CHINA CONSUMPTION TRENDS │ 2017
CHINA CONSUMPTION TRENDS
OVERVIEW
China Digital Banking Report 2017
CHINA CONSUMPTION TRENDS │ 2017
2
Per capita consumption in Tier-1 cities is visibly high but several Tier-2 & Tier-3 cities record high growth. Rising preference for travel, staying connected, recreation, & buying durable goods
China has rapidly transitioned from a predominantly lower-middle class society to a middle, upper-middle and Affluent class society over past decade
Recent years have seen rising disposable incomes for high-income Chinese households, boosting demand for high value products – A visible shift from mass to premium
700 million plus internet users in China, bulk of them in urban areas, using 25 hours of internet per week. Beijing, Shanghai & Guangdong top in internet penetration, rapid growth across provinces
Rapid rise in use of smartphones for online shopping and payments over past 5 years. Online retail sales still forms a small part of China’s total E-commerce business, which is led by business to business (B2B) sector.
CHINA CONSUMPTION TRENDS │ 2017
SOCIAL TRENDS CONSUMPTION EXPENDITURE PATTERNS ACROSS PROVINCE AND INCOME CLASSES
CHINA CONSUMPTION TRENDS │ 2017
China’s demographics – large is beautiful
4 • Note : Millennials are those born in the 1980s & 1990s; Gen Z : Born after 2000s • Source: BBVA Research, China National Bureau of Statistics
415 mn Millennials
(30% of population)
79 mn College
graduates
US$ 606 bn Online retail market size
1.39 bn Population 54% urban
453 mn Households
1042 mn Smartphone subscribers
217 mn Gen Z
(18% of population)
1005 mn Working age population
CHINA CONSUMPTION TRENDS │ 2017
China’s rapid transformation from a lower-middle to a middle, upper middle and Affluent class society
5 • Source: BBVA Research, China National Bureau of Statistics
0
10
20
30
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Income-wise classification of China's Urban households (%)
Affluent Upper Middle Middle Lower Middle Poor
CHINA CONSUMPTION TRENDS │ 2017
A steadily increasing disposable income, albeit at a moderating but robust pace, with wide urban-rural gap
6 • Source: BBVA Research, China National Bureau of Statistics
0
2
4
6
8
10
12
14
16
18
0
5.000
10.000
15.000
20.000
25.000
30.000
2011 2012 2013 2014 2015 2016
China Disposable Income Per CapitaChina Disposable Income Annual Growth (RHS)
(RMB) (% YoY)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
2012 2013 2014 2015 2016
China Urban Disposable Income Per CapitaChina Rural Disposable Income Per Capita
(RMB)
CHINA CONSUMPTION TRENDS │ 2017
Recent years have seen a sharp pick up in disposable income of high-income Chinese households
7 • Source: BBVA Research, China National Bureau of Statistics
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
199
1
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
201
5
Low Income Lower Middle IncomeMiddle Income Upper Middle IncomeHigh Income
Disposable Income Per Capita by Urban Household Income Level
(RMB)
5,0
6,0
7,0
8,0
9,0
10,0
11,0
12,0
13,0
2014 2015 2016
Low Income Lower Middle IncomeMiddle Income Upper Middle IncomeHigh Income
Growth of Disposable Income per Capita across Chinese IncomeClasses (Annual , %YoY)
CHINA CONSUMPTION TRENDS │ 2017
City-wise differences in disposable incomes across China, with higher growth in lower income cities
