China to be second largest consumer market by 2020

Date:2011-11-02wangxin  Text Size:

China's real consumption will double to $4.8 trillion by 2020, making it the world's second-biggest consumer market after the US, global management consultancy McKinsey & Company said in its 2011 consumer report Monday.

"Despite the rising inflation, Chinese consumers are more confident and optimistic about their personal financial prospects compared with last year," Yuval Atsmon, a principal at McKinsey, said Monday in Shanghai.

In a McKinsey survey of over 15,000 consumers in 49 Chinese cities, 58 percent of respondents said they expected their income to rise in the next year, compared with 39 percent in the previous year. And 83 percent of consumers increased their spending in at least one category this year, 2 percentage points higher than 2010.

On average across categories, some 50 percent of those surveyed identified inflation as the main reason behind their higher spending. But of the remainder, 35 percent said they were trading up, meaning buying more expensive goods in a given category, while 60 percent bought in larger quantities or bought more frequently, with only 5 percent spending more on new items.

The data shows that trading up is the new opportunity to drive domestic consumption going forward. For the future, it's very important for companies to convince consumers to buy more, especially convince them to buy more expensive products, and the government needs to think about it as well, McKinsey said.

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