Business
22:52, 31-Aug-2018
As Chinese consumers demand more, two ways to access this growing market
Updated
22:30, 03-Sep-2018
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00:50
China's economic growth is transforming into a model that relies more on consumption and less on investment, offering the world a huge and rapidly expanding consumer market, according to the Financial Times.
The report mentioned that China's total household consumption accounted for only 13 percent of that of the United States in 2007, yet the figure has surged 20 percentage points in the 10 years since then.
Meanwhile, the International Monetary Fund (IMF) predicts China's total consumption will occupy 74 percent of America's household consumption in 2027, and China's economy will be equal to the US by 2026.
A report jointly published by World Economic Forum and Bain Capital analyzed that the market boom was mainly thanks to the increased demand of consumers, with several key factors driving the demand.
China's urbanization rate will stand at 70 percent by 2027 from 57 percent in 2016, data from the World Bank shows. Residents are predicted to move to second-or-third tier cities as well as inland cities instead of popular ones because their demand could be satisfied even in small cities. And the population flow to these cities will in turn boost local economies.
Additionally, more people will be joining the middle class in the future, thus bringing in higher demand for premium products and services that could make their lives more colorful.
02:38
Finding a way to access this market will be a challenge for companies. According to CGTN commentator Einar Tangen, there are two things to keep in mind: Don't see the Chinese market as an extension of their own and stop following the international companies.
"They have to understand what Chinese market wants. So you're starting to see this from all the luxury brands. They are releasing first-time offers in China, aimed at Chinese market," Tangen explained.
He said domestic companies should capitalize on their own advantages by responding swiftly to taste changes of Chinese. "They should start realizing they have a market onto themselves. They have a unique perspective, and that they can succeed where as other companies, even large brands, who have difficulties, because they are not nimble enough to respond to very quick changing Chinese tastes."