McKinsey’s report identifies “mainstream” as households with disposable income between $16,000 and $34,000/year. In just three years, 167 million urban Chinese households-close to 400 million individuals-will be categorized as “mainstream” consumers, according to McKinsey & Company.
If policy changes cause the exchange value of the renminbi to rise, Chinese consumers will feel richer overnight as imported goods revalue downwards. President Xi Jinping recently reiterated his aim to float China’s currency. As urbanization and growth progress, businesses have opportunities to develop brand loyalties in a growing population of increasingly wealthy Chinese consumers.Įven if urbanization hits a snag, China may have the ability to create a wealthier country with the stroke of a pen. In 2010, China announced its goal to double disposable income for urban and rural populations by 2020, and so far, things are going to plan. Urban per capita disposable income grew 5.6 percent to 33,616 yuan ($5,062) in 2016. It also tends to include more disposable income. City living can mean a better education, more job opportunities, and increased wages. In 2017, 57.9 percent of the total population live in China’s cities. China’s urban population surpassed its rural population by 2011. Urbanization, along with all the opportunities a city can provide, will be essential to creating a moderately prosperous country. International food and beverage companies increasingly target Chinese consumers’ penchant for wine and chocolate, among other luxury products, rather than another demographic in the midst of fast food mania.Ĭhina plans to lift the entire country out of poverty by 2020. In fact, China now resembles the US with a crowded marketplace where people vote with their wallets. The honeymoon period has now subsided and consumers are looking for something more. However, the initial wave of consumer euphoria in China is likely to be closer to the end than the beginning.Īfter thirty years, Chinese consumer culture has forged its own unique identity with increasingly distinct demands. Chanel, Cartier, Rolex, Hershey’s, and McDonald’s each have a presence in China today. KFC became the first fast food franchise to land on Chinese soil, but they were far from the last. After China began adopting freer policies in the mid-1980s, Western companies lined up hoping to tap into the newly opened market. Soon, it fades away and gets supplanted by the next big consumer fad.Ĭhinese consumer behavior follows the same pattern. Next, consumers evaluate the product or trend for what it can actually do, not what marketers promoted. Then the hype gives rise to a critical backlash that creates a balance. First, the novelty of a new product can lead to a craze. Some last longer than others, but consumer goods and trends have limited lifespans.
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