Excerpt from: "Basic Judgments and Thoughts on the Current Trends of Resident Consumption and Consumer Goods Market in China"
Author: Wang Zhi (Trade and Foreign Economic Relations Department, National Bureau of Statistics)
1. Urban consumption will be the key area of domestic consumption.
Urban areas are the carriers of consumer industrial products and service products. China has become a major manufacturing country and must build itself into a major consumer country to achieve a virtuous cycle and interaction. Urbanization should continuously develop alongside industrialization. While China's economy continues to grow rapidly, urbanization development has long lagged behind industrialization. Currently, China's urbanization rate is about 47%, and it is expected to exceed 50% by the end of the 12th Five-Year Plan period. At that time, more than half of the population will live in urban areas, plus the urban floating population, making urban areas the main places where residents gather as consumers. Consumption by urban residents will become the key area of resident consumption. China's urbanization rate is approaching the critical point of 50%, and the urbanization development model should shift from "growth-oriented" to "livelihood-oriented." Livelihood-oriented urbanization will become the strategic choice for China's urbanization development. Livelihood-oriented urbanization is urbanization with the fundamental purpose of improving people's livelihood, not simply pursuing the speed of urbanization development, but focusing more on improving residents' quality of life, fully reflecting the people-centered concept. 。 Currently, the "main force" of resident consumption in China is the middle-income group, and the large number of middle-income residents living in cities are the main force of urban consumption. Their total consumer expenditure accounts for a gradually increasing proportion of total urban resident consumption, exceeding 40%, reaching 49.3% in 2009, about 12 percentage points higher than other urban populations. According to the latest "2011 China Urban Development Report" released by the Chinese Academy of Social Sciences and other institutions: currently, the middle-income urban population accounts for about 37% of the total urban population. From 2000 to 2009, the number of middle-income urban residents grew at an average annual rate of about 3.8%, with Beijing and Shanghai accounting for about 46% and 38% of their respective urban populations. Therefore, in the process of building new urban communities, great importance must be attached to the planning of commercial outlets, reasonably arranging supermarkets, convenience stores, catering, housekeeping services, daily necessities rental, dry cleaning shops, cultural goods stores, and other service outlets closely related to residents to meet their consumption needs.
2. Rural residents' consumption level will increase significantly, and the consumption gap between urban and rural residents is expected to narrow.
The consumption gap between urban and rural residents is currently the most significant difference in China's resident consumption field. This difference is determined by China's current dual urban-rural economic structure. At present, the consumption level of rural residents lags behind that of urban residents by at least 10 to 15 years. The current urban-rural consumption ratio (rural residents as 1) averages 1:3.6. During the 12th Five-Year Plan period, with the advancement of urbanization construction and the government's policy tilt and financial input toward the "three rural issues" (agriculture, rural areas, and farmers), some rural residents will become urban residents, and another portion of rural residents who do not leave their hometowns will greatly benefit from the national "three rural" policies, with income levels expected to increase significantly. If the current rural residents' consumption level is raised to the level of urban residents ten years ago, based on the current rural population, it will drive an increase of 1.7 trillion yuan in total resident consumption demand, accounting for about 6% of the current national GDP, 16% of total retail sales of consumer goods, and 17% of total urban and rural resident consumption.
3. The "post-80s and post-90s" generations and the "silver-haired" group will become emerging consumer groups.
According to data from the Sixth National Population Census, the population born after 1980 in China is about 420 million, accounting for about 31.4% of the total population; the population aged 60 and above, the "silver-haired" group, is 178 million, accounting for 13.3% of the total population, and is expected to reach over 15% by 2015. These two groups have become emerging consumer groups in China with huge consumption potential. It is necessary to study the consumption psychology and characteristics of these two groups and vigorously guide production and marketing enterprises to produce and develop consumer products and markets suitable for these two groups respectively.
4. Brand consumption will become the main theme of the future consumer goods market.
With the continuous optimization and upgrading of China's resident consumption structure, consumers, especially urban residents, increasingly admire consumer goods brands. In the future, China's consumer goods market will continue the recent trend of brand consumption occupying the mainstream. According to the annual statistical survey of key consumer goods markets nationwide by the China Industry Enterprise Information Release Center, in 2010, the top ten brands by market sales volume had an average market share of 66.3%. In the home appliance category, where brand advantages are most obvious, the top ten brands had an average market share as high as 82.3%, followed by daily chemical and daily necessities consumer goods, with the top ten brands holding a market share of 73.9%.
5. Online shopping, catalog sales, personalized customized consumption, and card payment will become mainstream consumption methods.
With changes in the consumer group structure, shifts in consumption concepts, faster life rhythms, and improved informatization levels, China's resident consumption methods are shifting from traditional store-based to non-store-based, from cash payment to card payment, and consumption demand is evolving from single and mass to diversified, differentiated, and personalized. New consumption methods such as online shopping, catalog sales, and personalized customized consumption will develop rapidly. As of the end of March this year, China had registered 3.82 million websites, with 477 million internet users and an internet penetration rate of 35%. The internet has had a huge impact on all aspects of residents' lives, greatly changing their living habits and behaviors. With rapid economic development and continuous improvement in informatization, "e-commerce + express delivery" not only brings benefits and convenience to consumers but also greatly changes the consumption habits of many consumers, especially young consumers, through this "door-to-door" service. According to relevant departments, 40% of China's postal express business volume comes from e-commerce. In 2010, China's e-commerce transaction volume reached 4.5 trillion yuan, a year-on-year increase of 18.4%. The scale of online commodity transactions reached 513.1 billion yuan, a year-on-year increase of 98.4%, accounting for 3.5% of the total retail sales of consumer goods during the same period; the number of online shopping users reached 161 million. It is expected that by 2015, the scale of online transactions will reach 6 trillion yuan, accounting for more than 20% of the total retail sales of consumer goods during the same period. Meanwhile, to adapt to the needs of the information age and changes in resident consumption transaction methods, China's retail industry's informatization investment exceeded 9.6 billion yuan in 2010, a year-on-year increase of about 16%, and is expected to increase to 11.3 billion yuan in 2011, a 17% increase. Among China's top 100 chain enterprises in 2010, 52 had already launched online retail business. This emerging modern marketing method is in a period of rapid development in China.
6. Service consumption, automobile consumption, and electronic information consumption will become important directions for upgrading and transforming resident consumption.
With the gradual increase in residents' income levels, China's resident consumption is shifting from survival-oriented consumption focused on clothing and food to enjoyment- and comfort-oriented consumption that pursues quality of life. This also provides a strong foundation for optimizing and upgrading the resident consumption structure.
