China undergoing shift into nation of consumers

15:59, April 18, 2011      

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The explosive growth of luxury consumption in China is the epitome of China's huge consumption potential. Although the statistical standards are different, it has become a general consensus that China's luxury goods consumption accounts for more than 20 percent of the global market share, said Chen Wenling, director of the Comprehensive Department under the Research Office of the State Council, during the China-France Economic Seminar on April 14.

For multinational companies, China is the production base and the consumer market. Henri Hie, vice president of Air France's route management, said that most of their customers will be Chinese in the future because the middle class in China will travel overseas more. Paolo Gasparrini, president of the L'Oreal China, hopes L'Oreal products can cover a broader consumer group in China and expand into second-tier and third-tier cities.

Chen said that new products, new consumers and new markets will drive the rapid growth of China's consumer market. In fact, five types of consumption are leading China's consumer market.

The first type is conspicuous consumption, conducted primarily by the rich and the rising middle class. The second type is urbanization-driven consumption. China's urbanization rate will likely exceed 60 percent by the end of 2030, meaning that about 200 million rural residents will move to cities, which will lift the country' urban population to somewhere between 800 million and 900 million.

The surge in urban population will greatly boost the urban consumption of housing, daily commodities, agricultural products, among others. The third type is social security-driven consumption. As China improves its social security system step by step, people's consumption demand, which was previously held back by educational and medical factors, will be unleashed.

The fourth type is the consumption generated by economic restructuring, technological innovation and progress as well as other factors. For example, the development of high-speed trains, aircraft and other forms of transportation will promote the transportation and tourism industries.

The fifth type is the consumption conducted by the poor people who will see rising incomes. According to the United Nations' Multidimensional Poverty Index, there are about 254 million people living in poverty in China. Thanks to the central government's poverty alleviation efforts, their living conditions are becoming better and better, and their increasing consumption will boost China's domestic consumption.

However, Chen noted that the Chinese government should guide the development of its consumer market, and try to avoid excessive consumption.

Expanding consumption is one of the strategic tasks in the 12th Five-Year Plan. China's total retail sales of consumer goods reached 2.9 trillion yuan in the first two months of 2011, up nearly 16 percent from a year earlier.

By People's Daily Online

 
 
     
 
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