---
title: "From \"Anti-Consumption\" to \"Self-Pleasing,\" Zhang Yingqiu from Nomura Orient: \"Emotional Consumption\" Holds New Opportunities"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/225308709.md"
description: "Zhang Yingqiu stated that \"emotional consumption\" is a form of consumption that resonates with consumers, emphasizing \"self-pleasure\" and reflecting the importance young consumers place on self-worth. Among them, experiential consumption is more intuitive and is expected to become an important driving force in the consumer market by 2025"
datetime: "2025-01-17T07:43:28.000Z"
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  - [en](https://longbridge.com/en/news/225308709.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/225308709.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/225308709.md) | [繁體中文](https://longbridge.com/zh-HK/news/225308709.md)


# From "Anti-Consumption" to "Self-Pleasing," Zhang Yingqiu from Nomura Orient: "Emotional Consumption" Holds New Opportunities

Nomura Orient International Securities recently released a report titled "Buy a Happiness, Buy a Companionship - Investment Strategy for Consumer Discretionary in 2025," which has attracted significant market attention.

From the trend of "anti-consumerism" to the rise of "emotional consumption," the Chinese consumer market is undergoing a transformation from "seeking material" to "valuing spirit." On January 7th, Wall Street Insight interviewed Zhang Yingqiu, the chief analyst for the consumer discretionary sector at Nomura Orient International Securities. She believes that this trend is expected to continue into 2025.

Zhang Yingqiu has worked for six years at Citigroup Securities in Japan as a consumer industry analyst and previously worked at UBS Securities in Japan. She has 11 years of industry experience.

Zhang Yingqiu analyzed that **"emotional consumption" is a form of consumption that resonates with consumers, emphasizing "self-pleasure," reflecting young consumers' focus on themselves.** Just as Japan experienced a counter-cyclical growth in the two-dimensional economy during its economic transition in the 1980s and 1990s, new consumers continuously emerged, allowing Japan to maintain vitality even during economic downturns.

Drawing on Japan's past experiences, **Zhang Yingqiu believes that young people's emotional consumption is evolving in two completely opposite directions, leading to the emergence of emo consumption and chill consumption.** Representative emo consumption includes instant cameras, which provide consumers with a sense of retro and nostalgia, as well as concerts and "supporting activities" (where fans pay for experiences related to their favorite idols or interests, also including virtual characters from the two-dimensional world). Chill consumption is represented by anti-energy drinks, which help to calm emotions and aid sleep.

Looking ahead to 2025, **new consumption that can evoke emotional resonance is expected to become an important driving force for the transformation of the consumer market, with experiential consumption showing more direct performance. Traditional consumption with higher penetration rates faces greater pressure.**

Zhang Yingqiu stated that this year, the Chinese consumer market is expected to see improvement, with marginal changes in the wealth effect potentially boosting consumption willingness. At the same time, there is a clear differentiation in consumption between high-tier and low-tier cities, with low-tier cities likely to see more local brands emerging. Factors such as companies going overseas and policy guidance will also have a significant impact on the consumer discretionary market.

