There’s been a lot of talk about China’s economy. Some of it is positive such discussions over the globally towering GDP growth. However, as the GDP continues to rise and dwarf those of other countries, predictions of market bubbles bursting and the economy facing risks are even more astounding than the GDP growth.
I always like to look at things from a positive perspective. First of all, China wouldn’t have been able to get to where it is today without knowing what it’s doing. China is just getting started. There are only 300 million people of the population in the middle class, leaving 1 billion looking to climb out of poverty. China needs to fatten its middle class in order to maintain continuous economic growth which is why the government is promoting more consumer spending.
What I’d like to take a closer look at is…
1. Who is spending?
2. Why are they spending?
3. On what and where is this target market group spending their money?
4. Why is this important to businesses?
1. Who is spending?
The rich are definitely spending, but not necessarily domestically. Many affluent Chinese have been able to travel abroad to more places in the past few years such as Hong Kong, Taiwan, and the United States. This means that a lot of these new world travelers are buying brand name and high-end products while on vacation at ‘discounted’ prices compared to what these products go for in the mainland. So what are the affluent buying locally? Food, goods for the home, and automobiles. This leaves us with the middle class. Their salaries are growing which means they have more disposable income. The younger generations make up a good percentage of this spending middle class and they are spending every penny.
2. Why are they spending?
The younger generations are spending every penny because they don’t care. Times are good for them and they want to enjoy life. They want to express to their friends and the world that they have ‘made it’.
3. On what and where is this target market group spending their money?
Some of the young middle class are spending good money on food, but a lot of them tend to eat cheap and quick food. These food sources consist of local mom and pop shops, fast food restaurants, and convenience stores. So where does the rest of their money go? A lot of them like to spend money on other ‘entertainment’ since food is not always considered a part of this category. This can range from going to see movies, hanging out at lounges, bars, and clubs, or just plain shopping. Sometimes the shopping doesn’t always end up in a quick purchase but sure enough they’ll empty their bank accounts once they have enough for that ‘status symbol’ mobile phone or designer bag. Credit card debt is always an option if the bank account isn’t fat enough for the luxury items. Why not? Most of them don’t have to pay rent anyways since Mom and Dad put roofs over their heads.
4. Why is this important to businesses?
During this recovery time, there’s still plenty of market potential. It’s just a matter of finding where your target market is, what they’re buying, and why they’re buying certain products. Keep an eye on this rising young Chinese middle class. They will fuel this booming economy to the next level.
Comments anyone?
Whether you agree or disagree, we’d love to know what you think. Leave your opinion, thoughts, and/or comments below. Useful links to resources providing additional insight are especially appreciated. Thanks. =)
