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Chinese Upbeat on Spending
Published on: 2010-06-29
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Chinese consumers are ready to shop but remain cautious in their spending, according to a recent survey by the Boston Consulting Group.

The survey, which looked at consumer spending world-wide, found Chinese respondents relatively upbeat, with high levels of optimism about the economy and their individual job security, though rising living costs and a weak social-safety net have prompted a continued focus on saving.

Consumers in China’s northeast and southwest regions were less affected by the global economic crisis and remain eager to spend. “They enjoy the process, the result,” when it comes to shopping, said Carol Liao, a partner and managing director at Boston Consulting.

In contrast, Chinese consumers in southeastern cities, where Pearl River Delta factories were shuttered, were hit hard by the downturn and registered more pessimistic sentiments.

Given those regional differences, “there won’t be a standard formula for brands to take home and replicate and follow,” said Kuo Youchi, a project leader for the research firm.

Overall, salaries are highest in China’s biggest cities, including Beijing and Shanghai, but previous Boston Consulting research has shown that relative wages are growing faster in smaller urban centers like Chengdu.

Reaching these increasingly middle-class and affluent consumers, however, continues to be a challenge, Liao said. Landlocked regions are hard to get goods to, though infrastructure improvements have eased some of those pressures.

Branding is also important to this demographic. Consumers indicated that they are willing to “trade up” to brands that they perceive as healthier. In addition, half of those surveyed said they would pay more for dairy products, a nod to the Sanlu Group milk scandal in 2008.

“Big brands are equal to an assurance for quality,” Liao said.

 

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