In a November 2016 report on the rise of the Chinese consumer, the Economist Intelligence Unit (EIU) offers the following findings -
- Private consumption is now the main driver of economic growth in China. It will grow in real terms by 5.5% a year on average in 2016-30 – boosting its share of the overall economy to nearly 50%. Incremental growth over the next 15 years is expected to exceed the current level of consumer expenditure in the EU.
- Nearly 35% of the population, or around 480m consumers, will meet definitions of upper middle-income and high-income by 2030. That represents a sharp increase on the 10% (132m) at present. They will have a personal disposable income of at least US$10,000 and will alter the consumer landscape in China.
- Income will become more dispersed, rather than concentrated in first-tier cities on the eastern coast. Major interior cities, such as Changsha, Chengdu, Chongqing and Wuhan are set to see sizeable leaps, with each having at least 2m high-income consumers by 2030. Nevertheless, smaller cities and those undergoing industrial restructuring risk being left behind, suggesting that high levels of income inequality will persist.
- Around 30% of the spending by the average Chinese consumer is still allocated to food, compared with only 15% in South Korea. As income levels rise, consumers will look to upgrade consumption habits and switch to more expensive and premium brands. This will play out in the automotive, tourism and financial services sectors.
As for What is driving the Chinese consumer,, a Mckinsey Report of April, 2016 notes that there are distinctive shifts from products to services, from mass products to premium brands (including loyalty to top international brands), from mere goods to lifestyle, health and well-being, from Online to O2O (Online-to-Offline), from in-store shopping to associated leisure experience on-site such as restaurants and cinemas, and from individual to joint family leisure activities.
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