8 • Source: BBVA Research, China National Bureau of Statistics
5
7
9
11
13
15
17
19
0
10000
20000
30000
40000
50000
60000
70000
Chi
na
Han
gzho
u
Nin
gbo
Nan
jing
Xia
men
Bei
jing
Sha
ngha
i
She
nzhe
n
Gua
ngzh
ou
Jina
n
Hoh
hot
Qin
gdao
Fuzh
ou
Cha
ngsh
a
Che
ngdu
Dal
ian
She
nyan
g
Wuh
an
Hef
ei
Zhen
gzho
u
Nan
chan
g
Xia
n
Tian
jin
Lan
zhou
Cha
ngch
un
Har
bin
Shi
jiazh
uang
Tai
yuan
Yin
chua
n
Nan
ning
Hai
kou
Cho
ngqi
ng
City-Wise Avg Annual Disposable Income Per Capita in 2016 (RMB)10 Yr CAGR City-Wise Avg Annual disposable Income Per Capita (RHS)Polinómica (10 Yr CAGR City-Wise Avg Annual disposable Income Per Capita (RHS))
(RMB) (% CAGR)
CHINA CONSUMPTION TRENDS │ 2017
Reassuringly, income inequality has broadly been on a declining trend over the past decade
9 • Source: BBVA Research, China National Bureau of Statistics
0,45
0,45
0,46
0,46
0,47
0,47
0,48
0,48
0,49
0,49
0,50
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China Gini Coefficient
CHINA CONSUMPTION TRENDS │ 2017
Rural China leads consumption expenditure per capita growth, pace has moderated but still healthy
10 • Source: BBVA Research, China National Bureau of Statistics
7,56,9 6,8
5,8 5,5 5,7
10
8,67,8
0
2
4
6
8
10
12
2014 2015 2016
Consumption expenditure per capita
China : YoY China : Urban : YoY China : Rural : YoY
(%YoY)(%YoY)(%YoY)(%YoY)
CHINA CONSUMPTION TRENDS │ 2017
Province-wise consumption expenditure per capita
11 • Source: BBVA Research, China National Bureau of Statistics
0
5000
10000
15000
20000
25000
30000
35000
40000
Sha
ngha
i
Bei
jing
Tian
jin
Zhej
iang
Gua
ngdo
ng
Jia
ngsu
Fuj
ian
Lia
onin
g
Inne
r Mon
golia
Cho
ngqi
ng
Sha
ndon
g
Hub
ei
Hun
an
Nin
gxia
Jilin
Sic
huan
Qin
ghai
Hai
nan
Hei
long
jiang
Sha
anxi
Heb
ei
Xin
jiang
Anh
ui
Jian
gxi
Hen
an
Sha
nxi
Gua
ngxi
Yun
nan
Gan
su
Gui
zhou
Tibe
t
Annual Province-Wise Consumption Expenditure Per Capita in 2016(RMB)
CHINA CONSUMPTION TRENDS │ 2017
Per capita consumption in Tier-1 cities is visibly high but several Tier-2 & Tier-3 cities top in growth terms
12 • Source: BBVA Research, China National Bureau of Statistics
9
10
11
12
13
14
15
16
17
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
City-Wise Avg Annual Consumption Expenditure Per Capita in 2016 (RMB)
10 Yr CAGR City-Wise Avg Annual Consumption Expenditure Per Capita
Polinómica (10 Yr CAGR City-Wise Avg Annual Consumption Expenditure Per Capita )
(RMB) (% CAGR)
CHINA CONSUMPTION TRENDS │ 2017
Share of food in rural China’s per capita consumption basket is declining, offset by higher value purchases
13 • Source: BBVA Research, China National Bureau of Statistics
0100020003000400050006000700080009000
1000011000
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
Food ClothingResidence Hhd facility & serviceMedicine Transport & TelecomRecreation & Education MiscellaneousAggregate
Rural annual per capita consumption expenditure(RMB)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
Food ClothingResidence Hhd facility & serviceMedicine Transport & TelecomRecreation & Education Miscellaneous
Rural annual per capita consumption expenditure
CHINA CONSUMPTION TRENDS │ 2017
Increasing wallet share of urban Chinese towards residence, travel, communication, recreation & food
14 • Source: BBVA Research, China National Bureau of Statistics
0
5000
10000
15000
20000
25000
199
3
199
5
199
7
199
9
200
1
