Renting instead of buying

China sees “huge” potential for consumption

The rental model should open up "new prospects" for companies.

(Bild: AFP)

According to state media, Chinese domestic demand is gaining momentum thanks to new sales tactics. More and more consumers are opting to rent expensive consumer goods such as cameras or handbags instead of buying them. 

This model opens up a "new perspective" for companies, as the official People's Daily newspaper reported on Monday. New consumer formats offer "huge" potential. Internet platforms, for example, allow consumers to rent a drone for one yuan (13 cents) per day, whereas it normally costs more than 5,000 yuan (660 euros). A "99 percent new" Louis Vuitton handbag can be rented for 35 yuan, as one offer on a popular shopping app showed.

Similar offers also exist in Europe, and rented goods are often advertised as a more sustainable alternative to buying. However, it remains questionable whether this new form of consumption actually uses fewer resources.

According to official Chinese statistics, retail sales have fallen short of expectations this year. They only grew by 3.5 percent from January to November. In 2023, they had risen more than twice as much at 7.2 percent.

China grants discounts when trading in old products
To boost consumption, China introduced a trade-in system this year. It allows customers to get discounts when trading in old appliances, bicycles and even cars. According to official figures, sales under this program exceeded one trillion yuan (around 132 billion euros) this year.

Private demand is sluggish
The world's second-largest economy after the USA is relying primarily on industry and exports this year, while demand from private households is sluggish, partly due to the severe real estate crisis. Economists are advising the government to gear its policy more towards consumers - partly because US President-elect Donald Trump is threatening to impose high tariffs on Chinese goods.

At a meeting this month, top officials from the ruling Communist Party declared that China should "vigorously" boost consumption next year and try to increase domestic demand "in all directions".