After one of the fastest growing periods of economic growth, China is now undergoing a remarkable social and economic transformation. The domestic consumer goods market stimulated by rising incomes is now beginning to grow rapidly.
As global companies enter China many of them focus on serving the export market and China’s urban-affluent consumers. However, if these companies’ continue to use these strategies they risk missing the real opportunity, the emerging middle class.
During the next 20 years china’s middle class is expected to have immense purchasing power which in turn will fuel a greater level of growth across consumption categories. This group is set to become the backbone to the healthy development of China’s changing economy. Many western companies are beginning to tap into this huge market and are seeing its tremendous growth potential. This explains why stores featuring luxury brands have begun to appear in more and more cities throughout China.
Based on an annual growth of 1%, the middle class people in China are expected to make up 40% of the total population by 2020 according to a report carried out by the Chinese Academy of Social Sciences (CASS). Even Chinese leaders have recognised the growing importance of the middle class who are also known as the middle stratum.
Finding the right partner
Western companies wishing to sell into China must develop the right support capabilities. Finding the right partner means companies are less vulnerable to sourcing risks, supply-chain and business interruption issues and there is greater protection of intellectual property. Networking is a common aspect of business but it can take an added importance in a society with complex bureaucracy and distribution challenges.
In the many years we have operated in China we have developed strategic relationships with local officials, central authorities and suppliers. This web of relationships supports the smooth running of our business, allows us greater access to information and has enabled GPS China become an established partner to many Western companies.
