The Chinese consumer-To spend or to save 中国消费者一是清费还是储蓄 by:Kevin P.Lane and lan St-Maurice source:The MeKinsey Qurterly published Jamry 13,2006 Viewed from afar.China is an export juggerna whose growth is destined to motor steadily forward in perpetuity.But inside China.the view is much more tentative despite booming activity. While a recent door-to-door survey of 6,000 Chinese houscholds revealed a strong near-term appetite for consumer goods it also suggested a considerable wariness that could influence the behavior of shoppers 1 Just 37 pereent of those surveyed,for example.agroed or strongly agreed with the statement"I feel confident about my financial future The respondents also confirmed that they saved a quarter of their family income more than people in Europe and the United States save
The Chinese consumer - To spend or to save 中国消费者——是消费还是储蓄 by: Kevin P. Lane and Ian St-Maurice source: The McKinsey Quarterly published : January 13, 2006 Viewed from afar, China is an export juggernaut whose growth is destined to motor steadily forward in perpetuity. But inside China, the view is much more tentative despite booming activity. While a recent door-to-door survey of 6,000 Chinese households revealed a strong near-term appetite for consumer goods, it also suggested a considerable wariness that could influence the behavior of shoppers.1 Just 37 percent of those surveyed, for example, agreed or strongly agreed with the statement "I feel confident about my financial future." The respondents also confirmed that they saved a quarter of their family income more than people in Europe and the United States save
E X H I B I T I What they save for Top reasons in China for individual savings.%of respondents! As a precaution in case I or members of my family get sick 50 As a provision for retirement 3 Toward buying an apartment or house 36 Because it is a virtue 30 So that I can leave an inheritance to my children 27 2 Respondents were asked to select their top 2 choices. The survey results support the view that China's savings rate is high because the country's social safety net is thin and most Chinese must pay for health care and persions out of their own pockets.Asked to give the main reasons for saving.50 percent of the respondents mentioned the need to put money aside in case family members were to fall ill,and 43 percent cited retirement (Exhibit 1).For most consumers,creating a cash cushion is clearly the number-one priority. Among the one-third of respondents whose income had increased during the past year,nearly half saved all or most of the extra money:just 9 percen sid that they spent most of it (Exhibit 2) Fewer than one in five respondents intended to spend more in 2005 than in 2004
The survey results support the view that China's savings rate is high because the country's social safety net is thin and most Chinese must pay for health care and pensions out of their own pockets. Asked to give the main reasons for saving, 50 percent of the respondents mentioned the need to put money aside in case family members were to fall ill, and 43 percent cited retirement (Exhibit 1). For most consumers, creating a cash cushion is clearly the number-one priority. Among the one-third of respondents whose income had increased during the past year, nearly half saved all or most of the extra money; just 9 percent said that they spent most of it (Exhibit 2). Fewer than one in five respondents intended to spend more in 2005 than in 2004
1发目1B1T2 Restrained spending Csnf3p街制 n自nca2测4-明 n时d Increased 州6w准掉解d客 portion No change 5 Sved sgrif5a日 perticn Saved about hat of it Depeased 14 Although such caution about the future does restrain spending.as long as the Chinese cconomy continues to hum along at high growth rates.there will be ample disposable income for buying comsumer goods.Indeed,when consumers were asked about the big-ticket items they intended to buy over the next 12 months,they revealed amhitious shopping lists that included new cars,appliances,and the latest consumer electronics Some 8 pereent of these consumers said that their next major purchase would be a flat-screen television Ifa fraction of those who planned to buy one actuallly did,about four million flat-screen TVs would be sold in the next 12 months The other item at the top of may Chinese consumers shopping lists is a new apartment or house,which nearly 10 peroent of the respoodents said they were likely to purchase during the next 12 months Typically.home purchases generate significant sales of appliances and other items. since a majority of new apartments are sold as shells that must be outfitted with everything from appliances and fixtures to floor coverings and lighting Nearly three-quarters of the respondents reported that they would upgrade their furniture and home appliances when they moved into a new apartment.After scrimping for years to save enough to buy a dream home,Chinese consumers tend to splurge on high-qulity fixtures Some 43 percent of the respondents agreed or strongly agreed that"having a private car is my biggest dream,'and a little more than 2 percent claimed that they planned to purchase a car in the next 12 months.The penetration of passenger cars in China,at 8 per 1,000 inhabitants,remains
Although such caution about the future does restrain spending, as long as the Chinese economy continues to hum along at high growth rates, there will be ample disposable income for buying consumer goods. Indeed, when consumers were asked about the big-ticket items they intended to buy over the next 12 months, they revealed ambitious shopping lists that included new cars, appliances, and the latest consumer electronics. Some 8 percent of these consumers said that their next major purchase would be a flat-screen television. If a fraction of those who planned to buy one actually did, about four million flat-screen TVs would be sold in the next 12 months. The other item at the top of many Chinese consumers' shopping lists is a new apartment or house, which nearly 10 percent of the respondents said they were likely to purchase during the next 12 months. Typically, home purchases generate significant sales of appliances and other items, since a majority of new apartments are sold as shells that must be outfitted with everything from appliances and fixtures to floor coverings and lighting. Nearly three-quarters of the respondents reported that they would upgrade their furniture and home appliances when they moved into a new apartment. After scrimping for years to save enough to buy a dream home, Chinese consumers tend to splurge on high-quality fixtures. Some 43 percent of the respondents agreed or strongly agreed that "having a private car is my biggest dream," and a little more than 2 percent claimed that they planned to purchase a car in the next 12 months. The penetration of passenger cars in China, at 8 per 1,000 inhabitants, remains
quite low compared with the worldwide average of 104 cars per 1,000.The survey results suggest that the market's long-term potential remains strong despite recent volatility in demand. What's more,the survey reveals the rapid growth of consumerism in towns and smaller urhan areas Some products are actually on more shopping lists in the countryside and midsize cities than in the largest ones,where the market is becoming saturaled (Exhibit 3).For instance.20 percent of respondents in rural county seats plan to buy mobdle phones over the next year,compared with just 10 percent in top-tier cities and 15 percent in second-tier cities,such as Wuhan and Xiamen E%样1s8T3 Shopping lists 5 ted intentias的ar九nwn00,写 Overall a9e时金es Midsine eities 象mall ci相es Raral county 化wt1有 转向 Uebie handoet N 10 13 Desitoe PC Vigeeane 的shing machne At cendtioner Perator Digits camera 11 0i国wa州nfnh珍6n到间P指k-ts情e特动g0g Similarly.12 percent of respondents in small towns indicated that they were likely to purchase new washing machines in the next year,compared with 5 percent in top-tier cities The survey's discovery of such strong demand in China's up-and-coming urban areas underlines the importance of this new battleground for both multinationals and their loca competitors
quite low compared with the worldwide average of 104 cars per 1,000. The survey results suggest that the market's long-term potential remains strong despite recent volatility in demand. What's more, the survey reveals the rapid growth of consumerism in towns and smaller urban areas. Some products are actually on more shopping lists in the countryside and midsize cities than in the largest ones, where the market is becoming saturated (Exhibit 3). For instance, 20 percent of respondents in rural county seats plan to buy mobile phones over the next year, compared with just 10 percent in top-tier cities and 15 percent in second-tier cities, such as Wuhan and Xiamen. Similarly, 12 percent of respondents in small towns indicated that they were likely to purchase new washing machines in the next year, compared with 5 percent in top-tier cities. The survey's discovery of such strong demand in China's up-and-coming urban areas underlines the importance of this new battleground for both multinationals and their local competitors