China to be world's 2nd largest consumer by 2015

17:13, November 12, 2010      

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A recent report by Boston Consulting Group asserts that China's middle-class and rich population will grow from 150 million to more than 400 million in 10 years with two-thirds of them living in small cities.

It also found that this group is more willing to increase and upgrade their consumption than those in big cities.

BCG predicts in this report that China will contribute 9 percent of the world's total consumption in 2010, ranking the third in the world and that will increase to 14 percent by 2015, overtaking Japan as the world's second largest consumer. By 2020, China's consumption will account for 22 percent of the world's total.

A household with an annual inflation-weighted after-tax income of more than 60,000 yuan is regarded as a part of this group in the report. It estimates that the middle class will account for 51 percent of the population by 2020 from 24 percent now.

Pressured by rising living costs and economic recession, the middle and rich consumers in big cities are getting more conservative on consumption, while those in small cities are much more optimistic and happy with their life.

That means huge opportunities for multinationals. Enterprises have to build their business in 340 urban areas now. But there will be 550 urban areas in 10 years housing 80 percent of the Chinese middle-class and rich population.

And suppliers should not take it for granted that their business success can be copied in small cities. They need to do more to promote their brand to those new consumers and take the market diversity into consideration.

By Li Jia, People’s Daily Online


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