On December 21, the Boston Consulting Group (BCG) and AliResearch jointly issued the Chinese consumption trend report, predicting an increase of $ 2.3 trillion in China’s consumer market in the next five years. The upper middle class and affluent consumers will contribute 81% of the incremental consumption. Private online shopping is expected to surge by 20% per year by 2020.
Despite the slowdown in the Chinese economy, the growth rate of China’s consumer market is still expected to remain a world leader. According to the prediction of BCG, despite the slowdown in GDP growth to 5.5%, lower than the official target 6.5%, private consumption will reach $ 6.5 trillion in 2020. In the next five years, China’s consumer market will increase by $ 2.3 trillion, 1.3 times the current size of the consumer market of Germany and the UK.
In the meantime, it’s pointed out in the report entitled “Chinese Consumption Trend Report—Three Major Newly Emerging Forces Leading the Consumption of New Economy” that the main reason why the growth rate of China’s consumption will continue to exceed that of GDP significantly is that the development trend in population, society, science and technology and other aspects is fundamentally creating a two-speed parallel consumer economy.
The three development trends “the upper middle class and affluent consumers, the new generation of consumers and online shopping” are driving the transformation of China’s consumer market.
According to the research of BCG, the number of upper middle class and affluent consumers in China with an annual income of more than $ 24,000 is increasing: 81% of the growth in China’s urban consumption is expected to come from the upper middle class and affluent consumers. The number of upper middle class and affluent families is expected to double by 2020, reaching 100 million. Their consumption is expected to grow by 17% per year.
The new generation of Chinese consumers between the age of 18 and 35 is gaining momentum. They’re expected to replace the consumers born in the 1950s, 1960s and 1970s as the dominant force in the Chinese consumer market. According to estimates, the spending power of these new-generation consumers will grow at an average annual rate of 14%, which is twice that of consumers over the age of 35. They’re expected to contribute 65% of the incremental consumption.
In addition, the demand for online shopping will remain strong. It’s pointed out in the report that private online consumption is expected to surge by 20% per year by 2020, while over the same period, the growth rate of retail sales of entity shops is expected to be only 6% per year. This means that online shopping will reach about $ 1.6 trillion by 2020. 42% of the growth in private consumption will come from online consumption in the future.
At present, 51% of the online shopping comes from mobile terminals in China, only 35% on average in other countries around the world. The growth in online shopping (especially shopping on mobile terminals) will open up the market for more consumer products.
The three trends above will also change the type of products and services that Chinese families consume. It has been found in the study of BCG that as Chinese consumers become the upper middle and affluent classes, their consumption of services and high-end products such as luxuries, healthy food, education, tourism has increased dramatically in order to improve and enhance their lifestyle and quality of life.
“Consumer product enterprises must continue to pay attention to the Chinese market. China will remain one of the countries with the biggest opportunities for growth in the world, and the growth will come from different products and different retail channels,” one of the authors of the report and a BCG partner Jeff Walters said.
In the eyes of the Director of AliResearch Gao Hongbing, online shopping is driving the transformation of China’s consumer market. It has been found in the study of AliResearch that online shopping can meet many of the consumers’ demands that aren’t satisfied in entity shops, thus encouraging consumers to generate need demands. “The per capita expenditure on organic and imported food has increased significantly over the last three years.” Gao Hongbing reveals that the share of consumers’ consumption on mobile terminals in Tibetan area increased on the November 11 shopping festival. Mobile Internet will further help consumers in remote areas complete consumption in the future.
The variety of purchasing channels of the Chinese consumers means that enterprises need a comprehensive set of channels and modes to interact with consumers. One of the authors of the report and the Managing Director of BCG Guo Youqi said: “As the nature of consumption is changing dramatically, the winning strategies of the past are getting out of date. It will be of unprecedented importance for enterprises to choose appropriate target consumers and product categories strategically. At the same time, enterprises must find a place in the rapidly growing online retail channel.”
According to statistics, on the November 11 shopping festival, the trading volume on the platform of Alibaba Group reached RMB 91.217 billion, an increase of nearly 60% compared with RMB 57.1 billion from a year earlier. The trading volume on mobile terminals reached RMB 62.642 billion, accounting for 68%. Countries and regions where the transactions took place reached 232, and 30 million Chinese consumers bought imported goods.
The Boston Consulting Group and AliResearch Jointly Issued the Chinese Consumption Trend Report
Time： 2016-01-21 17:39 Views：2676
Time： 2016-01-21 17:39 Views：2676