Chinese Consumer Market
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China has experienced rapid economic growth and urbanization over recent decades, transitioning from a largely rural, manufacturing-based economy to a more consumer-driven urban society. This has created a massive new consumer class that is projected to increase domestic consumption substantially. The government is investing heavily in infrastructure like high-speed rail and new cities to facilitate economic development and further stimulate domestic consumption. Younger generations in particular are driving new patterns of spending, especially through growing e-commerce sales, and represent both opportunities and challenges for companies seeking to engage Chinese consumers.
Chinese Consumer Market
- 1. China's Century Trends in Retail & Consumption An Introduction to the Chinese Market By Ajay Jain
- 2. Cheap Labour Creating a Manufacturing Miracle Factory of the World ? After the global ?nancial crisis in 2008-2010 there has been a new focus on the latent power of the Chinese consumer. ? As demand in the United States and Europe has waned, exports have weakened as an engine of China¡¯s economic growth, and Beijing has turned its attention to stimulating domestic demand.
- 3. Exporting Nation China shipped US$1.623 trillion worth of goods around the globe in 2014, up by 48.5% since 2010.
- 4. Shortfalls in Consumption In 2010 Chinese consumption accounted for 5.6% in 2010 of global private consumption, compared to the US¡¯s 29% and Western Europe¡¯s 26% Chinese consumers still spent a large percentage of their incomes on provisions 35% in the case of rural consumers 26% for Urban households Yet China contributed more than any country to the growth in global consumption I 2011-13. Consumption by urban Chinese households will increase from 10 trillion yuan in 2012 to nearly 27 trillion yuan in 2022.
- 9. Urbanisation A massive push to urbanise is also under way, which should produce tens of millions of richer & therefore willing consumers. Changes through infrastructure
- 10. Redevelopment In 2014, 26 million urban homes were occupied The role of Infrastructure
- 11. Redevelopment In 2014, 26 million urban homes were occupied The role of Infrastructure
- 12. The role of Infrastructure Rural Conversion China builds between 12 - 24 new cities a year. Of the 10 cities world-wide that created the most shopping-mall space last year, nine were in China
- 13. Rural Santai county inhabited by farm- workers one modern shopping mall has sprung up and another is being built. Creating Consumer Societies Changes in Population
- 14. Mega cities ? China has more than 660 cities ? Over 100 of them have more than a million people ? 10 Chinese cities contain 5m-10m people.At least one of these, Wuhan, will pass 10m within a decade. ? 6 cities have more than 10 million (worldwide 30 cities) Shanghai (23m), Beijing (19.5m), Chongqing (13m), Guangzhou (12m), Shenzhen (11m) and Tianjin (11m). No One Single Market
- 16. Migration & Population Shifts In 2014 alone 13.2 million new urban jobs creating more empowered consumers. China's percentage of urban population is 55% 300 million more people will move from the rural areas into cities in the next 10 years.
- 17. Mall Construction Building Boom Of the 10 cities world-wide that created the most shopping-mall space last year, nine were in China
- 18. New Century Global Centre, Chengdu Build it And they will come China built world¡¯s largest building in Chengdu. The New Century Global Centre is the largest freestanding building in the world 500 meters long, 400 meters wide and 100 meters tall. As large as 20 Sydney Opera Houses or three Pentagons.
- 21. Malls with Chinese Characteristics Chinese cities account for more than half of the mall space under construction now.
- 22. Transportation & Railway Network Over the next ?ve years China will spend as much as 3.5 trillion yuan on railway construction, 750 billion yuan on rail rolling stock, 3.5 trillion yuan to 4 trillion yuan on highways, 300 billion yuan to 350 billion yuan on airports, and 900 billion yuan on ports
- 24. Generation 1 - Cautious Spenders Lived through the cultural revolution and have sometimes witnessed starvation and adverse poverty.
- 25. Generation 2 - Conspicuous Spenders Deprived when growing up, the generation that buys brands for show.
- 26. Generation 3 - Gen. 90s Sophisticated Technologically savvy, sophisticated and well informed customers looking to express their individuality.
- 27. China's Luxury Goods Market Globally the Chinese are the biggest buyers of expensive items, accounting for some 29% of purchases last year by 2020 China¡¯ personal luxury market will account for $245 Billion 40% of the world market.
- 31. Consuming Experience for the sharing economy
- 32. Post 90s Generation Chinese born in the 1990s are playing a signi?cant role in consumption, as they have more disposable money and a greater say in family spending. Style and design, brand, type, colour, size and price were the top six factors that in?uenced their decisions.
- 34. Informed Choices Many Chinese consumers, frustrated with high retail prices, are now seeking bargains online and abroad. Only 13% report that a brand was the ?rst factor they considered while shopping, and 65% took both brand and practicality into consideration when making a purchase. About 70% consider both quality and price in shopping decisions.
- 35. Information Empowered Consumers China has become the world¡¯s biggest e-commerce market, with spending forecast to reach $540 billion next year. 61.7 % of 16 million post-90s surf the Internet everyday, which accounts for 13% of the total number of China Internet users.
- 36. E-Commerce Revolution On Singles Day, an annual online- marketing extravaganza held on November 11th, 400m Chinese spent $5.7 billion just on Tmall, an e- commerce platform run by Alibaba; Americans, on their Cyber Monday a few weeks later, spent only about $2 billion.
- 37. E-Commerce Revolution Luxi, a town of 57,000 people, online shopping is hot. The ?rst express- delivery of?ce opened only three years ago, and handled perhaps ten packages a day; today, there are ?ve, each handling 100 packages a day.
- 39. e-Commerce? Logistics Companies focusing on higher-density networks with quicker response times. Taobao¡¯s logistics network now covers more than 90 percent of China¡¯s cities, counties and districts as opposed to traditional networks, which typically focus only on tier- one and -two cities.
- 42. Challenges ? Vast Market of 700+ cities ? Fast & Dynamic Demographic Shift ? Marketing Strategies need to ever more creative. ? Lack Brand Loyalty / Fickle Customer Loyalty ? Chinese Products Cheaper but they will soon be better.? The Factory of the world in Rapidly Innovating
- 43. Opportunities ? Numbers and Volumes. ? Even a niche customer base in China is as big as a European Country Market. ? China is still a growth story. ? Chinese Customers search for Real Values ? e.g. Health & Safety. ? Expanding Infrastructure. ? Educated & well-informed Customers.
- 44. Best of Luck!