**The following are the key points from the interview:**

> -   Two main new trends in the consumption sector for 2024: **First, the tendency of "anti-consumerism" is becoming more evident**, manifested in consumption downgrading, rational consumption, and reluctance to pay brand premiums, such as "City Walk" and special forces-style tourism; **Second, structural changes, namely the expanding trend of spiritual needs**, while traditional material consumption remains relatively weak. These new trends are expected to continue into 2025.
> -   "Emotional consumption" differs from traditional functional and pleasing consumption, **as it is a form of consumption that resonates with consumers, emphasizing "self-pleasure," that is, purchasing products that bring personal joy**, reflecting young consumers' focus on themselves. This is a consumption focus worth noting in 2025.
> -   Drawing on Japan's past experiences, **we see that young people's emotional consumption is evolving in two completely opposite directions, leading to the emergence of emo consumption and chill consumption.** Representative emo consumption includes instant cameras, which provide consumers with a sense of retro and nostalgia. There are also concerts and supporting activities (related to idol economy and two-dimensional virtual characters) etc. Chill consumption is represented by anti-energy drinks, which help to calm emotions and aid sleep
> -   From the perspective of age differentiation, young people (especially recent college graduates) have lower income and wealth accumulation compared to their peers two to three decades ago, and their consumption behavior has changed more significantly, showing a greater tendency towards spiritual consumption. **Therefore, it is more important to pay attention to the changes in young people's consumption trends, as new consumption trends are often driven by young people.**
> -   From the perspective of urban hierarchy differentiation, the wealth effect brought about by fluctuations in real estate prices has a greater suppressive effect on consumption in high-tier cities. Low-tier cities are more influenced by income expectations, with a more prevalent acquaintance economy, and the brand ecosystem shows significant differences from high-tier cities, which may give rise to new local brands.
> -   Excluding macroeconomic and investment preference factors, **new consumption that can evoke emotional resonance has a relatively stronger momentum, while traditional consumption with higher penetration faces greater pressure.**
> -   The policy of replacing old durable goods with new ones can stimulate consumption in the short term, but in the long run, the stimulating effect will diminish, fundamentally depending on changes in demand. **Once material consumption becomes widespread, the proportion of household spending that satisfies spiritual needs is likely to increase.**
> -   **Reduced working hours and increased personal disposable time will also promote the growth of consumption demand in leisure and entertainment.** Japan stimulated consumption through "time system reform" by increasing consecutive holidays, and China's current policy direction is also providing more choices to increase personal disposable time.
> -   **There are three successful paths for going overseas: timing, cost-effectiveness, and cultural export.** Cultural export means that enterprises possess certain cultural attributes, and products labeled with a Chinese tag will attract consumers interested in Chinese culture. The Southeast Asian market has a stronger affinity for Chinese culture.
> -   **The overall environment in 2025 will improve compared to 2024, as income expectations and the wealth effect may undergo positive changes.** There will be more focus on new consumption areas related to young people, as well as IP, pets, and travel directions.

**The following is the full interview:**

## The Rise of Spiritual Consumption: New Growth Points for Consumption in 2024

**Wall Street Insights:** In 2024, we have seen a series of policies aimed at promoting consumption and boosting domestic demand, such as the old-for-new replacement policy, which has played a certain role in stimulating consumption in the short term. After experiencing this round of policy dividends, what new trends do you think currently exist in the Chinese consumption market? How would you summarize the overall performance of the discretionary consumption sector this year?

**Zhang Yingqiu:** I will explain from several dimensions.

**From a quantitative perspective, the total demand is mainly determined by the population.** The core consumer group overlaps significantly with the labor population, generally consisting of individuals aged around 15 to 64. If we consider some economically capable groups, the age range can extend to those over 35. According to China's population statistics, the labor population peaked around 2013, and the core consumer population over 35 is also facing a dilemma of sluggish growth. This demographic structure is very similar to Japan in the 1990s, indicating that the era of excessive consumption has passed, marking the beginning of a new round of transformation in consumption patterns. The growth of the core consumer group over 35 is facing challenges So, what is the overall trend for 2024? It is certainly expected to be weak. **In terms of prices, from 2012 to 2018, the upgrade in consumption was very evident.** However, prices are greatly influenced by purchasing power. Several factors affect consumption decisions, such as income factors, including whether income will grow and expectations for future income; as well as asset conditions, including stock market and housing prices, all of which can influence consumer decisions.

Therefore, we see that **consumption volume has declined not only due to demographic changes but also because prices have shown a noticeable decline in the Consumer Price Index (CPI), which has actually also decreased. These two factors together lead to overall weak consumption in 2024.**

From the perspective of the stock market, the reflection is very direct. The stock market essentially represents people's expectations for the current and future economy, acting as a barometer. We can see that in various consumer sub-sectors, apart from the high-dividend or more defensive home appliance sector, almost all other sub-sectors have underperformed the market.

Regarding what new trends we can expect in 2024, I would like to introduce two major directions.

**The first is the issue of weakening purchasing power.** The reduction in purchasing power is not solely influenced by the economic cycle. For example, the current continuous decline in income reflects more of a difference in the consumption choices of young people compared to previous patterns. Their consumption preferences have changed, and to summarize it in one term, it is **“anti-consumerism.”** Although the term “anti-consumerism” may not be entirely accurate, it refers to the change in how many middle-class individuals choose to express their status and realize their self-worth through consumption after accumulating a certain level of wealth.

