Chinese Consumers to Pamper Themselves
China represents the largest growing consumer market in the world today. With wages in China expected to be 4.5 times higher by 2020, researchers at the Economist Intelligence Unit forecast that at least 80million households will have an annual income in excess of US$7,500.
So what will Chinese consumers spend their larger incomes on? Services. According to a study conducted by GIA Asia Pacific in 2006 among 720 respondents across three cities: Shanghai, Wuhan and Guangzhou, over 45% of respondents are likely to spend more on education, healthcare and well-being, food and beverages and entertainment within the next three years.
This study highlighted a shift in consumption patterns with households less attracted by traditional hardware expenditures and leaning towards services with a strong emphasis on consumerism and self-indulgence. Housing related home furnishing and fittings, automobile and transportation expenses will be among the slowest growing sectors, together with supporting activities such as financial services.
Around the country, households will open their wallet wider for services: Education and Healthcare/well-being will witness the fastest growth in all surveyed cities, regardless of the respondents’ age, marital status, current education or income. Budgets allocated to “Feel good”, “quick rewards” services, such as food and beverages and entertainment will grow for around 45% of respondents.
However, there are noticeable differences in consumption patterns from city to city. Shanghai residents are less willing to spend than Wuhan and Guangzhou residents.
Alongside the trend “feel good and instant reward” purchase, Wuhan residents will most likely increase their budgets in clothing while Guangzhou residents will spend much more on traveling.
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