The Chinese Middle Class

Five New Trends of Chinese Consumers

As 2012 comes to an end, pundits and analysts alike are making predictions for 2013. Many things could happen in 2013, but one thing is almost certain: China will be the largest e-commerce market in the world. Already, the country has the largest population of online shoppers. In June 2012, people who shopped online in China reached 210 million, compared 179 million in the United States.

Chinese consumers have always been a mystery to many Western companies. Little is known about their spending behavior and buying habits. As they come of age, certain characteristics are starting to emerge. Here are five new trends of Chinese consumers:

Value Seekers

A quintessential trait of Chinese consumers is that they are value seekers. They will search hard for the best deals, to make sure they get good value for their money. That means they will spend a lot of time researching products and comparing prices. They tend to resist impulse buying (despite some conspicuous spending), and are more likely to get cues from their friends as to which products to buy.

This trait actually applies to both high- and low-income groups, although it is more apparent in consumers with lower incomes. I know this intuitively, and from first-hand experience. Having lived in the West for over 20 years, I am still “good at saving money” (as my husband put it) when it comes to a purchase. For example, I eyed a giclee painting from ZGallerie for several months before I bought it on sale. I searched on the Internet for comparable paintings, and was willing to wait for holiday sales to make the purchase.

I am not the most frugal person you can find in the world, but like most Chinese, I am naturally good at finding good deals. Continue reading Five New Trends of Chinese Consumers

The Chinese Middle Class Approaches Half a Billion

And how American companies can seize the opportunities…

The Chinese middle class is expanding rapidly, reaching 474 million this year, according to my latest calculation.

Many people may challenge this number. But it’s just arithmetic. In a recent report “Consuming China,” McKinsey indicates that 83 % of households in China’s mega cities (cities with population of over 10 million: Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen, and Tianjin) and 66 % in the rest of the cities are middle class families.

By the end of 2011, China’s urban population reached 691 million. Do the simple math, and you will get the same number I got: the population of the Chinese middle class was 474 million, with 88 million living in mega cities, and 386 million in smaller cities.

This means the Chinese middle class accounts for 68 percent of urban population, which is believable to me. Assuming two percent are super rich, still about 30 percent of the people in urban areas are poor.

Some would argue that there are different criteria to measure the size of the Chinese middle class. A simple and important rule of thumb, as stated in my book The Chinese Dream, is that of a household with a third of its income for discretionary spending. These people have passed the threshold of survival and have disposable income to spend on leisure items. As I travel around China, it’s very clear to me that the majority of people in urban areas have reached this stage.

Chinese Consumers Love “Made in USA” Products

The rising Chinese middle class is the biggest story of our time. However, many US companies are missing the opportunity. US exports to China account for only 6 percent of China’s total imports. The major categories of US exports to are in industrial sectors such as power generation equipment, aircraft, and medical equipment.

The biggest opportunity, however, is in the consumer sector. On November 11, China’s “Single Day” shopping festival, online retailers Tmall (B2C) and Taobao Marketplace (C2C) generated a record revenue of $3.1 billion, more than the total sales in the U. S. on Black Friday and Cyber Monday combined. Before long, China will become the world’s largest consumer market, and its consumption could reach $13 to $16 trillion by 2020.

Better yet, Chinese consumers love American goods and are willing to pay more for them. Continue reading The Chinese Middle Class Approaches Half a Billion

The Chinese Middle Class View of the Leadership Transition

The Chinese Communist Party began its once in a decade leadership transition as the 18^th National Congress opened on Thursday. I was interviewed by the Canadian TV News Channel and a German newspaper, Sueddeutche.de, regarding the change of power in China and how members of the Chinese middle class view the leadership transition. Below are the questions and my answers:

Q: What do members of the Chinese middle-class think about the last ten years and the leadership of Hu Jintao?

A: Members of the Chinese middle class think that the country has made a lot of progress economically in the last ten years under the leadership of Hu Jintao. They feel that their lives have improved tremendously. Many of them now own homes and drive cars. This compares to thirty years ago when their parents lived in slums and could hardly afford bicycles.

While many of them approve what the government has done, they are also under extreme anxiety. This anxiety has become increasingly intense in recent years due to political uncertainties. Continue reading The Chinese Middle Class View of the Leadership Transition

Chinese Consumers Spend Twice as Much

Luxury retailer Shanghai Tang CEO Raphael le Masne de Chermont told the Wall Street Journal that its Chinese customers spend an average of 500-600 euro per year, which is about twice as much as their counterparts in New York and London.

Chermont also said that Chinese consumers are getting more sophisticated, meaning they are now less about big brand names to show off their status, but more about consuming the luxury.

However, Chinese consumers still want to be re-assured that Shanghai Tang is not just a Chinese brand, but a brand with stores in Paris and New York.

As Chermont pointed out, even though Chinese economy may slow down a little in the coming years, there are still a lot of potentials for growths.

Seeking Research Analyst Interns

The Helen Wang Group is seeking research analyst interns to help with a major research project. You will have an opportunity to gain significant knowledge on the Chinese economy, its new middle class, and the Chinese market. This position is perfect for students who want to learn about this field and prepare for future careers in multinationals. As a research analyst, you are responsible for both primary and secondary researches. You will work with other researchers to conduct case studies and produce reports. The work is very intellectually stimulating and challenging. The person must have a desire to learn new things and be a quick learner.

Job Descriptions

Conduct market research on targeted industries and companies
Design survey questionnaires and conduct online surveys
Analyze data, trends, and interpret research results
Develop business cases and write research reports
Identify useful resources and compile information
Assist in producing seminar materials and workbook

Skills Needed

Strong analytical and critical thinking skills
Excellent written and oral communication skills
Resourceful and creative
Experience of market research a plus
Proficient with Word, Excel, PowerPoint
Knowledge of Google Doc, and other Google products
Ability to take leadership role as well as follow instructions
Bachelor or advanced degree in business

This position is based in Silicon Valley, California, but you can work remotely. If interested, please send an introductory email to info@TheHelenWang.com. Continue reading Seeking Research Analyst Interns

HELEN H WANG

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