UNLOCKING CHINA'S CONSUMER POWER
Jeff Walters & Hubert Hsu
Forbes, April 5, 2010
In 2005, a consumer company doing business in 70 locations (cities and counties) in China could reach 70% of consumers in the middle and affluent classes. To achieve the same coverage today, a company must be in nearly 240 locations. By 2020, that number will exceed 400. A dramatic shift in the geographic distribution of consumer spending power is under way in China. The middle classes are expanding out beyond the largest cities more rapidly and in greater numbers than any market has ever witnessed.
China's growth will bring close to 100 million households earning at least 60,000 yuan per year (about $9,000) into the middle- and affluent-class (MAC) segments from 2010 to 2020--roughly the same number of MAC-equivalent households as in the United States today. The increase in MAC households will double consumer spending power in nearly a quarter of China's cities and counties over the next decade. Such a dynamic environment has implications for companies at all levels and positions. Companies currently enjoying growth need to ensure that their economic model is sustainable. Laggards can capitalize on market dynamics and catch up to the leaders by winning in newly important locations.
Given that prospect, it's no wonder that many consumer goods and retail companies--including Procter & Gamble, Inditex, and Tesco--are making major investments in China. Yet their success in this culturally complex and geographically massive market is by no means guaranteed. Our latest analysis indicates that the rapid increase in disposable household income across China has magnified the complexity that companies encounter when deciding where to expand. Consider the prospect that by 2020, there will be nearly 800 urban locations with real disposable income per capita greater than Shanghai's today--meaning that in 2020, a city with per capita income that equals Shanghai's today will be too poor to be counted among China's top 800 urban locations. Even rural China will be an attractive market for some companies and an engine for growth after most of urban China has been reached. But with the highest incomes in some rural areas as much as 30 times greater than the lowest, picking the right markets to enter is critical.
(...) [artículo aquí]
Forbes, April 5, 2010
In 2005, a consumer company doing business in 70 locations (cities and counties) in China could reach 70% of consumers in the middle and affluent classes. To achieve the same coverage today, a company must be in nearly 240 locations. By 2020, that number will exceed 400. A dramatic shift in the geographic distribution of consumer spending power is under way in China. The middle classes are expanding out beyond the largest cities more rapidly and in greater numbers than any market has ever witnessed.
China's growth will bring close to 100 million households earning at least 60,000 yuan per year (about $9,000) into the middle- and affluent-class (MAC) segments from 2010 to 2020--roughly the same number of MAC-equivalent households as in the United States today. The increase in MAC households will double consumer spending power in nearly a quarter of China's cities and counties over the next decade. Such a dynamic environment has implications for companies at all levels and positions. Companies currently enjoying growth need to ensure that their economic model is sustainable. Laggards can capitalize on market dynamics and catch up to the leaders by winning in newly important locations.
Given that prospect, it's no wonder that many consumer goods and retail companies--including Procter & Gamble, Inditex, and Tesco--are making major investments in China. Yet their success in this culturally complex and geographically massive market is by no means guaranteed. Our latest analysis indicates that the rapid increase in disposable household income across China has magnified the complexity that companies encounter when deciding where to expand. Consider the prospect that by 2020, there will be nearly 800 urban locations with real disposable income per capita greater than Shanghai's today--meaning that in 2020, a city with per capita income that equals Shanghai's today will be too poor to be counted among China's top 800 urban locations. Even rural China will be an attractive market for some companies and an engine for growth after most of urban China has been reached. But with the highest incomes in some rural areas as much as 30 times greater than the lowest, picking the right markets to enter is critical.
(...) [artículo aquí]
Posts
No comments:
Post a Comment