In recent years, young consumers, when making consumption choices, do not exhibit the same consumerist sentiment as they did from 2012 to 2018; instead, there is a tendency towards anti-consumerism. This trend manifests as consumption downgrade or more rational consumption, with young people being less willing to pay for brand premiums.

This trend will be more evident in 2024. In terms of channels, outlets and offline discount stores are performing well. In terms of travel, there has been a rise in urban wandering and special forces-style tourism. At the same time, in traditional product consumption, the phenomenon of domestic substitution is gradually increasing, reflecting young consumers' re-evaluation of brands.

**The second observed change in structure is that the satisfaction of spiritual needs seems to be expanding, while traditional consumption is relatively weak.** Consumption can be roughly divided into physical consumption and service consumption that meets spiritual needs, which we refer to as material needs and spiritual needs.

These are some phenomena we have observed. For example, on online platforms like Xiaohongshu, young people share their enjoyment of listening to Wu Bai's songs, buying lottery tickets, visiting temples, or growing bananas at their workstations. These reflect changes in young people's emotions; changes in the external environment may lead them to need to vent their emotions, and this venting method has significantly differed from traditional consumption patterns in the past. These are the new trends we see, and we believe these new trends may continue to evolve into 2025

## New Trend in Discretionary Consumption in 2025: The Rise of "Emotional Consumption"

**Wall Street Watch:** Last year, you mentioned that the three main lines of discretionary consumption are reflected in: the shift from "material abundance" to "spiritual abundance"; the enhancement of beauty, hygiene, and health awareness; and the industrial structure upgrade nurturing industry superstars. Will this logic continue in 2025, and how do you define "happiness" and "companionship" in the 2025 discretionary consumption report?

**Zhang Yingqiu:** We did propose several main lines in 2024, and these lines are not only directions we are focusing on in 2024. The report we wrote last year had a higher starting point and a longer time dimension, drawing on about 30 years of development in Japan since the 1990s, a period often referred to as the "lost thirty years." During these thirty years, many consumption trends emerged, which we summarized into several main lines that represent the consumption trends of an era and are worth continuous attention in the future.

The emphasis on material consumption and spiritual consumption mentioned earlier is what we hope everyone will focus on in 2025.

**Regarding how to define "happiness" and "companionship" in discretionary consumption, I believe this differs from functional consumption and pleasure-oriented consumption and can be seen as a consumption model.** In the report, we refer to it as "emotional consumption," which should be a form of consumption that resonates with consumers.

This is somewhat related to the broad consumption downgrade phenomenon in traditional consumption that we mentioned earlier. During the consumption upgrade period, certain traditional consumption models met people's needs, but the current consumption value phenomenon may be more severe, with greater pressure.

Emotional consumption, distinct from functional and pleasure-oriented consumption, still sees consumers willing to pay a premium for it. Pleasure-oriented consumption, such as the romance economy, involves buying gifts for partners during dating, and examples like the dating cars that emerged in Japan in the late 1980s are representative of pleasure-oriented consumption. **Now, happiness and companionship, as we emphasize in the report, belong to self-pleasing consumption. This consumption demand reflects young consumers' focus on themselves, emphasizing the purchase of products that bring personal joy.**

Secondly, we discussed its distinction from functional consumption. Functional consumption is more prevalent in traditional consumption areas and has a relatively high penetration rate. However, these areas may be affected by weakening consumption capacity. In emotional consumption, consumers not only focus on the functionality of the products but also pay more attention to the emotional value that products can bring. From this perspective, consumers' willingness to spend is generally strong.

## Looking at China's "Millet Economy" from Japan's Experience: Huge Development Potential

**Wall Street Watch:** Japan has seen the emergence of new consumption models centered on experience economy and emotional consumption during the lost thirty years, such as anime, the two-dimensional culture, and high-end trendy toys. With the popularity of "millet economy" and POP MART among young people in China, how do you view the potential of the Chinese market in this field?

**Zhang Yingqiu:** We believe there is considerable room for future development. Let me first introduce the situation in Japan, and then compare China with Japan. Japan has a particularly large comic exhibition called Comic Market, which started in 1975 and has a history of nearly 50 years The number of early exhibitors was relatively small, mainly consisting of people who gathered due to their love for a particular comic or animation, and the crowd was relatively limited, primarily consisting of teenagers. However, the current number has far exceeded that of the past, and the age range is also more diverse. This is a very obvious change in the evolution of Japan's ACG (Anime, Comic, Game) economy from niche culture to mass culture.

