The emerging potential of China’s consumer markets is well known to outside producers, many of which, like General Motors, have already come to depend on these markets for their profitability. Unlike other leading economies in Asia, including Japan and South Korea, China began opening its
At the same time, the Chinese people have rapidly advanced as consumers; the wealth created by China’s growth has created a substantial middle class. Putting a precise number on the size of this segment of the population remains tricky, but however large it is, China’s current middle class is a mere fraction of what it will become as hundreds of millions more people join its ranks during the next decade.
After this honeymoon phase, the Chinese mass market will morph into a vast, highly differentiated and sophisticated multi-tiered consumer economy capable of driving growth for Chinese and global businesses alike. This growth trajectory represents a powerful short-term opportunity for major non-Chinese companies (for example, in helping to develop the retail sector of this nation) and a daunting long-term challenge in terms of maintaining market share.
This growth has also created an immense cultural transition from a largely rural country to a nation of cities. In the 1990s many companies had their hopes for China dashed because they were trying to sell urban-oriented products into a market where three-quarters of the people still lived in the countryside. Now around half live in urban areas.
By 2020, this share will rise to 60 percent. This shift to an urbanized population means that China’s markets, fundamentally different from ten years ago, will be transformed once again in the next decade. Urbanites need, and buy, fundamentally different types of products and services.
The Three Great Consumer Regions
Socioeconomic Levels of City Tiers
China's Urban Population, 1980-2020, millions