By Tassos Stassopoulos, Alliance Bernstein
Rapidly ageing societies in developing countries represent important markets for consumer companies. However, it should be understood that vast cohorts of elderly people heading into the sunny uplands of their lives does not necessarily imply a bright future for investors.
It’s easy to overlook the ageing trend in emerging markets. Countries like India and China are home to the world’s youngest populations in terms of size. Yet as birth rates decline and healthcare improves, older people will constitute a growing percentage of the population. In the top 12 emerging markets, the over-65 demographic is growing at an annual rate of approximately 3.7 per cent (see chart) — nearly double the rate in developed countries. Continue reading »
A huge bonfire of the brands awaits auto manufacturers in China as some 90m car owners prepare to disregard loyalty when they chose their next model.
A survey of some 2,400 car owners conducted by the Boston Consulting Group (BCG) found an itch to switch brands among 83 per cent of respondents who drove domestic Chinese brand cars. Of these, only 30 per cent said they would drive another domestic brand as their next car, while a full 40 per cent said they planned to plump for a Volkswagen.
The findings suggest that the next big trend for auto manufacturers in the Chinese market – which has expanded tenfold since 2000 to register annual sales of around 20m units – may not be so much concerned with chasing growth as with inculcating brand loyalty. Continue reading »
Wealth is not necessarily translating into health for China’s growing cohort of millionaires, many of whom complain of eating disorders, too much alcohol and an average of just 6.2 hours of sleep a night (see chart).
Fast living is blamed for a variety of ailments, with around a third of millionaires (those with a personal wealth of Rmb10m or US$1.6m, £1m) suffering from insomnia, headaches, fatigue and memory loss while smaller proportions endure hair loss, immune problems, numb limbs and smokers’ coughs, according to a survey by Hurun Research Institute released on Friday.
Such conditions underpin a burgeoning demand among wealthy Chinese for products, treatments and lifestyle choices that are thought to confer health. “There is a clear trend among the Chinese millionaire class towards exercise, eating more carefully and generally taking better care of their bodies,” said Rupert Hoogewerf, chairman of the Hurun Report. Continue reading »
“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.
In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.
Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Continue reading »
By Andy Rothman, Matthews International Capital Management
Statistics announced on Wednesday do much to challenge the view that sub-par Chinese consumer spending is to blame for the sluggish rebalancing of the world’s second largest economy away from an over-reliance on investment. For too long this opinion has obscured the crucial truth that China is actually host to the world’s best consumer story.
Real retail sales rose 10.7 per cent in June and 10.8 per cent in the first half of this year, compared to the year earlier period. The strong momentum of this spending springs from solid foundations, with real urban household disposable income rising 7.1 per cent, up from 6.5 per cent a year ago. Continue reading »
By Qu Hongbin, Co-Head of Asian Economic Research, HSBC
For many, China’s growth model, which has delivered average annual GDP growth of 10 per cent over the past three decades, simply looks wrong: a national savings rate of around 50 per cent is unheard of in a large, modern economy.
A typical diagnosis states that China invests too much and consumes too little. The prescription is “rebalancing” – moving the economy away from investment towards consumption-led growth. However, a consumption-led growth model has little in theory or evidence to support it. Continue reading »
By Tassos Stassopoulos, AllianceBernstein
Consumer dynamics in emerging markets are often misunderstood. Although the rise of the middle classes is a defining characteristic of a vibrant, developing economy, the working classes will be the real engines of consumer growth in developing countries.
In other words, the middle classes tell you what has happened. But looking ahead, the fastest growth will be driven by the masses of lower income workers as they improve their lot to join the ranks of the middle class. Continue reading »
A Chinese manufacturer and direct seller of health, cleaning and beauty products with Malaysian roots may not be the most obvious cross-border investor in the South African wine industry. But Guangdong-based Perfect China is selling volumes of classic wine with a French heritage produced in South Africa’s vineyards. It is one more sign of the potential for Asian investors with an innovative eye for Africa. Continue reading »
Ultra-luxury fireplaces and wood burning stoves may not sound like the obvious things to sell in China, which has little or no tradition of decorative heaters – and no wood to burn in them if it did. But if Starbucks can make itself almost a household name in a country that doesn’t like the taste of coffee, then anything is possible.
Chesney’s, the high end fireplace and stove brand which opens two large new showrooms this week in Shanghai and Beijing, is hoping that rich Chinese have all the famous-label bling they can handle, and are ready to move on to subtler ways to spend money. Continue reading »
Chinese growth needs to come more from consumption than investment. However, Chinese consumption patterns will be nothing like what we’ve seen in developed countries. According to Gordon Orr, Asia Chairman at McKinsey, China will turn the consumption patterns known in the west upside down. Continue reading »
China is increasingly flexing its legal muscles to protect consumers against everything from illegally fixed prices to, it seems, over-the-top product packaging.
Friday’s official Shanghai Daily reports a slap on the wrist for some cosmetic firms guilty of having “too much empty space in the packaging”. Continue reading »
Yum Brands may be the leading company in the Chinese fast food market with over 5700 outlets, but recently it has seen a sharp decline in sales in the country.
Although Yum has suffered from headline-grabbing food scares (bird flu and banned antibiotics), are there bigger structural shifts afoot in Chinese fast food? Chart of the week takes a look. Continue reading »
The rise in spending power of China’s 220m migrant workers is supporting the country’s economy as manufacturing stalls. James Kynge, principal of China Confidential, explains how a labour shortage is inflating wages and what this mighty consumer cohort is buying.
Ikea’s flagship store in Beijing is among the group’s most heavily trafficked in the world – with more than six million visitors in 2011. But how much time and effort does it take to translate those visits into sales?
It’s an important question given that the Swedish furniture giant has this week announced plans to boost the number of stores in China from 11 to 40 over the next seven years. Continue reading »