Chinese Consumers Catching & Surpassing American Shoppers
Chinese consumers are rapidly catching up to American shoppers and, in some cases, they are already overtaking them. This is a world-changing trend away from the decades that have seen consumers in the United States as the driving engine of world economies.
2012 Reports and Projections
The recently released Bank of China (BOC) report reveals that Chinese consumption together with aggressive investments are expected to produce an 8% growth in the second largest economy of the world in 2013. Investment stands as the predominant growth influence currently, but consumerism is projected to outperform investment within the next decade. Also, within this period of time, the consumer market in China is expected to become the world’s largest, surpassing the consumer habits of the American market.
The government think tank State Information Center added to the projections, stating that they expect a 14.5% growth in consumption just within the 2013 year. They suggest that growing consumerism will provide the fuel necessary for key restructuring of the economy which will, in turn, ignite greater consumer activity.
Chinese Consumers Outperforming Americans in Luxury Goods
Chinese consumers have already surpassed Americans in the purchasing of luxury goods. A report released by Bloomberg News shows that, currently, Chinese shoppers make up a full 25% of the market for expensive items purchased with the United States trailing at 20%.
This uptick in luxury sales is due to a rapidly growing middle class within Chinese society. With a large number of workers netting more income, they are increasingly becoming affluent and savvy shoppers within bustling cities. Also, high end stores have been setting up in large numbers over the past months and credit card use is soaring among well-to-do Chinese consumers.
The Economic Catch
A major factor that is slowing down China’s run for world consumer dominance is a weak European economy. The grueling and stubborn economic downturn across Europe (and the United States for that matter) has kept the Euro low and, therefore, more attractive to shoppers.
Chinese consumers with growing incomes and buying power often strike out to Europe on special shopping trips to grab deals on luxury items. Although workers in China are enjoying more expendable incomes, they are still very price conscious and looking for deals in order to get the most products at the best price.
The Challenge to Big Brands
This trend of going outside of China to purchase desired items will no doubt continue as long as the Euro remains weak. These travel spending sprees are sure to increase as long as Chinese worker wages rise, giving Chinese shoppers more available funds to spend on expensive brands that are offered at better deals in the European markets.
If major brand name manufacturers and venders want to expand in China, they will be required to come up with inventive ways to increase sales within the market of mainland China and not only abroad.
It is sobering to note that major world economic changes are occurring which could significantly redefine who controls the fueling of world markets. If current trends continue, it looks like China and not the United States will soon be the dominating consumer force on the world scene.