200
3
200
5
200
7
200
9
201
1
201
3
201
5
Food ClothingHousehold Facility Medicine Transport & Communication Recreation, Educational & Cultural ServiceResidence MiscAggregate
Urban annual per capita consumption expenditure(RMB) Urban annual per capita consumption expenditure
CHINA CONSUMPTION TRENDS │ 2017
Urban Chinese prefer to travel, stay connected, buy protein rich food, durable goods & recreation
15 • Source: BBVA Research, China National Bureau of Statistics
0
250
500
750
1000
1250
1500
1750
2000
2250
199
2
199
4
199
6
199
8
200
0
200
2
200
4
200
6
200
8
201
0
201
2
201
4
201
6
Food: Meat, Poultry & Related Food: Dining OutHS: Durable Consumer Goods Transport & Communication: TransportTransport & Communication: Communication RS: Recreation Service
Urban annual per capita consumption expenditure(RMB)
CHINA CONSUMPTION TRENDS │ 2017
Automobile consumption has grown at a robust 24% CAGR over the past decade in urban China
16 • Source: BBVA Research, China National Bureau of Statistics
0
5
10
15
20
25
30
35
40
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Average Automobiles per 100 households in China
CHINA CONSUMPTION TRENDS │ 2017
Auto consumption growth has been most rapid in less developed provinces over the past decade
17 • Source: BBVA Research, China National Bureau of Statistics
0
5
10
15
20
25
30
35
40
45
50
0
10
20
30
40
50
60
Chi
na
Sha
ndon
g
Zhej
iang
Bei
jing
Yun
nan
Jian
gsu
Tia
njin
Heb
ei
Tibe
t
Inne
r Mon
golia
Gua
ngxi
Sha
nxi
Nin
gxia
Gua
ngdo
ng
Fujia
n
Xin
jiang
Sha
ngha
i
Hun
an
Qin
ghai
Hen
an
Sic
huan
Gui
zhou
Jian
gxi
Hai
nan
Anh
ui
Sha
anxi
Liao
ning Jilin
Cho
ngqi
ng
Gan
su
Hub
ei
Hei
long
jiang
Automobiles per 100 urban households (2015) CAGR of automobile consumption over past decade (RHS)
(CAGR %)
CHINA CONSUMPTION TRENDS │ 2017
China’s internet usage
CHINA CONSUMPTION TRENDS │ 2017
700 million plus internet users in China, bulk of them in urban areas, using 25 hours of internet per week
19 • Source: BBVA Research, China Internet Network Information Center
0
10
20
30
40
50
60
0
100
200
300
400
500
600
700
800
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Rural Areas Urban Areas Growth of Internet Users (RHS)
(Person Million) (% YoY)Number of Internet Users in China across Rural & Urban Areas
0
5
10
15
20
25
30
Number of Hours of Internet use per week in China (RHS)
(Hours)
CHINA CONSUMPTION TRENDS │ 2017
Guangdong province tops with the most number of internet users followed by Shangdong and Jiangsu
20 • Source: BBVA Research, China National Bureau of Statistics
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
80
90
Gua
ngdo
ng
Sha
ndon
g
Jian
gsu
Hen
an
Heb
ei
Zhej
iang
Sic
huan
Hun
an
Hub
ei
Liao
ning
Anh
ui
Fujia
n
Gua
ngxi
Sha
nxi
Jian
gxi
Sha
anxi
Yun
nan
Hei
long
jiang
Sha
ngha
i
Bei
jing
Cho
ngqi
ng
Gui
zhou Jilin
Inne
r Mon
golia
Xin
jiang
Gan
su
Tia
njin
Hai
nan
Nin
gxia
Qin
ghai
Tibe
t
Province-wise number of internet users across China in 201610 Year CAGR Province-wise number of internet users in China (RHS)Polinómica (10 Year CAGR Province-wise number of internet users in China (RHS))
(Million (% CAGR)
CHINA CONSUMPTION TRENDS │ 2017
Beijing, Shanghai & Guangdong top in internet penetration, rapid growth seen across most provinces
21 • Source: BBVA Research, China National Bureau of Statistics
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
