Huachuang Securities: Both supply and demand sides exert efforts, ushering in a golden decade for consumer services

Huachuang Major Consumer & Non-Banking & Media

Service Consumption Enters a Golden Decade

China’s macroeconomic development has significantly improved residents’ lives, leading to upgraded consumption demands and shifts in the main themes of the consumer industry. Over the past twenty years, basic survival physical consumption such as clothing, food, and daily necessities has reached saturation in volume and experienced price upgrades. Around 2015, major categories of consumer goods like alcohol, beverages, air conditioners, and mobile phones saw sales saturation, with growth rates declining. In the following decade, the focus shifted to quality improvement, with price increases becoming the dominant logic in consumption. Currently, the slowdown in the growth of product prices indicates that consumer upgrading has matured. Compared to functional and basic survival needs, service consumption’s core focus is on higher-level life experiences (such as emotional resonance and social recognition) and value-driven needs (such as personal development and self-actualization). We believe this will become the main theme of Chinese consumption in the next ten years.

Part 01

Demand Side

Demand Side: The consumer industry is forming two new engines. Currently, industries such as dining, entertainment, accommodation, and leisure, as well as development-enhancing consumption like education, health, and elderly care, are booming. Service consumption is gradually becoming the core driver of China’s consumption growth. Meanwhile, the shift from physical goods driven by services is accelerating; physical products are transforming into the “physical carriers” of services—this rapid development is evident in IP-themed collectibles, offline retail and catering, and the pet economy. Additionally, Generation Y and Z, growing amid urbanization, are becoming the main consumption forces. The “spiritual focus, material light” consumption philosophy is expected to drive a golden decade for service consumption. Different generations’ needs are intertwined and resonant, creating a highly segmented and rapidly evolving market that continuously stimulates innovation and specialization in service formats.

Part 02

Supply Side

Supply Side: Industry, technology, and talent are evolving in coordination to drive service consumption upgrades. First, industrialization underpins large-scale service supply, enabling cross-regional and multi-scenario expansion. Second, technological iterations such as the internet and mobile payments have reshaped the service ecosystem. Currently, the AI wave is sweeping across industries; the rapid development of AI intelligent agents is expected to further disrupt platform economies in the coming years, significantly enhancing efficiency and experience in service consumption. Third, the popularization of education has improved the quality of service industry personnel—college graduates can earn up to 20,000 yuan per month as nannies. The “engineer dividend” brought by widespread education is reshaping the human capital structure in the service sector, promoting a shift from “physical labor” to “knowledge- and skill-based” work, providing a solid talent foundation for higher-level consumer needs and ushering in an “engineer dividend” era for the service industry.

Part 03

Policy Side

Policy Side: Both demand and supply are being strengthened, becoming the main leverage for stimulating domestic demand. Since 2025, central and local governments have issued numerous policies to support service consumption. This is not short-term stimulus but a systematic resource allocation adjustment aligned with the “investment in both goods and people” focus of the 14th Five-Year Plan. On the demand side, the implementation of the primary and secondary school holiday system in provinces like Jiangsu, Sichuan, and Zhejiang helps smooth tourism seasons and releases long-term travel demand. On the supply side, the central government encourages local state-owned assets to leverage listed companies to integrate high-quality cultural and tourism assets. Provinces like Sichuan and Hubei have proposed trillion-level development goals for cultural tourism industries, driving iterative upgrades in cultural tourism supply.

Part 01

Catering

Catering: The chain wave, supply chain integration, and service experience are key to success. 1) Chain restaurants: The chainization process continues, and under the pursuit of cost-effectiveness, those with supply chain integration capabilities are consolidating the market. Meanwhile, “emotional value,” “spatial experience,” and “IP added value” are becoming new engines for brands to cycle through and command premium prices. 2) Upstream supply chain: Flavored seasonings, frozen foods, and other manufacturing-oriented products are focusing on upgrading consumer experiences and large B2B customization opportunities amid the service consumption wave.

