Chinese Consumers: Impact on the Asia Pacific
On Wednesday 21 Oct 2015, ANZ Chief Economist, Mr Warren Hogan, delivered an enlightening presentation about Chinese consumer trends and the significance of China’s economic development in the Asia-Pacific region. In particular, Mr Hogan focused on the opportunities and risks to Australian and New Zealand businesses if seeking to do business in China in the near future.
Here are the key messages we took away from the presentation.
- China’s private consumption is currently 38% of GDP, which is much lower compared to most of the world’s economies where consumption is around 50-70% of GDP. Thus, solely based on statistics China does not seem like an attractive market. The power of the Chinese market lies in its potential for long-term growth.
- The growth in affluent and middle-class Chinese consumers has created one of the largest markets for luxury goods in the worls. Chinese tourism spending hit a record high in 2014.
- Chinese Government initiatives such as reforms to pension and medical insurance are also increasing consumer confidence in spending. These social safety nets contribute to an increase in household wealth and improved financial infrastructure.
- Urban middle class spending is estimated to double over the next 15 years. Similarly, as business ties with China deepen, Australia’s exports to the country, both in goods and services, are forecast to almost double by the year 2030. The opportunities for Australia include education, tourism and services.
- As China undergoes its evolution, affluent cities like Shanghai are expected to follow Hong Kong’s pattern of higher expenditure on personal items such as electronics, jewellery, leisure activities and education in the future.
About the presenter:
Mr Warren Hogan was appointed Chief Economist in 2010. He is responsible for ANZ Research, the Bank’s economics, commodities and financial markets research capability.