80
90
Province-wise internet penetration rate across China in 201610 Year CAGR Province-wise Internet Penetration rate in China (RHS)Polinómica (10 Year CAGR Province-wise Internet Penetration rate in China (RHS))
(%)(% CAGR)
CHINA CONSUMPTION TRENDS │ 2017
Across top cities, internet penetration growing most rapidly Ningbo, Hangzhou, Chengdu, & Chongqing
22 • Source: BBVA Research, China National Bureau of Statistics
0
5
10
15
20
25
0
10
20
30
40
50
60
70
80
90
Gua
ngzh
ou
Bei
jing
Sha
ngha
i
Cho
ngqi
ng
She
nzhe
n
Wuh
an
Han
gzho
u
Suz
hou
Che
ngdu
Nin
gbo
2007 2011 2016 CAGR over past decade (RHS)
Internet penetration rate in China across top 10 cities(%) (% CAGR)
CHINA CONSUMPTION TRENDS │ 2017
The use of mobile phone to access internet has far outdone that of desktop and laptop in China
23 • Source: BBVA Research, China National Bureau of Statistics
20
30
40
50
60
70
80
90
100
110
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Jun-
14
Dec
-14
Jun-
15
Dec
-15
Jun-
16
Dec
-16
Desktop Laptop Mobile
Share of Chinese internet users using desktop, laptop or mobile to access internet(%)
CHINA CONSUMPTION TRENDS │ 2017
Gender gap in internet usage has largely closed while 20-50 years age group are the main users of internet
24 • Source: BBVA Research, China National Bureau of Statistics
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec
-97
Dec
-98
Dec
-99
Dec
-00
Dec
-01
Dec
-02
Dec
-03
Dec
-04
Dec
-05
Dec
-06
Dec
-07
Dec
-08
Dec
-09
Dec
-10
Dec
-11
Dec
-12
Dec
-13
Dec
-14
Dec
-15
Dec
-16
Female Male
Internet User Structure in China by Gender(%)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Jun-
14
Dec
-14
Jun-
15
Dec
-15
Jun-
16
Dec
-16
Under 10 years 10 years to 19 years 20 years to 29 years30 years to 39 years 40 years to 49 years 50 years to 59 yearsAbove 60 years
Internet User Structure in China by Age(%)
CHINA CONSUMPTION TRENDS │ 2017
Most using internet have atleast attained secondary education, while usage is even across income groups
25 • Source: BBVA Research, China National Bureau of Statistics
0%10%20%30%40%50%60%70%80%90%
100%
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Jun-
14
Dec
-14
Jun-
15
Dec
-15
Jun-
16
Dec
-16
Primary School or Less Junior Middle SchoolSenior Middle School CollegeUndergraduate & Above
Internet User Structure in China by Education(%)
0%10%20%30%40%50%60%70%80%90%
100%
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Jun-
14
Dec
-14
Jun-
15
Dec
-15
Jun-
16
Dec
-16
Under 500 RMB 501 to 1000 RMB 1001 to 2000 RMB
2001 to 3000 RMB 3001 to 5000 RMB over 5000 RMB
Internet User Structure in China by Monthly Income (%)
CHINA CONSUMPTION TRENDS │ 2017
Mobile phone ownership across Chinese households has risen to an average above 2 per household
26 • Source: BBVA Research, China National Bureau of Statistics
150
160
170
180
190
200
210
220
230
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average Mobile Phones per 100 households in China
CHINA CONSUMPTION TRENDS │ 2017
Mobile phone ownership in urban Chinese households across provinces
27 • Source: BBVA Research, China National Bureau of Statistics
190
200
210
220
230
240
250
260
Chi
na
Gua
ngxi
Fujia
n
Cho
ngqi
ng
Hun
an
Nin
gxia
Gui
zhou
Hai
nan
Jian
gsu
Yun
nan
Zhej
iang
Sic
huan
Hen
an
Sha
anxi
Gan
su
Jian
gxi
Hub
ei
Gua
ngdo
ng
Sha
ngha
i
Heb
ei
Sha
ndon
g
Bei
jing
