China’s 34m ‘mass affluent’ consumers to drive 75 pc of national consumption by 2020
Around 34 million ‘mass affluent’ consumers, who’ve earned their wealth in the new economy, will drive the majority of China’s spending in the near future, global consultancy says
China is about to undergo a consumer revolution driven by an emerging group of 34 million “mass affluent” consumers who’ve built their personal wealth in the new economy, according to a report by Oliver Wyman.
Spending by this emerging demographic, which represents 2.5 per cent of China’s population, is set to rise, such that by 2020 they will account for more than 75 per cent of the country’s total consumption, a report by the global consultancy showed.
They are the “mass affluent”, generally young, tech-savvy individuals with 650,000 yuan to 6 million yuan (US$95,220 to US$878,941) of investable assets, who are more free spending than their Western counterparts.
The survey, which polled 1,000 mass affluent Chinese consumers, showed that they are more inclined to spend on entertainment such as sporting activities and cinema, as well as domestic vacations.
“They are now seeking meaningful experiences to elevate lifestyles, spending more on experiences that result in higher levels of self-fulfillment,” said Jacques Penhirin, partner at Oliver Wyman and co-author of the report.
“Millennials are jetting off to more exotic destinations. Places like Sweden and Iceland are trending right now and are on track to take over from the generic Asian tourist attractions like Thailand.”
The poll also revealed that China’s mass affluent consumers are expressing widespread and profound discontent over the cost of living.
“Chinese consumers demand better welfare benefits as they set money aside for future health care treatment and education,” said Penhirin.
Scepticism towards the quality of local health-care services is helping to fuel a rise in the medical tourism market, the report said. The top overseas destinations for wellness services, medical care and treatment for critical illnesses are Japan, south Korea, United States, Taiwan and Germany.
A separate survey by Channel NewsAsia showed that 60 per cent of Chinese consumers prefer foreign brands over local brands.
Asked when there could be a reversal of the situation,
Liu Shijin, vice-chairman of China development research foundation, a top Chinese think tank, told a panel at Summer Davos in Dalian that Chinese consumers will probably warm more to domestic brands in three to five years.
“Chinese consumers have three advantages in a global context: first, their scale, the largest in the world; second, they are increasingly picky and quality conscious; and third, they actively embrace innovation,” Liu said.
Yan Xuan, president of Nielsen Greater China, said a lot depended on the category of consumer goods.
In the electronic goods market, a majority of mainland Chinese consumers already embrace local brands. But he said Chinese consumers are less trustful towards local brands when it comes to edible products or other goods that are applied externally.