What’s Growing in China?

Aug 22 2011

CNBC have an interesting slide show (click here) and article on Growing Trends for Chinese Consumers and it’s worth sharing them even though some are well known (some are more surprising). The trends are macro-economic, and provide insights into the changing Chinese marketplace and consumer.

#1 Demand for corn is growing at an incredible pace, with a doubling of imports in the last year. This demand is mostly to feed grain-fed livestock (75% of demand) rather than consumers themselves, and reflects changing lifestyles and growing affluence.

#2 Health food and nuts show expanding demand, especially among a wealthier and older population. The Chinese health food market is expected to grow to $70 billion by 2015, driving demand for imports of fruits, nuts and yoghurt. For example, the probiotic market is expected to grow 120% from 2009 to 2012.

#3 Mobile internet is booming, and China is set to pass 1 billion connections by May 2012 (of which a third already have internet-enabled phones). There is also huge growth in instant messaging services, especially among the young, presenting opportunities as well as challenges (especially for those who would seek to control information).

#4 Wine consumption is also booming, with China set to overtake the US as the world’s largest wine consumer by 2015.  In 2009 wine consumption was around 126 million cases, and consumption is growing at 20% or more per year. Wine is considered a healthier alternative to spirits and appeals to the growing number of women who are drinking.

#5 International travel is no longer the prerogative of a few, with 65 million outbound departures this year predicted to grow to 100 million by 2020. Travel is a top priority for the newly wealthy, in a country where few were previously able to travel outside the borders. The Chinese travel industry is well known for large groups of travellers (up to 12,000) heading for Europe and Australia and hotels in many countries are gearing up to meet the demand for Chinese speaking staff.

#6 Pet ownership is increasing and attitudes evolving, especially in a country of one child families with an ageing population. Dogs are the most popular pets, and seen as status symbols among many, leading to an increase in shops and websites focused on catering for the growing population of wealthy pet owners.

#7 Overseas education is growing, and China already has more students abroad than any other nation (around 1.27 million in 2010). As well as the appeal of travel and overseas exposure, overseas education allows students to bypass the highly competitive national college entrance exams.  The UK’s University of Cambridge had around 1,000 Chinese students last year (more than 8% of the total population).

#8 Luxury goods sales are growing at around 18% per year, and luxury goods retailers flocking to China to get a piece of the action. Sales are expected to reach at least $27 billion by 2015, which would account for around 20% of the total global market for luxury goods. As a startling example, Gucci has grown from 6 stores to 39 in the last five years.

#9 Green technology is a key trend among consumers and for the government’s long term plans too. Although China is now the world’s biggest polluter, Chinese consumers are becoming more environmentally conscious, and in a recent survey 84% said they would be prepared to pay more for products which are certified as ‘green’. China invested around $34.6 billion in renewable energy in 2009, double the US.

#10 Foreign real estate investment is becoming more and more popular as the Chinese government cracks down on the domestic property market, and Singapore, Hong Kong and further afield prices are growing as Chinese consumers snap up properties.  For example, Chinese buyers are the largest investors in the London property market currently at over 10% of the total sales. Canny Chinese buyers find many ways to bypass the government’s restrictions on buying foreign currency!

These trends reveal sometimes expected and often surprising aspects of China’s growing importance in the global economy, as Chinese markets and Chinese consumers take their part along with more established economies. There are plenty more stories to come out of China in the coming years.

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