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Serving up Chinese consumers (2)

By Wei Tian  (China Daily)

08:41, January 04, 2013

"Ensuring migrant workers receive the same treatment as urban citizens will place a large demand on the service industry. That is what Li said will help create jobs and stimulate domestic demand."

Lu was echoed by Ye Tan, a financial commentator, who said a lot of domestic consumption will be of services.

Even so, she said China's consumption structure is still unbalanced, as the rich continue to spend lavishly while the middle class' purchasing power remains frail.

Two other sources of concern are middle-aged and senior citizens, whose spending power has been reduced amid concerns over the future of social services. Ye said improving the social security system is the best way to increase that power.

A recent survey by the marketing research company ACNeilson suggests that consumer confidence stabilized in China in the third quarter. Middle-class consumers in the largest cities, buoyed by a low consumer price index and measures to stimulate consumption, were much more willing to spend in the third quarter than in the previous one.

Changing appetite

While China's purchasing power remains strong, consumers' tastes are changing. They now tend to show less enthusiasm for fancy brands, and instead pay more attention to services.

In the first nine months of 2012, the amount of tax rebates Chinese customers received on goods bought overseas increased by 63 percent, according to Global Blue, a Switzerland-based shopping tourism company.

A survey conducted by Boston Consulting Group Inc suggested that, despite the country's slowing GDP growth, 40 percent of Chinese consumers plan to spend more on "non-mandatory products" by 2013.

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