A Consuming Nation in the Making
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I watched an interview on China-CBN last night, the guest is a guy from McKinsey, and he is familar with the consumer trend in China. Some interesting points I took down here:
1) China is the No 4. in the world in terms of GDP; I believe China is No. 1 or 2 receipent of foreign investments. But China is about the size of Italy (No. 8 economy in the world?) in terms of consumer spending.
2) The consuming is speeding up as goverment realized this is good for the economy, as the health care and social insurance system undergoing reform, as the young generation and emering middle class realize “life is more than work and saving”, etc. He mentioned 2015 maybe a turning point.
3) Many foreign companies tend to under-estimate or over-estimate the market potential of China from time to time.
4) The tiered cities. If we can category the cities according to the income and spending level, tier one city include: Shanghai, Beijing, Guangzhou and Shenzhen; Tier two: Hangzhou, Ningbo, Suzhou, Wuhan, Nanjing etc; Tier three: Jinhua, Ji’nan, Nanchang, Xi’an, Wu’hu etc (I am just making up the list to get an idea. Don’t take this list too seriously).
He believes the tier 2 and 3 cities will have more growth opportunities than tier one. I agree. The reason is very simple: a ten year old will grow much faster than an adult.