A new breed of enthusiastic Chinese consumers helped to pull many U. S. companies through the global recession.
While older Chinese still save almost 50 percent of their incomes, younger generations are “shopaholics” and save next to zero. Salaries for young Chinese aged between 20 and 30 almost tripled in less than a decade. The number of credit cards exploded in China, from 13 million in 2005 to more than 115 million in 2009.
A typical young middle class Chinese drives a Buick, talks on an iPhone, eats in MacDonald’s, and wears Nikes.
Almost every major American company is digging its way into China. Here are the highlights of how some of American companies have benefited from a growing Chinese middle class:
In 2009 when the world was in deep recession, Wal-Mart opened a new store in Guangzhou that attracted more than 10,000 shoppers on the opening day. It was Wal-Mart’s 173th store in China in just 13 years.
The revenue of Caterpillar, a California-based construction and mining equipment maker, grew from $700,000 in 2005 to $2.6 billion in 2009.
The NBA’s 30,000 Chinese retails stores were selling 60 percent more merchandise in 2009 than the previous year.
Nike has become China’s number one sports brand. In 2009, Nike’s revenue in China increased 22 percent, compared to only 2 percent in the U. S.
KFC and Pizza Hut are also feeding Chinese appetites faster than ever before. They are opening 1 – 2 restaurants a day in China.
But perhaps no one is more thankful to the country’s generous spenders than GM. The company filed bankruptcy in the U. S. But its sales in China increased 70 percent as Chinese first time drivers are eager to get behind wheels of American cars.
As the middle class continues to grow in China, the Chinese economy will be able to re-balance toward domestic consumption, correcting its problem of over-saving. In the meantime, a large Chinese middle class will create enormous opportunities for American businesses, and help American economy to re-balance from its problem of over-consumption.
When the two major economies with opposite strengths and weaknesses can rectify each other, the world will be able to thrive on the virtuous cycle of globalization.