China's Economic Downturn Drives Consumers Toward Value Brands, Squeezing Premium Names

China's economic weakness is causing consumers to trade down from expensive brands like L'Oreal and Starbucks to cheaper options like Uniqlo and KFC. This benefits low-cost brands but pressures premium names.

Chinese shopper confidence and spending power have dropped due to ongoing real estate/job market weakness. Consumers demand better value for money.

Fast food chains like Yum China (KFC, Pizza Hut) and McDonald's are enjoying sales/traffic growth from value promotions. Meanwhile luxury brands are struggling.

Homegrown platforms like Pinduoduo that offer domestic bargain deals have also benefited at the expense of pricier e-commerce players.

The thriftiness was evident during Lunar New Year when tourism revenue per capita fell despite more travelers, showing deflationary pressure on consumer prices.