, their first big credit crunch has caused a severe consumer shake up.

About Touchmedia

Touchmedia was founded by its CEO Micky Fung in 2003 and joint-CEO Bernard Auyang and aims to develop state-of-art touchscreen media technology in China and internationally. Today, Touchmedia is already the largest in-taxi media company in China, providing an innovative marketing platform for brands to build a closer and more effective relationship with their consumers.

For more about Touchmedia, please visit：www.touchmedia.cn