There is an interesting point in the middle, which coincides with the late 1980s and early 1990s, when Japan's economy was undergoing a shift. During this period, the number of consumers of ACG experienced explosive growth. The factors behind this are quite complex, one of which is that children who watched anime grew up and gained the economic power to purchase IP-related products. At that time, consumers were fortunate to experience a period when Japanese animated shows were in abundant supply. In the 1970s, Japan had a very famous manga artist, Osamu Tezuka, who created works such as "Astro Boy," influencing many manga artists and animators. As a result, a large number of high-quality animated shows emerged in the 1970s.

Adults who grew up influenced by these animated shows, around the late 1980s or early 1990s, began to have economic power and developed an interest in animation and ACG products. Therefore, consumption during that time was influenced not only by these factors but also by economic conditions. After the 1990s, we saw that many Japanese people's disposable leisure time increased while their working hours decreased. As national holidays increased, working hours were reduced, and the time for rest and sleep correspondingly decreased, leaving the remaining time for personal discretionary use.

When you have more leisure time but no money, young people tend to stay at home more, playing games, watching anime, and consuming related products to fill their time.

If we compare the situation in China with that in Japan at that time, where are the differences?

**From the perspective of the consumer demographic, China's investment and consumption of IP-related products are mainly concentrated among students under 20 years old, primarily in high-tier cities.** This is quite different from the current situation in Japan. In the early days, Japan also experienced a similar state, which developed from that period. However, by the 1990s, Japanese animated shows were no longer just targeted at children. For example, "Neon Genesis Evangelion," released in 1995, had a very obscure storyline and was unlikely to be aimed at elementary school students. After 2000, there was a gradual increase in animated works aimed at adults. In 2005, Japan launched a TV drama aimed at audiences of all ages, one famous series being "Densha Otoko," which tells the story of an otaku.

This indicates that the phenomenon of otaku has no longer been a niche area but represents a broad consumer demographic.

**In addition, there is a disparity in per capita consumption; statistics show that the current per capita consumption amount for IP-related products in China is about 150 RMB, while in Japan it is 500 RMB.** Therefore, looking ahead, there is still significant room for development in this field in China.

## emo and chill: The AB side of "emotional consumption"

**Wall Street Insights:** Besides the areas we discussed such as the ACG (Anime, Comic, and Games) economy, what other niche industries do you think are typical examples of "emotional consumption"? In the future, in which industries will "emotional consumption" be most prominent? Can you elaborate with specific industry sectors?

**Zhang Yingqiu:** Drawing on Japan's past experiences, **we see that the emotional consumption of young people is evolving in two completely opposite directions, resulting in emo consumption and chill consumption.** Emo refers to emotional consumption that can trigger emotional fluctuations. Chill, on the other hand, refers to consumption that calms emotional fluctuations. One side is emo, and the other side is chill.

Representative examples of emo consumption include instant cameras. The unique grainy texture provides consumers with a sense of nostalgia and retro feel. Other examples include concerts and "supporting activities" (spending money on things or people you love, which is close to idol economy, including virtual characters from the ACG world), etc.

Chill consumption is represented by anti-energy drinks. While energy drinks invigorate through effective ingredients, anti-energy drinks help to calm emotions and promote sleep, and related products have seen good sales and attention.

Emotional value is emphasized and is reflected in various aspects from food and drink to entertainment, with experiential consumption being more intuitive. In traditional consumption, brands like Uniqlo (apparel) and Sushiro (conveyor belt sushi) often create topics to attract consumers through collaborations with IPs.

In addition to the ACG economy, emotional meal replacements or "companionship" needs have also evolved into an economic ecosystem. This includes pets and virtual companionship needs. Electronic pets, pet games, and AI pets that emerged in Japan in the 1990s fall into this category.

## Who is paying for "happiness" and "companionship"?

**Wall Street Insights:** Based on your observations, what differences exist among consumers of different age groups, income levels, and city tiers in their demands for "happiness" and "companionship"? For example, the differences between Generation Z and single individuals, the elderly population; the differences between first-tier cities and second or third-tier cities or lower-tier markets. How do their consumption habits and behaviors differ? Consequently, what different strategic allocations should investors consider?

