Friday, April 27, 2012

Chinese middle class

In China, the middle class is all concentrated in big cities. Most people have a college education and relatively stable jobs. There are a lot of entrepreneurs and a lot of white collar workers, working for multinationals or state-owned companies. They are young: 20 to 50 years old. A lot of them own homes. Everyone has a car and some people have more than one car. They want everything Westerners have.

This new middle class just emerged in the last 15 to 20 years. It is estimated that it's more than 300 million. About 25% of the Chinese population is middle class: about 50% of the urban population. A lot of them are entrepreneurs: with China's economy growing over the last 20 to 30 years, there have been a lot of business opportunities.
Some people still go to college and then get good jobs. A lot of multinationals employ these young college graduates. They pay relatively better than Chinese companies. Many foreign companies are contributing to creating the white-collar middle class. Chinese state companies also employ a lot of people. Their income has more than tripled over the last 10 or 15 years.

This middle class is shopping a lot. Retail is booming like a wildfire in China. There are a lot more consumers and they are demanding a lot more services. A lot of Chinese, especially younger consumers, are really into the luxury brands. They associate Western luxury brands with quality of life and sophistication. They want gyms, health care clubs and definitely travel. They want to see the world. The restaurant business is doing very well. The younger generation -- people under 30 -- they are consuming like crazy. A lot of them stay with their parents so they don't have housing expenses and save close to zero. But once they get married, then they start to save.

They know China is growing wildly, and they're very busy trying to catch this opportunity. They know China won't grow at this high speed forever and they know the window of opportunity will close. They know government won't take care of them anymore. They have to take care of themselves.

The Chinese middle class may grow to 700 to 800 million, which is 50% to 60% of China's entire population. In the past, all the predictions have proven to be too conservative. But on the other hand, a lot of Chinese will be in the lower middle class because education will prevent them from moving up.

In any case, this middle class means a lot of opportunities for Western companies, since Chinese consumers love Westerners products. A probe of it is how many new Chinese trademarks have been appearing, in the recent years, in China domestic market being sold as Westerner ones: Italian, French, Canadian, American, etc

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