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How Companies Are Benefiting From China Urbanization

Foreign companies seeking China sourcing opportunities will be pleased with a recent report released by the National Bureau of Statistics. Large numbers of rural residents are moving into city hubs to find work. This rampant rise in urbanization is offering benefits galore to those companies doing business in China.

The NBS report reveals that the urban population rose to 51.3 percent, or 690 million people, in 2011 from 17.9 percent, or 170 million people, in 1978. Of course, the trend was reversed in rural areas which saw a drop from 1978 numbers of 82.1 percent to 2011 figures of 48.7 percent. This trend of large numbers of the Chinese population moving to urban from rural areas is expected to continue.

Benefits of Urbanization

Since businesses require workers as well as the supply chain and other necessities that big cities provide, continued urbanization is opening a slew of benefits for them. First of all, consumer demand is increasing as all those masses require China products as well as new and improved public services, housing, and infrastructure. As long as the central government handles such requirements correctly, there is a great deal of potential for the country’s economic growth to be bolstered by both internal and external investments.

Urbanization is also expected to increase market demand. There is a 3.3 to 1 per capita ratio between urban consumption compared to rural consumption. Since wages are higher in urban areas, the amounts of expendable incomes increase with such moves. The middle class is booming in growth within cities due to better pay in China manufacturing and other sectors allowing for more products and services to be utilized.

Don’t Overlook Rural Benefits

Although rural populations are dwindling due to the shift towards urban living, you can’t ignore the opportunities that this process is opening up in outlying areas. For one, family members who have moved to cities and are making better wages are sending money home to their rural relatives. This means expendable money is also increasing in these far out locations that also require products and services.

With the NBS report showing a yearly average increase of 21 million of those relocating to urban areas from rural areas between 2002 and 2011 and an estimated 20 million expected to continue the trend each year over the next 10 years, huge demands for industrial and agricultural goods will be created. This trend in urbanization is consistently opening up huge opportunities in a variety of sectors.

Now Is the Time

The urbanization of Chinese cities is providing huge opportunities to companies wanting to take advantage of China sourcing. Last year, China manufacturing showed its strongest increase in years and the atmosphere remains positive for those seeking to buy from China.

This is an ideal time to either move your company to China or open a Chinese branch in order to take advantage of this explosion in urban development. Regardless of which sector you specialize in, contact Asiatic Sourcing who can help put your plans in motion today.

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