Tia
njin
Sha
nxi
Jilin
Inne
r Mon
golia
Anh
ui
Tibe
t
Qin
ghai
Xin
jiang
Liao
ning
Hei
long
jiang
Mobile phones per 100 urban households
CHINA CONSUMPTION TRENDS │ 2017
Mobile phone ownership in rural Chinese households across provinces
28 • Source: BBVA Research, China National Bureau of Statistics
150
170
190
210
230
250
270
290
Nin
gxia
Gua
ngdo
ng
Qin
ghai
Gua
ngxi
Sha
anxi
Fujia
n
Gui
zhou
Gan
su
Hun
an Jilin
Yun
nan
Hai
nan
Jian
gxi
Hub
ei
Bei
jing
Heb
ei
Cho
ngqi
ng
Hen
an
Inne
r Mon
golia
Tia
njin
Jian
gsu
Sic
huan
Zhej
iang
Sha
ndon
g
Anh
ui
Hei
long
jiang
Sha
nxi
Liao
ning
Sha
ngha
i
Xin
jiang
Tibe
t
Mobile phones per 100 rural households
CHINA CONSUMPTION TRENDS │ 2017
Ecommerce in China
CHINA CONSUMPTION TRENDS │ 2017
China has seen rapid rise in use of smartphones for online shopping and payments over past 5 years
30 • Source: BBVA Research, Ministry of Commerce, China General Chamber of Commerce
0
50
100
150
200
250
300
350
400
450
500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Online Shopping Online PaymentOnline Bank (Excl payments) Online Securities TradingGroup Purchase Advance Booking for Journey
Number of users of internet based financial services in China(Person Million)
-10
0
10
20
30
40
50
60
70
2010 2011 2012 2013 2014 2015 2016Online Shopping Online PaymentOnline Bank (Excl payments) Online Securities TradingGroup Purchase Advance Booking for Journey
Purpose-wise usage rate of mobile phone in China(%)
CHINA CONSUMPTION TRENDS │ 2017
Online shopping has far outdone offline shopping in China over the past five years
31 • Source: BBVA Research, Ministry of Commerce, China General Chamber of Commerce
0
5
10
15
20
25
0100200300400500600700800900
1000
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Hypermarket Supermarket
Convenient Store Discount Store
Agg Avg Annual Growth (RHS)
China Store Sales (RMB Bn) (% YoY)
0
2000
4000
6000
8000
10000
12000
14000
16000
0
1000
2000
3000
4000
5000
6000
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
2016
China Annual Online Retail Sales (RMB)
(RMB Bn) (RMB)
CHINA CONSUMPTION TRENDS │ 2017
Chinese are shopping online to buy an increasingly diverse range of goods today than ever before
32 • Source: BBVA Research, Ministry of Commerce, China General Chamber of Commerce
0102030405060708090
Clo
thin
g, S
hoes
Dai
ly U
se G
oods
Boo
k, A
udio
/ Vid
eo A
ppl
Com
pute
r, C
omm
nP
rodu
ct
HH
D A
pplia
nces
Virt
ual g
ame
card
s
Food
& H
ealth
Sui
tcas
e &
Bag
Cat
erin
g
Film
& T
icke
t
Cos
met
ic &
Mak
eup
Cul
tura
l & S
ports
Goo
ds
2010 2015
Category-wise online shopping as a share of online & offline shopping in China (%)
CHINA CONSUMPTION TRENDS │ 2017
Online retail sales forms a small but growing part of China’s total E-commerce business, led by B2B
33 • Source: BBVA Research, China National Bureau of Statistics
0
5000
10000
15000
20000
25000
2010 2011 2012 2013 2014 2015 2016
Business to Business Retail Sales Group Sales
China's Annual ECommerce Business Turnover by Type of Business (RMB Bn)
CHINA CONSUMPTION TRENDS │ 2017
This report has been produced by Asia, MENA & Geostrategy Team
34
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CHINA CONSUMPTION TRENDS │ 2017
35
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CHINA CONSUMPTION TRENDS │ 2017
Disclaimer
36
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