China's Transition to a Consumer Society
Release Time:
2010-09-16 17:27
Source:
China Laundry Information Center
When mentioning a consumer society, an important measure is the proportion of household consumption in GDP. For many years, the ratio of household consumption to GDP in the United States has been around 70%, while in Europe and Japan it is above 50%. What about China? According to the Penn World Table, in 1952, before China's land collectivization and enterprise nationalization, household consumption accounted for 67.4% of GDP, which is not much different from the current 71% in the United States. During the entire planned economy period, household consumption relative to GDP kept declining; by the time of the reform and opening up in 1978, the share of household consumption in GDP had dropped to 48.7%. It continued to decline afterward, and now household consumption is only slightly above 35% of GDP.
This data is just an abstract result, behind which lies complex and rich content. What is a consumer society? What is China most lacking in its shift toward a consumer society? These questions are worth studying at present.
In our view, what China lacks most in its transition to a consumer society is the system — laws, regulations, and strict market management that are conducive to household consumption. In other words, to enable the people of a country to consume freely, the country's institutional system must serve household consumption.
This is very evident in developed countries such as the US, Europe, and Japan. In the United States, all tap water meets drinking standards and can be consumed safely: you don't have to worry about toxic food sold in the market because it has undergone strict inspection; all clothes, shoes, and socks sold in the market are guaranteed authentic because they have also been strictly checked; the US has ways to require all manufacturers exporting products to the US market to use the highest quality standards... Any violation or counterfeiting in the US market faces strict punishment, which may even lead to the bankruptcy of the manufacturer.
Not only the United States, but the European and Japanese markets are also no less strict. Strict systems ensure that developed countries worldwide become the safest consumer markets globally.
In contrast, the situation in the Chinese market is vastly different. Although luxury goods sell well in China, the market remains very chaotic. A recent typical example is the melamine milk powder incident in 2008, which caused the deaths of several children and affected 300,000 children, yet it has resurfaced this year! Recently, relevant domestic authorities found melamine over-standard incidents in Gansu, Qinghai, Jilin, and other places, with the highest exceeding the standard by 500 times! This is another serious food safety incident occurring only half a year after multiple melamine "resurgence" incidents involving Shanghai Panda milk powder, Shaanxi Jinqiao milk powder, and others at the end of 2009. Besides melamine milk powder, many counterfeit incidents such as gutter oil, fake medicine, and fake alcohol frequently appear in the domestic market.
Can a market with such a poor consumer environment give rise to a healthy consumer society? This is probably very difficult! Unless the market undergoes major institutional reforms.
Many people complain that China is the "world's assembly factory" but lacks world-class brands. Now that we have money, we want to buy world brands. However, this approach is not accepted by everyone. It is said that not long ago, Shanghai Fuks Company claimed to have acquired part of the shares of the Italian fashion company PRADASPA and sought controlling interest. However, although Prada is deeply in debt, no member of the Prada family has sold shares to the Chinese businessman Lu Qiang because they fear "handing it over to the Chinese will degrade quality and style."
Control over brands is a typical feature of a consumer society. For a long time, China has not been a consumer society and has not taken the people's consumption seriously. Therefore, it is normal not to master brands or know how to manage and use brands. Our involvement in globalization has been from the low end of manufacturing to "selling labor."
Final Analysis Conclusion: China's transition to a consumer society has just begun. On this journey, what is most lacking is not capital or technology but strict systems and laws. Without achieving this, it will be difficult for China to develop a consumer society.
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