Spending power of China's middle class

To date, many Western companies have focused on China's most affluent urban consumers - those earning more than Rmb100,000 (about $12,500) a year - despite their comprising just 1% of the total population.

by McKinsey Quarterly
Last Updated: 23 Jul 2013

That market's predilection for globally branded luxury goods has meant that many companies have succeeded without significantly changing their products.

But the next two decades will see the growth of a huge - and young - urban middle class with an overall spending power that will dwarf the affluent.

Housing and healthcare are forecast to be among the fastest growing areas of spending among urban Chinese: private homeownership has only recently begun, while a rapidly ageing population will fuel healthcare spending.

Many of today's blue-collar workers will make up this growing middle class. Companies should focus on this emerging segment now.

The value of China's emerging middle class; special edition:
serving the new Chinese consumer,
Diana Farrell, Ulrich A Gersch and Elizabeth Stephenson,
McKinsey Quarterly 2006

Review by Steve Lodge

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