China’s emerging middle-class buyers were set to generate significant spending power in coming years as more people wanted to buy “affordable luxuries,” according to marketing advisers in Hong Kong.
The trend would be seen in not only first-tier cities like Shanghai and Beijing, but also their satellite towns and second-tier cities, the advisers told a recent business forum.
China’s emerging middle class has been “a reality,” especially over the past five years, and retail markets were already established and competitive in first-tier cities like Beijing and Shanghai, the Chief Executive Officer, Janet de Silva, of a Hong Kong-based Retail China marketing and branding firm said.
“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 sector.
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 exports.
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 10 satellite towns, each with a population of about 1 million, planned for Shanghai, for instance, she said.
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” of consumer goods.
But de Silva was also quick to warn that international retailers often run the risk of unrealistic expectations for the Chinese consumer market.
“One-point-three billion people does not mean 1.3 billion shoppers,” she said.
She cited a case to show that Hong Kong, with a population of about 7 million willing to pay HK$350 (US$45) on average for a mother and baby product, is a larger market than the city of Chongqing, with over 30 million people.
Chongqing would become “commercially viable” for the product by 2015, but Shanghai was soon expected to overtake Hong Kong.