Part 02

Retail

Retail: Offline supermarkets are transforming + chain stores creating a “good shopping, good browsing” experience. 1) Supermarkets: They are shifting from “sublessors” to “consumer agents,” with companies like Yonghui actively promoting transformation—changing supply chain models from key account to bare procurement, optimizing product selection, developing private brands, and upgrading store experiences. 2) Snack wholesale: Moving from “selling snacks” to “selling experiences,” with richer SKUs, efficient product iteration, and continuous store upgrades, plus IP collaborations and event marketing to meet the desire to “browse.” 3) Ingredient retail: Led by Guoquan, focusing on hotpot and barbecue ingredients, expanding categories and scenarios, and continuously iterating new stores.

Part 03

Cultural Tourism and Scenic Spots

Cultural tourism and scenic spots: Upgrading from sightseeing to experience economy. Post-pandemic, domestic tourism rebounded in 2023 and continued growth in 2024/2025, driven by macro growth expectations and the release of demands from young people, seniors, and inbound travelers. The shift from sightseeing to leisure and experiential consumption is a clear development trend. Policies are now promoting leaner supply through capital markets and REITs, driving a new round of optimized cultural tourism projects.

Part 04

Education

Education: AI reshapes educational experiences, and service industry shifts are driving new vocational education opportunities. Overall demand in education is stabilizing; AI development is beginning to transform experiences and improve efficiency in this vertical, becoming a key investment focus for major education companies. Meanwhile, employment structure changes driven by service consumption are reshaping vocational education, creating new growth opportunities.

Part 05

IP and Trendy Toys

IP and trendy toys: Transitioning from “toys” to “emotional assets,” with broad overseas growth potential. Pop Mart’s spillover demand and IP operation models are increasingly influencing the industry, with leading companies in various niches making breakthroughs—such as Buluo for building blocks, Chuangyuan for self-branded cultural and creative products, and TNT Space for soft vinyl plush toys. Besides the booming domestic market, Chinese trendy toys are entering a global expansion phase, with companies focusing on cultural adaptation—signing local artists and deeply integrating core IPs with local cultural symbols to achieve cross-cultural emotional resonance.

Part 06

Pet Hospitals

Pet hospitals: From growth to value-added, demand upgrading and supply enhancement jointly drive the second half of the pet healthcare industry. The essence of pet healthcare is comprehensive health management across a pet’s lifecycle, offering systemic health solutions. On the demand side, aging pets and more scientific, family-oriented pet care increase the need for precise medical services. On the supply side, significant CAPEX investments have empowered equipment and technology, with ongoing innovation meeting unmet needs. Future specialization and chain development remain key solutions.

Part 07

Gaming

Gaming: Focus on new markets, new users, and new channel opportunities. Overseas casual games have large penetration potential; domestic manufacturers are emerging, with prospects to recreate a “global SLG market.” Young and female users are driving new category opportunities. The growth of PC and console markets domestically, along with cross-platform gaming, is opening up global markets.

Part 08

Health and Elderly Care

Health and elderly care: Service-driven transformation promoting “Insurance +”. Traditional insurance products are product-centric, especially protection-type policies with obvious consumption attributes, with after-sales interactions limited to claims, leading to poor customer experience and low stickiness. With accelerating aging and rising awareness of healthcare, demand for health and elderly care has surged. Traditional insurance struggles to meet these needs, giving rise to “Insurance + Medical” and “Insurance + Elderly Care” models. Leading insurers are actively building “Insurance+” service ecosystems, leveraging brand and comprehensive service advantages, and are expected to benefit first.

Part 09

Physical Goods Consumption

Physical goods consumption: From selling products to selling lifestyles, creating demand for service-driven physical goods. 1) Home appliances: Previously focused on single-product sales, recent years have seen companies like Haier and Midea leveraging smart home and connected vehicle-home systems to generate service needs such as AI cooking assistance, smart housekeeping, and security, increasing user engagement. 2) Baijiu: Moutai uses cultural experience centers to elevate from sales to social interaction, expanding online with iMoutai to attract broad audiences, and developing cultural IP products like zodiac-themed, scattered flower flying to the sky, and Xiaoxi dinner, reconstructing value matrices. Other brands like Langjiu, Zhenjiu, and Jinjui follow suit, innovating service marketing paradigms and expanding into food, cultural tourism, and health sectors.

Risk Warning: Macroeconomic demand recovery below expectations, deviations between macro perspectives and micro business operations, etc.

(Source: Huachuang Securities)