**Zhang Yingqiu:** There will be some differences. **First, from the perspective of age groups, it is quite evident that young people and older individuals with a certain level of wealth have different income levels and wealth accumulation situations.** This leads to a clear differentiation in consumption between young and elderly individuals in the current environment.

Young people, especially those who have just graduated from university, generally have lower income levels compared to their peers who were job hunting two or three decades ago, and their wealth accumulation is not optimistic, with not much wealth on hand. The changes in consumption we see now mainly come from young people. Their economic situation has been more severely impacted, leading to more changes in their consumption behavior. This group of young people has a significantly different growing environment compared to older individuals, and the comparison between material consumption and spiritual consumption mentioned earlier reflects this.

If we observe the overall development trends in Japan, South Korea, and the United States, we can find that the proportion of spiritual consumption in household spending continues to rise, while the proportion of material consumption continues to decline. This trend is similarly observed in multiple countries, and the economic cycle has not affected this trajectory The only influencing factor is the level of penetration of durable consumer goods. This has led to differences in the growth environments of the older generation and the new generation, resulting in different consumption patterns. For example, the material needs of the older generation were not fully met during their youth, and the penetration rate of household appliances may not have reached 100% in their era.

Now, some young people grow up in an environment where material needs are fully satisfied. **They naturally invest more money in areas that meet spiritual needs. This is a development trend observed in some developed countries and is equally applicable to us.** When the economy is severely damaged, the aforementioned trends will be more evident among young people compared to the elderly.

**From the perspective of urban levels, high-tier cities will experience more severe damage in overall consumption in 2024.** The three factors influencing consumption decisions are income, income expectations, and wealth effects. Among these, lower-tier cities are more influenced by income expectations, while high-tier cities are more affected by wealth effects. This leads to a greater consumption suppression effect in high-tier cities when real estate prices decline.

**Lower-tier cities are more inclined towards a familiar economy,** **which shows a clear difference from the ecology of high-tier cities.** For example, a store run by a relative may attract customers more than a well-known brand. If lower-tier cities have greater development potential in the future, it may give rise to a new batch of brands. For instance, Tastin and Mixue Ice City are representative brands in the sinking market.

From a broader trend perspective, logically, one should allocate resources to the sinking market and the silver economy. However, based on our long-term research in Japan, it is difficult to find any pure consumption sector (excluding medical and pharmaceutical fields) where an industry or company truly benefits from the trend of population aging. It is hard to find a widely applicable rule for companies on a large scale.

The reason is that these companies target all age groups. Older people consume more throughout their lives because wealthy individuals age. Young people have less money, and when both sides offset each other, it turns out that the macro environment has a greater impact. For example, if everyone's purchasing power declines and the population decreases, this impact will be more significant. It is indeed challenging to find a relatively good niche area or a specific company through such allocation and thinking. Instead, we emphasize looking more at the changes among young people.

Because young people are a variable. Many past changes in consumption trends in Japan are not due to significant changes in the consumption preferences of the elderly, but rather the preferences of young people differ from those of the previous generation, leading to new consumption trends driven by intergenerational preference changes. The previously mentioned consumption downgrade and home economy are all driven by young people. **We believe there are also significant opportunities in new consumption.**

## 2024 Consumption Market: New Consumption Grows Against the Trend

**Wall Street Insights:** Looking back at 2024, under the influence of policy dividends, domestic brands going global, and trade-in programs, has there been a differentiation in the performance of various industries within the discretionary consumption sector? Which specific sub-industries do you think will perform outstandingly this year, and which will be relatively weak? What are the underlying reasons? **Zhang Yingqiu:** There is indeed a differentiation. Excluding some policy factors or investment preference factors, if we purely look at which consumption trends are stronger, this phenomenon still exists. **The new consumption that we mentioned, which can evoke emotional resonance, is relatively stronger, while those consumptions with already high penetration rates face greater pressure.**

I will give an example, which is also a phenomenon observed in Japan after the 1990s. We can use the calories consumed by people to infer different stages of consumption patterns. Since the 1970s, per capita calorie demand has already declined. This is a very normal phenomenon because the industrial structure has changed. At that time, the number of manual laborers decreased, shifting to the tertiary industry, with manual labor being replaced by mental labor. Everyone's dietary needs have also correspondingly decreased, so calorie intake naturally declines. In principle, supply should also decrease accordingly. However, during the process of consumption upgrading, similar to the period from 2012 to 2018, supply continued to rise despite the decline in demand from the 1970s to the 1990s in Japan. The gap between supply and demand has been widening, which is a characteristic of consumption upgrading. The rise in consumption capacity supports this social waste, or the change in the consumption process.

