Moreover, with a GDP growth rate of 8 percept as per 2012 china consumers are experiencing a boom in their income earning (Lardy, 2012). As a result, many consumers are moving from rural areas to urban areas. This implies that there will be increased consumer spending since in urban areas their enough goods and services which are not present in rural areas. There will be increased spending on transport and housing services. Holistically, there will be a decrease in saving among the China consumers since the living conditions will warrant them to spend more each day. Therefore, future economic changes in China will have great impact on consumer spending and consumption behaviours.
Demographic changes
Demographic changes in China play a vital role in influencing the consumer spending and consumption behaviours. There is an expectation of declining fertility as time goes on in China thus affecting some ages. There will be decrease in the number of child births implying that there will be less spending on children related products namely clothing, games and toys. This means adults will have a lot of money because they will not spend on their children. This implies that they will increase their spending on food stuffs, travel, entertainment and decorating their homes (Deloitte, 2012).
In addition, there is an expectation that there will be an increase in the number of older working age between 50 to 60 years (Deloitte, 2012). This is an age which spends more on services and less on goods however, their spending is considered to be very low since they focus on saving more. Finally, the number of Chinese elderly people is expected to rise following good health care products and services. As a result, there will be an increased spending on various commodities which are geared towards developing good heath such as pharmaceuticals, food, recreation and fashion.
Technological Changes
Effective marketing is very vital for business growth and development as well as enlisting better consumer spending habits. Product communication is aimed at creating product awareness, product attributes, enhancing positive product image and providing customers with product information. Their various promotional methods which investors need to focus on in order to increase China Consumer spending and consumption levels. This includes advertising, direct marketing promotion, sales promotion, public relations and personal selling. Of all the above mentioned promotion channels, advertising remains the most viable method. Advertising involves the use of radios, television, journals, outdoor communications, magazines, cinemas and newspapers.
The world is facing rapid technological changes thus calling for every sector of economy to adopt these technologies to ensure efficiency. In China growth of internet usage has become the holder of the day. Following its huge population, greater numbers of its population have switched to internet use (Deloitte, 2012). This is to imply that internet investors need to focus on internet marketing so as to attract more consumers for their products. With increased internet use in China many consumer have shifted to internet spending and this stands as the only opportunity for investors market their products and services via the internet. This is to imply that there will be an increased consumer spending using the internet services.
Internet use in the rural areas in china will increase consumer spending because consumers will be able to buy products and services without the need of moving to the market place (Information Services Department, 2012). This will help in solving the problem of reduced spending facing most of China consumers following lack of enough commuting services. Availability of online payment systems in China will also played a vital role in increasing consumer spending. An outstanding example is the Alipay system which is becoming a common payment method for internet consumers in China (Deloitte, 2012). Therefore, China investors should consider advertising their products through the use of internet. In this case, digital online and offline strategies should be used to create product brand awareness. Moreover, the use of optimized search engines can make the business compete successfully. This is because information retrieval with ease improves brand awareness.
On the other hand, with advancement in technology many consumers are finding it nice to move from rural to urban areas. This is to imply that these consumers will need to make use of new automobile services for their daily movement in the urban areas. As a result, these consumers will be forced to spend more on acquiring transport facilities which match with the new technologies. This means that they will have to spend more and save less since they have to live at high standards which correspond to the advancement in technology.
Political Factors
Politics and governance influence the business activities and thus affecting consumer spending at large. China has stable governance which serves to promote business activities and encourage investment. Govern restrictions, exchange controls, and issues of product requirements are sometimes subjected to political debates whose end results affect business operations. In addition, the business is exposed to political risks that call for contingent measures. China has developed several Free Trade Agreement negotiations with many countries. In addition, China has over the recent reduced its tariff for agricultural products following its entry in to World Trade Organization (GovHK, 2012). As a result, this has eased investment in the country for many investors. Following this, many consumers have increased spending and consumption level because they are able to get the products and services they need nearer to them. Further increase in consumer spending calls China to stabilize its politics and governance influence in business activities.
Social Changes
When we talk about the effect of social changes in consumer spending and consumption behaviours, we actually refer to different social classes which are present in China. China income distribution remains unequally distributed among its consumers (Lardy, 2012). This is to imply that there are two types of consumer classes existing in the country. There high class consumers who can be said to possess high wealth and most of them tend to direct more spending on luxury goods. On the other hand there is low class consumers or the poor who are low income earners and they tend to spend more basic needs and hardly non on luxury goods. However, the poor consumers in China are seen to spend more as compared to the wealthy class of people. This is because most of the wealthy class tend to save more than they spend.
Savings is one factor which influence or affect spending and consumption behaviours of consumers. When there is increased income saving among the consumers, there is fall in spending and consumption levels. China households are among the consumers who save a lot of funds. With increased per capita for China, there is increased income among the households thus impelling them to save more (Deloitte, 2012). This is affects consumer spending negatively and as a result investors look forward to motivate consumers to make use of a part of their savings in buying goods and services.
China consumer saving still remains very high hence discouraging spending. Rural consumers are seen to be the top income savers following their lack of social safety. However, following increased movements from rural areas to urban areas in China, the saving rate start declining. This is because in urban areas consumers have enough access to products and services thus increasing their spending and consumption habits.
Conclusion
Clearly, it is true that China has varies consumer types thus playing a vital role in influencing their consumption and spending habits. The city has both high income earning consumers and low income earning consumers. This difference in income earning is reflected on their spending and consumption habits. For instance, high income earners have a high demand and spend more on luxury products and services this is because they are able to affordable. On the other hand, the low income earning consumers have high spending habits for basic needs only (Deloitte, 2012).
China stands to be a good investment point for global investors but in order to succeed in the Chinese market; these investors need to understand consumer behaviour. Most of the Chinese consumers are increasing appetite for internationally produced products following their better quality and health safety. Thus investors should focus on developing different marketing approaches which will attract consumers spending and consumption (Stephen, 2006). Regular conduct of market research in China consumer product and service market will give investors a good understanding of China consumer spending habits. This will play a vital role in assisting them to adjust their operations to match with those of their consumers.
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