The global market has been long dominated by Western consumers, especially spenders from the United States. However, experts are seeing some major changes in the world’s global spending and recent forecasts are putting one of Asia’s population giants and a particular social group on top of the pedestal: China and the nation’s middle class.
China is currently transitioning from an investment-based economy to a consumption-led economy and in the process, a powerful middle class begins to emerge – but how powerful is the Chinese middle class, exactly?
Consider these numbers: China has an approximately 790 million of urban population (based on 2016 data). Considering the current population growth trend, analysts estimate that come 2030, the same population in the country’s urbanized community will hit a billion. So why are these statistics significant?
According to a recent study conducted by McKinsey & Company, a consulting firm, China’s urban population will be composed of 76% of the country’s middle class by 2022 – and it’s a record-breaking number that could disrupt the global economy.
Several industries can benefit from China’s rising middle class. For instance, their changing buying patterns and consumer behavior have proven to benefit global e-commerce, thanks to the availability and access to the biggest online shopping platforms from around the world.
Chinese consumers have also disrupted other sectors with their active spending and consumption of both goods and services, domestic and international. The travel industry, particularly, is a direct beneficiary of China’s growing middle class. In 2016 alone, they have brought in over 3.9 billion Yuan in tourism revenues. Dubbed as the “new global travelers,” this social group is the major driver of the country’s outbound as well as inbound tourist market.
As they thrive and become more financially powerful, the Middle Kingdom’s middle class may also venture into overseas businesses. This can include an array of startups, as well as offshore investments in the likes of Bermuda, the Cayman Islands, or Bahamas.