About China's middle-income class spending power

US think tank DemandInstitute and parent bodies ConferenceBoard released a report that China's middle-income class spending power is overrated.

china middle income class

Injection molding china consumer

China injection molding companies -CNMOULDING, our definition of "middle class", should be capable of spending a day at $ 10 to 50, the Institute demands that the scale of China's middle class is defined under this section is too large. TNCs are the typical target customer groups should be less than 49 years old, well educated, and living in the city, with the ability to access the Internet. This part of people's spending power is much lower than the United States. In 2010 to 2014, this population only 12% of household income more than 32,000 US dollars / year, or about $ 85 / day.
Not with the United States than China, low US interest rates of consumer loans, people for their strong confidence of the middle class status, are not available in China. China's consumption is not overvalued, but distinctive characteristics.
The first characteristic, FMCG, buy cheap.
China mould believe, the scale of online shopping accounts for almost 35 percent of Europeans and 40% of the world of online shopping scale, basically in 40%; the same period, the Americans in 2006 Online shopping accounted for 42% of the world scale, but in 2013 this figure dropped to 21%; while net purchases from the size of the Chinese share of global online shopping scale growth to 1.2% in 2006, 24 per cent in 2013.
"Double 11" full-day trading volume of 122.937 billion yuan net, compared with last year's 80.5 billion 52.7%, total net number of packages of 678 million, 410 million increase over last year's 65.7%. Although the return data, which are entangled, but online, and online promotion festival such a huge amount of consumption, indicating that Chinese consumers are very price-sensitive products, particularly involving the type of appliances, brand, FMCG, etc., can be cheaper just absolutely not expensive.
Some Chinese pay attention to the quality of life of the middle-income class has purchased in the high-end brand FMCG goods, they are not than what to wear, but to someone in the bathroom, that household soap and shampoo is what brand? Previously considered a good sign, reduced now, the middle-income class is no longer in use Rejoice brands such pride, in favor of the direct use of high-end brands purchased abroad.
The second feature, the luxury to wait until the foreign buying.
Chinese consumers shopping from luxury goods to Europe and Japan to household appliances, food, all-encompassing. Japan National Tourist Office to name data, as of October 9, 2015, the cumulative number of tourists visiting Japan exceeded 15 million, more than 2014 full-year 1341 million, of which 47% for Chinese tourists. The third quarter of this year, Chinese tourists to visit Japan per capita tourist expenditure of 280,000 yen (about 14,870 yuan), an increase of 19% over the previous year. Among them, 140,000 yen (about 7435 yuan) to shopping. Japanese jeweler Mikimoto jewelry (Mikimoto) headquarters in Tokyo's Ginza 7-9 months of duty-free merchandise sales increased by 20% compared to the same period last year. During the 2015 National Day holiday, duty-free goods of Chinese tourists spending in Japan's Takashimaya department store more than 2 times the same period last year. Cosmetic skin care products based realization selling, accounting for a quarter of overall sales.
Do not say that China's middle class income not consumption, but a large part of the consumer transferred directly to the outside, so there were only one way to lower taxes. If the country also sell so expensive Gucci, who in the country to buy it?
Third, more than China's middle class income will not mean security and education, safety of life, involving children for the future, no amount of money spent.
November 16, the US State Department and the American Institute of International Education nonprofit agency released the latest report, 2014-2015 academic year, nearly one million international students into American universities study, the number of international students enrolled in an increase of 10%, an increase of 35 years maximum, The number of Chinese students increased by 10.8%, accounting for 9.8 billion of the $ 30 billion contribution.
Food, too, China's middle class is not only large-scale purchases of organic food in foreign countries, health care products, pharmaceuticals, domestic organic food are rising. Industry research and consulting firm Investment Advisor data show that in 2012 the world market sales of organic products has more than 60 billion US dollars, mainly in Europe and North America. Developed nearly 60% of the organic food gap imported from developing countries, which accounted for 70% of Argentine exports to developed countries organic foods. Currently, the amount of organic food consumption is growing at a rate of 30% to 50% annual growth, annual out up to 30%.
Middle income groups can rent a small plot of land in rural areas, can be rented for a fraction of a workforce management own vegetable garden, the overall cost is not low, but they are never bored for safety.
      From more than 20% of the growth we can easily see that the above Chinese middle income groups do not skimp on spending, but the growth of consumption and safety, quality, and show off, investment linked, in order to impress them, to a concept to pay, has been increasingly the less.

