The value of China's emerging middle class

Telecommunications, Equipment & Services Article, China's middle class

Article at a glance:

As global companies have entered China, many of them focused mainly on serving its urban-affluent consumers. However, if these companies continue to use this strategy they risk missing the real opportunity—the emerging middle class.
During the next 20 years we expect a huge middle class, with enormous spending power, to emerge in China's cities, following two distinctive waves of growth.
As incomes increase, the spending patterns of this consumer group will evolve, fueling various levels of growth across consumption categories.
Although it will be difficult, companies should broaden their focus to include this swiftly evolving middle class. Since this segment is a hard one to serve, companies must think creatively to succeed.

This article includes the following exhibits:

Exhibit 1: Growth translates into rising incomes.
Exhibit 2: Rising incomes will create a large urban middle class.
Exhibit 3: The largest category of spending in China is food.
Exhibit 4: Spending on categories other than food will increase faster.

This article is part of a McKinsey Quarterly package on the new Chinese consumer. To read the other articles, please select from the following choices:

Building brands in China
China's emerging consumers are rushing to buy name brands but show little loyalty to individual labels. A closer look at these shoppers' behavior suggests ways to counteract their fickleness.

Marketing to China's hinterland
China's smaller cities and towns conceal pockets of prosperity that shouldn't be dismissed lightly.

Understanding China's teen consumers
Teens in China influence the spending of hundreds of billions of renminbi annually, but don't expect them to mirror their counterparts in developed markets.

Lessons from a global retailer: An interview with the president of Carrefour China
A retail veteran discusses what he's learned after years of running hypermarkets in Taiwan and China.

Shaping China's home-improvement market: An interview with B&Q's CEO for Asia
This British retailer finds that keeping up with the changing Chinese customer is the biggest challenge.

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Abstract

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