Tag McKinsey

One Billion Consumers – Now Buying

How many articles have you read about China being the ‘biggest consumer market in the world’?   Western brands are investing, opening regional offices, and partnering with local conglomerates to open vertical and multi-brand doors in key cities.  Many mega-brands are diversifying their China strategy and investing more deeply to enter tier-two and tier-three metropolitan markets with tailored assortments to meet the demands of entry-price-point expectations.
In a interesting recent McKinsey Quarterly piece, noted Yale economist, Stephen Roach, makes the argument that the heavily export-oriented Chinese culture needs to look to its internal private consumption to drive stability and growth… and advanced western brands can jump in and harness the potential of this massive shift from export to mature consumer economy.

Of note, in March of 2011 China enacted the 12th Five Year Plan with three building blocks to drive fundamental internal consumption:

  • Greater focus on jobs – especially services
  • Urbanization to boost per-capita wages
  • Funding a social safety net – to drive consumer spending vs saving

Here is a video clip from McKinsey Quarterly where Stephen Roach discusses the plan:

To read the full article on the McKinsey Quarterly site, click here