The Chinese consumer remains a favorite business topic (and book subject: see “Billions”, a “Billion Customers” etc.), and the latest news is that retail sales rose 13.6 percent in April (and 13 percent for the first four months of the year), year-on-year, to RMB578 billion (US$72 billion). This follows growth of 12 percent last year, with record sales of US$834 billion.
Where is this growth coming from? The International Herald Tribune (IHT) reports that recent policies, such as cutting taxes and raising the minimum wage, have resulted in urban and rural per-capita disposable incomes rising by 10.8 percent and 11.5 percent respectively in the first quarter. This increase in spending power, and confidence, has benefited several sectors: ”Spending on household electrical appliances rose 17.6 percent and sales of jewelry jumped 29.5 percent…Sales of clothing, shoes and accessories increased 17.4 percent.”
In the electrical retail sector – which is projected to reach US$100 billion in sales by 2010 – Gome is reported to have seen sales jump by 68 percent in the first quarter. It is news like this that is attracting attention from foreign retailers. The latest to arrive is the US electrical retailer, Best Buy, which has bought a controlling share in China’s Five Star (the country’s fourth biggest consumer electronics retailer for US$180 million.
The Chinese mass consumer market may not offer “a billion customers” (see the post “A Billion Customers…Myth or Miricle?”), but it is does present a growing and increasingly attractive market for foreign retailers and consumer brands who can customise their offering to difering local tastes, while getting their pricing right (see related post here). Which is no easy task.
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See news sources:
Consumer affluence lifts China retailers
International Herald Tribune – France
BEIJING China’s retail sales rose at the fastest pace in more than a year in April, according to government figures released Monday, as rising incomes left …
Best Buy Acquires China’s Five Star for $180 Mln (Update1)
Bloomberg – USA
May 12 (Bloomberg) — Best Buy Co., the largest US electronics retailer, agreed to invest $180 million for majority control of China’s Five Star Appliance to …