China promises "a shopping spree of historic proportions," Janet De Silva
China’s growing middle class is expected to transform the global consumer marketplace as we know it, according to the CEO of a Hong Kong based company called retailChina.
Speaking to The Hong Kong Canada Business Association, Janet De Silva, explained that by 2009, the number of middle-income consumer class households in China is expected to triple to 105 million and to reach 520 million by 2025.
In China, these households are much more youthful than other developed countries. According to De Silva, many of China’s emerging middle class consumers are young professionals between the ages of 25 and 40, with significant, discretionary spending power. More importantly to Canadians, they’re first generation consumers with no brand loyalty, and they value goods produced outside of China.
De Silva, a Canadian who was previously the Chairman and CEO of Sun Life Financial (Hong Kong) Limited, says China is unlike any other market. In order to successfully sell to China, companies must understand the geographic diversity and differences in consumer tastes and attitudes.
De Silva describes dramatic differences between consumer preferences in China’s largest four or Tier 1 cities, and the 11 cities labeled as Tier 2. In Beijing, Shanghai, Guangzhou and Shenzhen, consumers are looking for items that demonstrate their rising status; whereas in tier 2 cities like Nanjing and Xi’an, consumers focus more so on safety and hygiene. Successful companies adapt their marketing strategies accordingly.
Of course price point is vital. Retailers must be able to drive down costs in order to succeed in the market. And for retailers, the biggest barrier, according to De Silva is getting experienced people and keeping them.
Working directly with the property developers of international malls in China (200 new malls in the next 3-5 years), retailChina is looking to acquire international brands to market to this burgeoning middle class. Already the company is marketing Fruits & Passion in 12 stores in China and plans to grow that network to 80 stores by 2010.
China promises “a shopping spree of historic proportions,” says De Silva, with all international brands equal in the eyes of the Chinese consumers. While “Made in Canada” has no particular brand, Canadian retailers have an equally tremendous opportunity to sell to what will someday be, the world’s largest middle class consumer market.
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