After the 1990s, with changes in consumption sentiment and capacity, the entire supply line accelerated to catch up with the declining consumption demand, and the excess consumption part was naturally reduced. Over the past 30 years since the 1990s, the excess consumption part or supply line has dropped by about 40%. This indicates that traditional consumption may face a transformation: not only are consumption volumes and prices declining, but consumption capacity is also weakening, and consumption patterns need to be adjusted. The approach to cope with consumption upgrading has shifted to a mindset of consumption downgrading. Conversely, some emerging consumption may occupy more time and money.

Regarding the durable consumer goods you mentioned, the old-for-new policy implemented last year is still ongoing this year, and these measures have indeed stimulated consumption demand for 2024. Overall, home appliances have performed well. However, durable and semi-durable goods, such as clothing and home appliances, are called durable or semi-durable because they stay in your hands for a period of time, meaning there is a replacement cycle. Stimulating durable consumer goods may only change the timing of consumption decisions, with the possibility of overdrawn future consumption. From a long-term perspective, the effects of such policies may be diminishing. In addition to the old-for-new policy, there is a need for policies that promote endogenous consumption demand.

**Ultimately, we still need to consider the changes in demand for these products.** From a long-term perspective, traditional consumption will still face some dilemmas we mentioned earlier and needs to be transformed. Some new consumption has a low penetration rate but can meet your emotional needs; overall, we are still more optimistic about such consumption, believing it will occupy more time and money.

The proportion of household spending that satisfies spiritual needs, regardless of economic conditions, will likely form such a trend as long as material consumption has become widespread. From a temporal perspective, working hours will decrease during economic downturns. This includes policy changes; Japan experienced this as well, giving employees time off, increasing rest days, and adjusting some holiday arrangements. This was referred to as "time system reform," which involved making certain holidays non-fixed, such as the third Monday in July, rather than a fixed day, allowing for three consecutive days off, enabling people to go out and consume **From our current policy direction, we are also providing more choices, which means that personal disposable time may increase.** From the perspective of money and time, these may tilt towards your freely disposable leisure and entertainment needs, which is also why we are optimistic about these consumptions.

## Three Successful Models of Domestic Brands Going Global

**Wall Street Insights:** Thank you, Teacher Zhang. The next question revolves around the trend of domestic brands going global. We can see that whether in the fields of trendy toys, beauty, or medical aesthetics, the overseas expansion of domestic brands has become an important trend. What key overseas markets or sectors do you think should be focused on in 2025? Will the overseas strategy become a watershed for leading companies?

**Zhang Yingqiu:** Going global is actually a relatively long-term topic and certainly not a short-term phenomenon over a few years. The fundamental reason lies in China's demographic structure. As mentioned earlier, looking solely at the labor population, China is already decreasing. Therefore, in the future, everyone may feel a trend of weaker consumption power than before. Regardless, China's demographic structure has begun to age and experience a declining birth rate. In this context, more companies will strongly expand into overseas markets, so this is a long-term trend. We can draw a parallel with Japan, which also first expanded its manufacturing overseas to reduce manufacturing costs.

The large-scale overseas expansion of consumer companies occurred around 2009, when Japan's population began to decline. When the population decreases, consumer companies realize that their investment space domestically will shrink, so they need long-term replenishment and start to expand overseas; this is the overall background.

This means that after 2025, we will continue to pay attention to the process of going global. There are indeed differences in the ease of going global, and there are several successful paths that have been validated.

If we look at the relatively successful ways of going global, we mentioned three types in "Experiences of Japanese Consumer Companies Going Global." **One is having the right timing, location, and people, with a greater emphasis on timing, meaning that the timing of going global must be appropriate**, for example, entering the Southeast Asian market at the early stage of mass consumer goods.

