Middle-Class Consumer Profile in China - Essay Example

MIDDLE CLASS CONSUMER PROFILE IN CHINA Name: Course Instructor’s name Institution Date Introduction The swift development and economic growth in China has resulted in a huge number of consumers with high levels of income to dispose. It is prospected that by the year 2020 the middle class in China will be over 500 million in number. The current trends show that the Chinese are becoming more demanding when it comes to purchasing of goods or services Adam (2009). According to Assaf et al, the rapidly growing and versatile middle class in China is one of the most attractive consumer segments to most organizations. As China’s economy grows, more people are moving to its metropolises in search of better paying jobs. This class of working people will soon rise among China’s poorest people and progressively join the middle class. The organizations that will comprehend the needs of this class of people are likely to garner colossal rewards. Those organizations that focus on serving the affluent urban consumers are likely to miss the real prospect-the emerging middle class. In the next 20 years, it is expected that a huge middle class with enormous purchasing power will emerge in China. The increase in income will result in change in spending patterns. In order for business organizations to succeed, they must think in a creative manner since it is not easy to serve the middle class. The rapid growing middle class is fuelling a swift growth of processed food, manufactured goods as well as services. With such a varied and immense market place, creators of consumer goods with added value, retailers and manufacturers are competing to meet the demands of the consumers in terms of what they are searching and how efficiently they can reach them Adam (2009). Demographic indicators In the year 2013 the total population of China was 1.3 billion approximately. This represents around 20% of the world’s total population. The demographic trend indicates rapid population growth in China which is expected to rise to 1.4 billion in the year 2020. Almost half of China’s population resides in urban areas. The population in urban areas is predicted to increase swiftly by approximately 40% by the year 2030. This means that by the 2030, the urban population will account for close to 70% of the China’s total population Zeller (2009). The median age is also progressively rising in China. The rate of population aging is occurring rapidly in China than in any other country. The government is therefore reviewing its population control strategies. As a result of longevity and fertility trends, the elderly are increasing in China. Those aged above 60 are likely to form a go share of the swiftly growing population. It is anticipated that by 2030 455million people will be aged above 60 Bowman (2008). The many changes that are taking place in China are common features of industrialization: increasing incomes, urbanization, enhanced education and postponed life stages. Most of these changes have a great impact on the population’s purchasing power since the population has access to high levels of disposable income. The disposable income is anticipated to increase rapidly by the year 2030. As the middle class increases to include more than half of the country’s population in the urban household, it will pull the already existing business models. The business organizations that have been serving the mass population for a long time, meeting their basic needs at affordable prices, will risk losing a huge number of customers and face a dwindling market. Similarly serving a dilapidated mass market and a promising but uncertain upper middle class will call for new strategic approaches. This report collects and analyses information on China’s middle class and justifies the goods and services that could be marketed to them by the Australian organizations Nimmo and Coombs (2008). Consumer preferences For business organizations to succeed in China, they must recognize the unique features of China’s middle class. They have a sturdy preference for novelty that makes them to look for the newest products in the market. Next, they have embraced both the social and digital media thus are early technology adapters. It is not easy for marketers to win over the Chinese with foreign concepts and products that are imported. The consumers are becoming more demanding and desire products and brands that fit their aspirations.The consumers are used to change and usually anticipate it. They do not always stick to traditional products instead they are eager to try new products in the market. This is as a sign of evolving adventure and tastes Bryck (2003). Luxury goods are a preference to the Chinese consumers. The Chinese middle class consumers are highly sophiscated despite the government’s austerity campaigns. Most of the middle class consumers opted for the luxury goods and services despite the government campaigns. Social status and success are marked by the consumption of high end products. The Chinese consumers are ready to pay for indulgence, safety, value and wellness. Consumer trends All pointers indicate that the middle class in China have access to more disposable income. As a result they desire the convenience, services and quality associated with the Western brands. The consumers have matchless demands. They want constantly want new arrays of goods. The rapidly increasing middle class consumers often purchase services and goods from restaurants, service establishments and stores with Western associations. This group of consumers is young, mobile and aspirational. The middle income families have one child and a considerable disposable income and are increasingly becoming sophiscated in its demands. Additionally, the consumers are more varied across geographies, ages, generations, genders, income levels habits and lifestyles Carter (2007). The Chinese consumers spend a lot of income of food, nonalcoholic beverages as well as housing. Spending is however consistent between the lower middle and the upper middle class. However the upper middle class outspend the mass in housing by a significant margin. The Chinese consumers have the tendency to consume favorite brands and expensive products. This spending culture can be attributed to the increasing confidence monetary prospects and brand awareness. The anticipated spending increase among the middle class in the next five years is noteworthy Charles (2011). The increase in income levels has change the purchasing culture. Today, more members of the middle class purchase luxury goods and services. Luxury brands earn a remarkable. Consumer trend play an essential role in driving the economy. The open spending on pensions, education and healthcare is anticipated to support gains in consumer expenditure in the next few years. The private consumption on the other hand will be greatly boosted by the increase in wages. The current discussions on reduction of income tax are aimed at assisting the medium at assisting the medium and low income individuals. Population rise in China together with the income increase has made China one of the most attractive destinations for both exporters and investors Ford (2007). The digital generation The middle class in China has adapted to technology. They have enthusiastically embraced the social as well as the digital generation. The approximated figure of media users worldwide is 1.2 billion of which close to 450 million are Chinese. China is among the most engaged