Expectations for China’s Middle classes

16 Mar

Global companies are beginning to focus on the tremendous volume of China’s middle classes, those of which have expendable income for commodity driven markets. It is expected during the next 20 years that China’s wealthy urban coast will possess large spending power as spending will generally evolve from conservative saving habits to relaxed spending and consumption. This anticipated growth within the middle classes juxtaposes against former strategies that catered for upper middle classes and elites (Farrell et al. 2006). Many scholars have researched China’s obsession with foreign designer goods, a facet that allows global brands to enter the Chinese market swiftly and successfully.

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The spending power is emphasised in exhibit 1 (Farrell et al. 2006), as millions of Chinese leave poverty and climb the income ladder in urban metropolises. It is expected that the middle classes will account for the largest consumer market in the world, spending 20 trillion renminbi by 2025 (Farrell et al. 2006).

Some examples of China’s large rise in expendable growth are evident in car sales of 13 million in 2009 (Kharas, 2010) and its 700 million cell phone subscriptions  (Lau and Menn, 2009). However, the Chinese middle class although big, still only accounts for 12 percent of the population.  Meaning China has become reliant on investments for its growth rather than home grown consumption.

 

 

 

 

References

-Farrell, D., Gersch, U. A., & Stephenson, E. (2006). The value of China’s emerging middle class. McKinsey Quarterly2(I), 60.

-Kharas, H. (2010). the emerging middle class in developing countries (pp. 7-8). paris: oecd development centre.

– Lau, J. and J. Menn (2009), “Apple to launch iPhone in China”. Financial Times, 31 August 2009

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