For instance, some Japanese companies typically choose to enter the Southeast Asian market when the per capita GDP has not yet exceeded $1,000. This is a suitable point for the popularization of low-priced mass consumer goods. However, for higher-priced products, such as baby diapers, the target per capita GDP is generally around $3,000. Therefore, when the per capita GDP of Southeast Asian countries approaches $3,000, companies will consider entering the market. For Chinese companies, there are currently very few countries that meet such market conditions. Currently, there are very few countries with a per capita GDP of less than $3,000, mainly concentrated in Africa, with only a few countries like Laos in Asia. Therefore, the lack of timing and conditions is the first challenge faced by Chinese companies going global.

**The second type is cost-effective going global, relying on absolute manufacturing advantages.** Chinese companies have a global advantage in manufacturing, and as long as they have cost advantages, they can capture a certain market share regardless of the timing of going global or market opportunities. For example, China's light industry and daily necessities are very typical cases, and the home appliance industry is similar **The third type is cultural going global.** Cultural going global means that enterprises possess certain cultural attributes, and products labeled with a Chinese tag will attract consumers interested in Chinese culture. For example, in the catering industry and products like milk tea, their cultural appeal makes them easily accepted by consumers, thereby promoting consumption. Additionally, Japanese animation and comics from years ago are typical examples of cultural going global.

We believe that if we want to achieve the globalization of Chinese domestic products, there are mainly two relatively easy paths, among which we will pay more attention to cultural going global. If we focus on some brands, such as POP MART and Miniso, they mainly concentrate on these two paths.

In terms of the countries we are concerned about, we pay more attention to Southeast Asia due to its stronger cultural affinity. The United States is also of interest. If we look at cosmetics companies, companies like POP MART have achieved relatively more success in Southeast Asia, especially POP MART, because of the higher level of appreciation for Chinese culture, perhaps due to the closer geographical and cultural distance compared to Europe and the United States, making interaction with China easier.

The reason for the focus on the United States is that there are widespread concerns that tariffs may increase after Trump takes office, or there may be some changes in trade policies, leading to greater pressure here. However, since the market has already priced in these sentiments, it may have mistakenly undervalued some quality enterprises. Although the directions are different, both areas are of significant interest to us.

## IP, Pets, Travel: The New Trend of "Emotional Consumption" in 2025

**Wall Street Insights:** As you just mentioned, with Trump taking office this year, the uncertainty in the overseas environment has increased, and competition within the discretionary consumption sector has accelerated. Leading enterprises are becoming stronger, while small and medium-sized enterprises may face pressure to clear out. In light of this series of unknown factors, what potential risks do you think investors need to pay attention to in 2025, and do you believe there are any dark horses within the industry worth looking forward to?

**Zhang Yingqiu:** First of all, we hold the following views on the overall environment in 2025, which form the basis of our investment logic. **We believe that 2025 will be better than 2024.** The third factor mentioned earlier is income, income expectations, and the wealth effect. Income factors typically show lagging performance in any economic cycle, and the efficiency of income will only become apparent once actual income increases. Therefore, an increase in income will promote an increase in consumption, although this may not be obvious in 2025.

Income expectations and the wealth effect may change. **We mainly focus on the marginal changes in the wealth effect, real estate, and stock market, as these changes may enhance the willingness to consume.** Overall, compared to the negative factors of last year, this year's changes may be more significant. Thus, there are naturally some risks; one aspect is that if the stock market performs below expectations, it will affect the ongoing changes in consumption decisions, thereby posing risks to consumption.

Secondly, some policies that everyone is looking forward to may have been a hot topic of discussion since the second half of last year, especially after the end of September. Many people believe that by 2025, external demand may weaken due to U.S. trade policies, so there may be a greater emphasis on domestic demand, which has also sparked expectations for consumption policies If the expectations of these policies fall short, it may bring some negative impacts.

In addition, the risks associated with changes in population structure also need attention. We focus on the group aged 35 to 60, who have a certain level of wealth accumulation and higher consumption capacity. The growth of this population segment is also slowing down. If the structural changes in this group become more pronounced, it may impact consumption, thus requiring closer attention. These are several directions we are concerned about regarding overall risks.

**We are particularly focused on new consumption, especially some new consumption trends that appeal to young people. We believe that companies related to IP, pets, and travel, which can meet emotional consumption needs, are worth paying attention to.**

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