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China's Mega Trends

Between 1985 and 2005, China became the world's factory.  With current trends of rising labour wage rates, proportional reductions in the workforce size, and the increase in the value of the RMB, this phenomena will likely slow.  Two new trends are being established that will once again change the complexion of the world economy, and provide opportunities for informed companies.

  • China will emerge as the world's largest consumer market.  Just as China's economic revolution has been unique, characterized as "Socialism with Chinese characteristics", future growth in the Chinese internal market will be entirely unique.

  • Chinese companies will develop world-class brands, and move away from OEM.  Accompanying this will be improvements in both the actual quality and the percieved quality of Chinese brands.

It is important not to be distracted by 'averages' or total market sizes for China.  Fierce competition, intensive government involvement, and differing consumer behaviour need to be understood.  Orca works with listed companies and investors to perform market research tailored for each unique situation.

Additional Information:

The increasing clout of the Chinese industrial worker is helping to extend the affluence of China's consuming classes.  This article from the economist explains why:  Rising Power of the Chinese Worker

For the first time, Levis has introduced a new brand outside of the USA.  To address a lower price point and attract the emerging class of middle class consumers, the new line will be priced between domestic jeans and the existing Levis brand.  This article also discusses how other global manufacturers are putting the Chinese consumer first in branding decisions.  Levis - new brand addresses price points

Credit cards (and also other forms of consumer credit) are increasing in usage.  For more:  China Marketing -Credit Cards

Western consumer tastes are (in some cases) being adopted, but the uptake rates vary widely. For more:  China Marketing - Cheese to the lactose intolerant

 In this 2007 report, Interbrand reports on how Chinese companies are moving to build their own brands, and how consumer perception of Chinese products is slowly changing.  For more:  Interbrand Report on Chinese Brands

Ikea's experience demonstrates how Chinese consumer tastes are changing.   Ikea in China

 

 The Economist reports on how..........Many foreign firms, of course, are doing well in China, especially at the two extremes of the value chain: things like luxury goods, fibre-optic cable and big aeroplanes on the one hand, and oil, ores and recyclable waste on the other. But in between, both explicit legal impediments and hidden obstacles continue to hamper access to Chinese customers.  For more:   Selling Foreign Goods in China

 

 

posted...August 30, 2010