China's emerging middle class buyers set to push spending growth
31/10/2008 17:26
China's emerging middle class buyers were set to generate significant
spending growth in the coming years, as more and more people in not only
first-tier cities like Shanghai and Beijing, but also the satellite towns and
second-tier cities want to buy "affordable luxuries," marketing advisers said in
Hong Kong today.
Speaking at a recent business forum, Janet de Silva, chief
executive officer of a Hong Kong-based marketing and branding firm, said China's
emerging middle class has been "a reality," especially over the past five years,
and the retail markets were already established and competitive in first-tier
cities like Beijing and Shanghai.
On top of that, one of the key trends in
2008 is that more and more people in second-tier cities and satellite cities
around first-tier cities were joining the league of emerging middle class who
want to buy "affordable luxuries," she added.
"I believe that the
middle-class consuming market will do a lot to help stabilize what will be some
offsets in China because of the slowdown in certain parts of manufacturing," de
Silva said, referring to the export sectors.
She said consumer spending,
though growing quickly, was contributing only about 20 percent to China's GDP
growth at present, compared to 35 percent contributed by export.
But surveys
have shown that China's emerging middle class, many of whom are skilled
technicians and white-collar employees working with multinational firms,
"strongly associate international brands with tastes and success."
The middle
class buyers were obviously expanding beyond the first-tier cities into the
suburbs and the second-tier cities, with some ten satellite towns, each with a
population of about 1 million, planned for Shanghai, for instance, she
said.
Some of the multinationals, which employed many of the technicians and
white-collar workers, were now manufacturing products for consumption in China,
she added.
Viveca Chan, whose marketing firm operates in Beijing, Shanghai
and Hong Kong, said Chinese consumers were turning from shopping for "outward
recognition to inner substance."
But de Silva was also quick to warn that
international retailers often run the risk of unrealistic expectations for the
Chinese consumer market, which is developing rapidly but not everyone is there
with right consumption pattern right now.
"1.3 billion people does not mean
1.3 billion shoppers," she said.
She cited a case to show that Hong Kong, a
city with a population of about 7 million who were each willing to pay US$350 on
average for a women and babies' product, makes a larger market than the city of
Chongqing, a city of over 20 million at present.
Chongqing, in southwestern
China, would become "commercially viable" for the product involved by 2015,
whereas Shanghai was expected overtake Hong Kong in the coming years.
De
Silva said retailers trying to tap into the emerging Chinese middle class
consuming market should do researches, find a strong partner and be
patient.
Xinhua
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