The Economist explores what makes the Middle Kingdom’s shoppers tick.
By 2015 China will the second-largest consumer market in the world. Already there are 2 million more cars in China than America. The growth in the domestic market is making itself rapidly felt in luxury goods, there are more Prada boutiques in Hong Kong than in New York.
Western companies are keen to break into this growing market of vast potential. However, expansion into China is no guarantee of success. Home Depot failed to understand the home consumer. There is no DIY culture amongst the middle classes. Labour is inexpensive, and thus so is decorating. Why do it yourself when others can do it cheaper and better?
To many the Chinese consumer is still a mystery. Careful market research and cautious product launches are better ways of testing the water than trying to replicate western success on a grand scale.
George Magnus believes that rebalancing the Chinese economy is essential if it is to avoid falling into a middle-income trap. As such, if western companies can get it right, the benefits will not only be huge; they will be playing a part in sustaining China’s long term economic health.
George Magnus is an expert speaker on China, senior economic adviser at UBS and author of Uprising: will emerging markets shape or shake the world economy?