Meet the Chinese consumer

of 2020
Meet the Chinese consumer of 2020

• Companies need China

to power their growth
• They need to
understand the
economic, social and
demographic changes
• A survey by Mc Kinsey-
a useful lens that
contemplating the
portfolio of the Chinese
Consumers in 2020
Changing Demographics: In this part we will
be discussing about the urban consumers.

• Rapid Industrialization-rising income, urban

living,better education,greater mobility.
• Unique factors like-One child policy.
• Chinese getting richer faster-Disposable incomes of
the urban consumers are like to doubled (2010-
2020).
• A very small group of people being affluent-6%
belong to mainstream consumers and 2% elite group.
• Multinationals operating in China-Limited
themselves to only affluent and mainstream
consumers. However they have a bigger opportunity
and would be benefited from the value consumer
categories.
However, the situation is now changing-

• Wealth of many consumers is • While income is expected to

rapidly changing. By 2020
many people in the value
category will be joining the
affluent groups. Mainstream
consumers will be 51% of the
urban population.
increase across China, some
cities and regions are already
wealthier than others. So it is
very important to understand
these variations as it affects
the categories of product
growth rapidly, and where.
By 2020,almost 400 million Chinese people will have household
disposable incomes of between $16000-$34000 per year
Changes in income distributions

From the figure it can state that-

• By 2020 in China- 10%-30% rise
of mainstream consumers.
Families now be able to afford
wide range or products.
• Distribution of income in 4
different group of cities-For
example-Foshan in Guangdong
have small GDP and population
size but their affluences can
make them attractive to
companies as leading tier-1
cities(Shaghai).
New Spending pattern: Understanding the changing economic
pattern and its impact.

1.Higher Discretionary
Spending:
• Higher incomes and
government efforts are
likely to rise consumptions.
• Discretionary categories
will show strongest
growth(13.4%)
• Semi- necessities(10.9%)
and necessities(7.2%)
• Affluent ones will be main
consumers
• Average household
spending to change from
2010-2020 by the
value,mainstream and
affluents.
• Gap between the
consumers widen up.
 New Spending pattern: Understanding the changing
economic pattern and its impact
2.Aspirational trading up:
• Consumers aspiring to improve
themselves, their living
standards as well as their
perceived social standing.
• Growth depends on consumers
buying pricier versions of
products they already have.
• Brands repositioning to match
the aspirations.
3.Emerging Senior Markets:
• Aging population (65 years) to
rise in 2020
• Spending pattern of the new
elderly people to differ from the
previous groups.
• Companies need to rethink their
ideas.
Implications for the Companies:

1.First Biggest challenge for them:

Building and sustaining the leading
position in China. Scope: For
Multinationals to use this platform is
important for driving the global growth.
World’s largest mainstream consumers-
So wider opportunity for companies to
serves this large consumer segment and
maximize their profits.
However, huge variation growth rates
of companies operating in China (2020)
are likely to depend on the product
categories, consumer segments and
geography
Implications for the Companies:

2. Second challenge:
China’s vast geography
and diverse region.
-local insight and
strategic decisions will
be vital.
-Corporates need to
redefine their plans with
lowered overhead costs
Implications for the Companies:

3. Third challenge:
undifferentiated mass
utilization and the increasing
expense of promotions.
But this scenario is changing
as there is a rise in different
categories of consumers. By
2020 companies will position
their brands and set prices
according to the target
consumers in order to retain
the market position.