China's Affluent Consumers with Money to Burn
Welcome to this week's skinny on China. There are many stats bandied about for China’s middle class, said to number in the hundreds of millions; more than the US population. Unfortunately the definition of middle class is both inconsistent and misleading. Some measures would classify someone earning $7,250 annually as middle class in China, but with the cost of living in cities like Shanghai, there wouldn’t be a lot of extra cash to go around.
If you’re selling foreign goods to Chinese consumers, in most cases a more relevant measure are the ‘affluent’ consumers; Chinese earning more than $20,000 a year with something left over to make discretionary purchases. There are now an estimated 120 million in China and that number’s picked to grow 280 million by 2020 – a significant market by anyone’s measures. Below there are a couple of articles with more on that.
On the subject of numbers, not quite hundreds of millions, but our Twitter account @thechinaskinny crossed the 1,000-happy-followers milestone today. If you’re a Twitter user, we’d love to have you join us to find out more and discuss Chinese consumer trends. We’re also on Facebook, Linked In and Google+. In the meantime, enjoy this week’s skinny, I hope you find it helpful to woo a few more affluent Chinese:
Chinese Consumers
Wealthy Chinese Consumers now Number 120 Million: 120m affluent ($20K-$1m annual disposable income) currently in China, with an annual purchasing power of $590b.
A Fifth of Chinese to be 'Affluent' by 2020: And up from the 120 million today, China is picked to have 280 million affluent consumers by 2020. 75% will be from the 'smaller' cities.
China Consumers to Dominate in 10 Years: Maersk's CEO gives it 10 years for China to truly evolve into a consumer economy, moving on from the export/investment-focused economy it currently is.
Made in USA Label Popular in China, too: 61% of Chinese consumers would pay more for US-made products according to Boston Consulting Group. When products are a similar price or quality, 47% percent prefer US-made - more than double those preferring Chinese-made. One extreme is shoppers in China would pay a 77% premium for US-made athletic shoes.
China's Economy Recovering, but Boom Days are Over: China's economy improvements more confined to businesses focusing on the domestic market.
Internet & Mobile
Pity the Parcel People: Many firms are still struggling to make profits with eCommerce in China - PC and gadget online sales, for example, now average 7% cheaper than bricks & mortar, down from 12% last year. Online retail about 5% of overall retail (a similar portion to USA), but it's picked to grow to 9% by 2015.
Android Rises to 90% of Smartphone Market in China: For anyone developing apps or websites for the Chinese market: Android's explosive growth continues in China, accounting for 90% of smartphones. No doubt it's helped by the average Android smartphone costing $222, less than a third of the average iPhone.
8 Facts About Sina Weibo Users That All Marketers Should Know: Good insights into Weibo users - who effectively hold the spending power of 16 Trillion RMB - about the GDP of Italy.
Sports
Race to Breach China Market Heats Up for U.S. Sports: US Sports push into China: Will China become a nation of scrappers and jocks? I'm hoping they'll take to rugby.
Little Buddhas
Toys 'R' Us Grows in China, with 'Tiger Moms' in Mind: Toys R Us are ramping up their online presence in China, followed by more stores, to take advantage of 18% growth of toys in China in 2011. Six sets of parents are likely to spoil their sole treasure and there are more of them with the year of the Dragon boom. Their focus is on educational toys, which account for 35% of China sales versus 21% in the USA.
Food & Beverage
$5bn PepsiCo-Tingyi ‘Behemoth’: Pepsi's tie-in with Chinese drinks business Tingyi creates a $5b monster. Will the Chinese beverage market get even harder?
Fashion
Seeking Luxury Through Design in China: The rise of China's homegrown fashion and some tips to succeed in it, in the eyes of a returnee fashion designer.
That's the skinny for the week!
If you've missed earlier news or need to learn more, there's a library of information about Chinese consumers in prior China Skinny Weeklys right here. You can have this delivered to your inbox each week by subscribing for email updates, or if social media is more your thing, please follow us on Twitter, Facebook, Linked In or Google+, or subscribe to our RSS feed. If you have any feedback or suggestions for future articles, please let us know.