socially involved markets in the world. In China even those aged between the age of 55- 64 are active in social media. The middle class readily share information about their brands the like and those they do not like. The web is, therefore, is an essential business communication platform. The digital channel like the social media can be utilized to the marketers’ platform. On the contrary, the social media can tarnish an organization’s reputation if the consumers convey negative information about the company’s brand. It is thus, advisable for companies to constantly uphold a two way engagement with their customers. Luxury goods The middle in China buys more luxury goods as their income levels increase. Currently, luxury brands bring in an important portion of global revenue in China. Research indicates that Chinese consumers account for close to 20% of the world’s luxury purchases. The luxury Chinese buyers are younger compared to their correspondents worldwide. The average millionaire in China is 37 years old whereas in the USA is 57 years old. The younger Chinese consumers are likely to have customer life customers that are long. However the differences in generation among the buyers present the marketers with many challenges Gambel (2007). The Chinese government strictly controls the luxury market and strictly controls advertising because it is aware of the widening social gap and its effect on social stability. For instance in the year 2011,the business organizations were forced to get rid of such words as ‘royal’, and ‘luxury from all outdoor advertisements. Additionally in the February 2013, luxury advertisements were prohibited from the official radio stations and television. Though the consumers in China enjoy the status presented by luxury brands they miss out the emotional attachment that could initiate brand loyalty. Petitions for brand heritage and tradition may not work well in China as they do in other countries. In response, some marketers of luxury goods have responded by local tastes appeals. Food and beverage expenditures The young middle class generation spends less time cooking than their older counterparts. Instead, they prefer restaurant and foods for convenience meals such as noodles, microwave foods and fast meals. To the young generation, western food is perceived as being easy to prepare than the Chinese food. This group of consumers is well educated and has a high disposable income. The Chinese in their thirties save less and spend more on entertainment as compared to the older generation. Similarly they eat out frequently than their parents. Additionally, the younger generation prefers value and quality to lower prices. This class of individuals is likely to be the most important one in future as they will purchase for their children, themselves and their parents Gambel (2007). The Chinese consumers pay a lot of attention to their health though wellness and health products are very expensive. The elderly have a strong desire for herbal natural products. On the other hand, the younger generation mostly turns to the western products which link to quality as well as safety. Those below the age of twenty form an important consumer segment as well. This group of consumers is highly westernized and open to new products in the market. They are always informed of the global fashion trends and are they pursue a western lifestyle. This group importantly influences their parents purchasing decisions regarding food, clothing and electronics among others as much as they do not earn their own income. Conclusion The middle class in China have readily disposable income to purchase flexible services and goods that were beyond their reach some ten years ago. China can, therefore, be said to be one on the largest middle class markets in the world. Furthermore a trivial wage increase is most likely to have a visible effect, make the middle class stronger and improve its attractiveness. Health care as well as housing are likely to be the fast growing industries in China. Though there is much vacant property in China, the construction boom largely prevails in China. The credit curtailing by the government is aimed at cooling off the construction activity. Due to decreased subsidies, the consumers are most likely to assign a greater amount of income to utilities and shelter Husic and Cicic (2009). In the future, China’s middle class population is expected to be much younger with middle aged individuals being among the highest earners. This is so because those jobs that are highly paying require people who are highly educated and trained that few people among the older generation have attained. The median age for China is currently 35 years of age. Since the Chinese government gives a high priority to education more people who are young will access education and get lifestyles that are better. It is evident that China’s young generation follows the latest trends and fashions and is more interested in purchasing luxury goods and the global brands. If enhancement of the Chinese social welfare goes on, the consumers will not be troubled by their retirement and medical expenses. They will, therefore, spend more of their income on luxury items. The expenditures are however anticipated to rise steadily since a good number of the Chinese have developed a saving culture. The rise in income levels leads to changes in spending culture. The middle class consumers will ship to purchasing more discretionary items and luxury goods and the income spend on food, clothing and other basic items will decrease. Many people may also devote a remarkable share of their salaries to education. Spending on education can be attributed to the strong connection of education and high salaries and the increasing number of options for vocational and higher education DeRose (2009). China’s economy as well as population growth presents numerous opportunities for the Australian organizations. In the current years processed and packaged foods are showing impressive growth due to the emerging middle class population. It is evident that the middle class are quick to adapt to technology and those organizations that would embrace the internet as their business platform are most likely to reap rewards. Additionally the Australia companies should trade in luxury goods as they are a preference of the middle class population in China. As discussed these consumers prefer value and quality to lower prices. It is, therefore, evident that they will be much willing to pay high prices as long as the products are of high value and quality. This will increase the profit income for these business companies thus breeding success DeRose (2009). The rapid economic growth in China though perceived positively by many critics has its perils as well. As much as the growth has transformed the impoverished population it is likely to intensify the gap between the poor and the affluent which may lead to distinct societal classes. In order to effectively minimize the economic and social pressures, the government should put in place appropriate policies to reduce this social gap Carter (2007). References Adam, W. 2009. The Rubik’s cube: A puzzling success, Time, January 28, (online). Assaf, R. J., Noormohamed, N. A., & Saouli, M. A. 2012. Rethinking marketing commun-ication - using social media in the Middle East. Competition Forum, 10(2), 112-116. Beliaeva, L. 1999. The ‘New Middle Classes’ in Russia, Sociological Research, 38(5), 77–90. 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