A New Economic Era

Consumption differences

The advent of increased consumer spending in China has made many companies realize that selling to Chinese consumers, who show important regional differences in their buying habits, is an increasingly complex business. Max Magni, a principal consultant at McKinsey & Co., has underlined that it will be more important to cater to those differences.

According to figures from Alibaba, the company's sales rose 98 percent in central and west China in the first six months of 2011, exceeding its growth in eastern areas. The online purchasing platform shows China's great consumption capacity, especially in third- and fourth-tier cities and less developed regions, and offers a channel to balance supply and demand.

"Brands like Uniqlo and Zara that offer affordable prices are very popular among young customers in the third- and fourth-tier cities, but it is currently difficult for these consumers to purchase these goods through traditional retailers. Online shopping is able to help exploit this group's consumption potential," said Wang Yilei, Vice President of Tmall.com.

"Online shopping is not only a rival of traditional retail, but also a counterpart. It makes the whole market bigger," said Guo Tianyong, Director of China's Banking Research Center at the Central University of Finance and Economics. "The rise of e-commerce will also lead to a new round of reshuffling in traditional retail."

Rapid urbanization in China will continue to boost consumption. The generation born in the 1980s has become a major force driving consumption in housing, telecommunications, weddings and baby care. The group is more willing to accept new products and follow fashions and trends, and is more interested in spending money on social gatherings, fitness, travel, interactive games and other online products. This generation of consumers has a totally different attitude than their parents, and has a growing influence on the structures of social consumption.