MARKETING
China Foto Press
Understanding China’s Middle Class
Targeting key segments of China’s diverse and rapidly emerging middle class will be crucial as household incomes rise
Allison Cui and Kheehong Song
G
one are the days when companies looked at China as a monolithic land of 1 billion potential customers. Companies are now focusing on how to capture small segments of China’s giant market, and none of these segments is as attractive or as full of potential as the country’s rapidly growing—and multifaceted—middle class. As China’s economy continues to grow, more people will migrate to China’s booming metropolises to find better-paying jobs. These working consumers, once among the country’s poorest, will steadily climb
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Thanks to achievements part because the data on income in China tends to be in localization, the company has been able to cut prices by either unavailable or unreliable. Thus, companies must find an average of 54 percent in more than 1,000 categories meaningful alternatives to predict what consumers can since 2005. IKEA broke the bottleneck and succeeded in afford and what they are willing to pay for certain goods China because it recognized that middle class consumers and services. Studies by the Monitor Group indicate that wanted and would pay for high-quality products, but not at scores of non-income-related hooks—including age, the the same premiums as the affluent class. stage in a consumer’s career, and location of purchase— influence purchase decisions. Meet the middle class The Chinese badminton industry is a good example. China’s relatively new middle class consists of a rapidly Most Chinese school kids who play badminton do so in an shifting, diverse population. At present, China’s lower outdoor playground with a group of friends, wear non-promiddle class accounts for 44 percent of the total middle fessional badminton sportswear, and purchase a relatively chinabusinessreview.com January–February 2009 39
MARKETING class. As the middle class matures, however, the number of people in the upper middle class—households that earn $12,000 to $25,000—will spike dramatically. Companies must prepare for the different shopping behaviors of each
Despite the debates about social class, the United States is usually described as having four major social classes, the elite or upperclass, the middle class, the working class, and the lower class (Goldscmidt). Classes are generally differentiated by income, education, and occupation although other factors do have an effect. The upperclass consists of about 1% of the population making 750,000 dollars or more a year as investors, top executives, or heirs to large fortunes (Hughes and Jenkins). There tends to be no question about who is in the upperclass as they are pretty clearly isolated in their power and wealth. The middle class makes up about 40% of the population making anywhere from 40,000 to 749,999 dollars a year (Hughes and Jenkins). The large disparity in income and wealth have led to a further division of this class into upper-middle class and middle class in some circles. The middle class usually work white collar jobs as professionals and managers, however some highly skilled blue collar workers are included. Those in the middle class have usually obtained higher education degrees and place a high value on individual responsibility for one’s class (Goldschmidt). The working class is composed of about 50% of the population earning 13,000 to 39,000 dollars a year (Hughes and Jenkins). Some also divide this class into a working class and a
In reality the middle class are the job creators, and they are the heart of spending. When it comes to the upper class you would notice that if spending money was depended on them they would be the first to be ruled out. This is because the upper class makes a large sum of money, but they do not spend all that they make. So the middle class is the most important aspect of this economy. As of 2010 the middle class is struggling to stay afloat. Middle class would be considered to be with the medium being $50,000 dollars, somewhere close to $25,000 to $75,000.
There are three wealth classes in the United States which begins at Upper, Middle, and Lower income or class. According to one source as of December 2014 during the “Great Recession” of 2007-2009 the average income of Upper-income families in the U.S. was $639,400. At the time the minim 2013 household income to meet middle income for one person was $22,000. (http://www.pewresearch.org/fact-tank/2014/12/17/wealth-gap-upper-middle-income/)
The consumption of luxury goods in China is mounting sharply. Not only those born to elite families, but also many common people are greedy for luxury brands (China, a Booming
This cohort are more likely to be willing to pay full price and are also more likely to see owning luxury goods as something special. As for men, while they make up a minority of luxury shoppers in Japan, they have stayed more loyal to expensive brands. There are an estimated 3 million men under the age of 34 living alone in Japan. According to government data, average incomes for this group increased by 7 percent
Of this group, about 1/3rd belongs to the upper-middle class. The annual income of person belonging to this group is $70-$75,000. The jobs that the typical upper-middle class person holds would have a prestige rating of 65 or higher. 2/3rd?s of the middle-class population is the lower-middle class. White-collared individuals make up the majority of this class, earning anywhere from $30,000 to $60,000 a year. Lower-middle class Americans have a set standard of priorities. They take pride in the fact that they are financially stable, and promote hard work, and press on education. Without education, the members feel that they would not be where they are economically, and preach the importance to their children so that they, too, can live a lifestyle very similar to that of theirs (Norton).
As time passes the gap between upper and middle class is increasing at a fast paste. Most of those who classify themselves as middle class are now falling under the category of lower class. In 1978 an average worker worked a minimum of $48,302 and the upper class earned a minimum of $ 393,682. Since then the economic condition has changed.
Between the year 2001 and 2006, China bought more than $ 250 billion in U.S.
Additionally, as the new generation becomes more involved, a result of the middle class rising up in China, this has allowed them to participate in congress because of the expansion of personnel able to join the Communist party from the vast increase to renounce forces and an impressive ability to recreate itself.
Socio-economic and socio-political are the main force to the steadily growth of new middle class in China and become a major component of Chinese population . Many scholars explained the significant of middle-class as the supporter of democratization and democratic as Barrington Moore’s famous quote “no middle class, no democracy” However, the structure of Chinese society is very complex since China has its own characteristics which differ from other. The idea of China’s expanding middle-class will be a major driving force for political change and democratization may not be worked. I disagree with this statement due to the following reason;
Since my research in the book the circumstances of the poor and rich in China were very different prior to the Japanese invasion with the rich living in luxury while the poor live in poverty. But once the Japanese invaded their circumstances were almost the same, fleeing a powerful enemy for survival and making very hard decisions that have after effects that linger for many years. The circumstances were even the same in the 1940s during the communist revolution that they all were similar in the fact that either rich or poor that they had to flee China in 1949. The stories of the mothers relate to historical realities because all of them fled their homes and their families and also China for similar reasons. First off, they fled their homes
This essay will focus in on and look at contemporary China’s social stratification and social class make up and structure during the post reform era, (post 1978) and what affects it has on today’s social make up. It will outline the different class’s that make up contemporary China’s social structure and give a detailed outlook and perspective on each class, and show what change they have undergone since the opening of China’s economy in the late 1970’s and introduction to a market based economy. The greatest outcome will
China is becoming more westernised, particularly the ‘cosmopolitan’ city of Shanghai, where demand for Western products is increasing rapidly as disposable income rises in line with China’s strong economic growth. Michel’s wanted to establish a foothold in the market at an early stage to demonstrate a long-term commitment, which has been identified as essential to compete successfully in the Shanghai market (per Tim Harcourt, Austrade Chief Economist).
The Communist party in China has, for decades insisted that peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability. (Johnson,2014) However, China’s new policy is now to urbanize most of China as a way of mass modernization and they are doing so, through the creation of new cities and massive relocation. Due to the large amount of funds needed to create new cities, China’s government has created a series of development strategies that is meant to bring in people both investors and residents alike because they need the money from the investors and the land from the people.
This report is meant to capture the ever-changing Chinese consumer market. It includes demographic and economic information which McKinsey compiled by conducting