As the Chinese economy looks set to record a growth rate in excess of 8% in 2013, these brands have every reason to believe they are moving into fertile territory. However, it is not China’s growth rate per se that should be concerning Western marketers, but the composition of its GDP. There remain widespread concerns that China’s economy is too reliant on state enterprise and investment; and with official statistics reporting that private consumption accounted for just 35% of total GDP in 2012, these are not without justification.
It is against this cautious backdrop that I turn to recent calculations by Morgan Stanley, who found that private consumption actually accounted for 46% of total GDP last year - and this figure is rising. If correct, this points to a significant rebalancing of the Chinese economy and, potentially, to a wealth of opportunity for providers of consumer goods.
A small caveat is necessary at this juncture, however. Significant numbers of firms within emerging markets are also attempting to service middle-class demands, which is intensifying competition and saturating the market. Note here the success of Chinese brands Chery and Lenovo, who are both satisfying domestic appetites while also seeing their footprint grow internationally.
Those firms seeking to make a foray into China will do well to heed the challenges facing and opportunities awaiting them. For whilst The Rebalancing of Global Power is undoubtedly underway, brands must endeavour to speak loudly to aspiration if they are to appeal to the middle-class and High Net Worth psyche in this increasingly crowded marketplace. But for those deciding to undertake such a venture, rest assured that private consumption as a proportion of GDP in China remains a long way behind other mature markets, and this figure is only going one way.
If you are interested in finding out more about how to benefit from the high net worth global tribe, Future Foundation is hosting an event on this topic at the Financial Times’ offices on 26th April. For more details, please contact Pippa Goodman (firstname.lastname@example.org 020 3008 4889).