consumer goods companies move, indurial goods also will move

"Migratory birds" fly to Southeast Asia
Southeast Asia is another choice of the capital.
Received Adidas notice to terminate the contract, Sun Yingli some by surprise, the two sides agreed to the contract period is supposed to be until the end of 2015.
Adidas OEM grandson of the company since 1996, the two sides signed in 2006 a long-term cooperation agreement.
Then coincides with the the Adidas golden age of production in China. In 2007, Adidas Group footwear products under half of production in China. But then, Adidas started to increase supplier diversity strategy. 2011 annual report mentioned, the high import duties levied some Latin American countries, exports of footwear products to China, which is Adidas production base further decentralized configuration.
By 2011, the proportion of Group Adidas footwear products from China is still the largest, but has been reduced to 35%. Indonesia, Cambodia and other Southeast Asian countries significantly increase the latter's share more than doubled.
"Adidas Suzhou plant is shut down for re-integration of global resources strategy considerations, this strategy will help Adidas better play our economies of scale and reduce complexity." Adidas provide an official response to the Southern Weekend reporter leak, tried to shut down cool event, "close the plant not only has nothing to do with the salary increase, also has nothing to do with our inventory of Adidas in China's stock in good condition."
But in fact, the secret is to plant transfer costs. In July 2008, global Adidas CEO Herbert Hainer said the German media in China, by the government-set wage standards gradually becomes too high, the company hopes to partially withdraw from China, transfer to cheaper labor areas. Just four years ago Heiner's statements, triggering the production line will be transferred outside Adidas guess.
Compared with four years ago, China's rising labor costs to be getting worse. "If you include social insurance, we are here to the average worker's monthly salary of more than 3,000 yuan. Doubled compared with two years ago, but we also worry about being unable to recruit workers, hire workers, a high turnover rate." Li Xin (a pseudonym), a Fujian Adidas middle of the foundry business, recruitment, looking around for someone to help.
The new Lee said his corporate human costs accounted for the proportion of turnover from 12% two years ago to about 30%.
Side the the bullish labor costs in China, the other side is Indonesia, Vietnam and other Southeast Asian countries, the adult labor force each month about the salaries of more than one thousand yuan, Li Xin where the company began to expand overseas branch, three factories in Vietnam has Indonesia landing.
Compared with Adidas, rival Nike, the pace of the transfer of production bases to go far greater. Since 2005, Nike has increased year by year the of Vietnam factories in the proportion of its manufacturing, 2009, Vietnam and China, the proportion of orders with 36%. The go-ahead after two consecutive years, 2011, in Vietnam the proportion rose to 39%, while China fell to 33%.
This is not the first time Nike and Adidas factories migration. The two brand originated in Europe and the United States "migratory enterprises is very cost sensitive. In the seventies of the last century, and its main production base in Japan, due to the appreciation of the yen, Japan's labor costs rise, they shifted their production bases to South Korea and Taiwan; 1990s, because of cost reasons, to take his orders for the transfer to the Chinese mainland. Today, Vietnam, Indonesia and other Southeast Asian countries, to become the new promised land.
Nike and Adidas migration has also led to a number of Taiwan-funded background foundries transfer. In early 2012, Stella holding company listed in Hong Kong closed a processing plant in Dongguan, while continuing to enhance the production capacity in Indonesia. Chain from Japan's casual wear brand UNIQLO (UNIQLO) to Southeast Asia as the next migratory land.
In 1999, Uniqlo in Shanghai and Shenzhen to establish the production department. 2007 years ago, 90% of the Uniqlo rests in China. But in 2008, Uniqlo gradually reduce dependence on Chinese manufacturing, reduced to 80% the proportion of China in 2011. This year's annual report shows that the company plans to actively expand production in other Asian countries, in order to reduce costs, "the goal is to shift one-third of production outside China".
In addition to clothing vendors, food price has a high sensitivity. A well-known food companies in North America the past two years to begin direct imports products from overseas, the employee said, "Each of the products produced in China, must have at least one or a few back-country. Once China is losing its competitiveness, can immediately order. "
Not long ago, the European Union Chamber of Commerce in China facing conducted a survey of European companies in China. The survey shows that 22% of the companies surveyed said they are considering investment towards the outside of the Chinese market. When asked about the motive, one of the main factors that rising costs.
This research data show that consumer goods companies tend to evacuate more than industrial enterprises with the former are more sensitive to price.
"Compared with industrial enterprises, the transfer of the production of consumer goods companies faster," Lee said, five years can be basically completed.

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