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Meanwhile, China’s consumers keep spending, albeit a bit slower at the moment, and consumption growth is still on a staggering trajectory. China’s consumer economy is expected to expand by about half, to $6.5tr, by 2020—even if annual real GDP growth cools to 5.5 percent, which is below the official target. The incremental growth of $2.3tr over the next five years would be comparable to the world’s adding a consumer market 1.3 times the size of today’s Germany or UK.
China’s two-tier consumer economy, whose upper-middle-class (UMC) and affluent households disproportionately drive overall consumption, remains a defining force. The UMC, the young, and those employed in high-end services will be the source of much of the spending action in the near to medium term. Consumers continue to want to trade up. And there are multiple opportunities for marketers to engage increasingly sophisticated consumers and address their emerging dissatisfaction. All in all, The Boston Consulting Group’s latest consumer-sentiment survey provides good news for companies that are attuned to the shifts underway in China and that are prepared to adjust accordingly.
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