NACS 50th Anniversary: Celebrating 50 Years

January 2007

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Statistics show that China's emerging urban, middle-class population is expanding with the country's growing economy:

  • China's economy is the fourth-largest in the world. In 2005, its $2.26 trillion (U.S) economy was approximately one-seventh the size of the U.S. economy. (Source: 2006 UPS China survey.)
  • U.S. exports to China have been growing more rapidly than to any other market - up 28.4 percent in 2003, 20 percent in 2004 and 20 percent in 2005. (Source: U.S. Department of State.)
  • China will become the third-largest consumer market in the world by 2025, approaching Japan in real dollar terms. (Source: From 'Made in China' to 'Sold in China': The Rise of the Chinese Urban Consumer, the McKinsey & Company.)
  • Urban consumer spending in China will grow more than five-fold from 3.7 trillion renminbi ($446 billion) per year in 2005 to 19.2 trillion renminbi ($2.3 trillion) in 2025. (Source: From 'Made in China' to 'Sold in China': The Rise of the Chinese Urban Consumer, the McKinsey & Company.)

NACS Magazine

Inside the mind of the Chinese Consumer

China's 1.3 billion population spans 3.7 million square miles of multiple climates and countless regional dialects. With such diversity, logic dictates that Chinese consumers have myriad tastes and preferences. And that is exactly the case, according to a UPS survey of consumer purchasing preferences among China's diverse urban, middle-class - often referred to as "Chuppies." The survey recommends that American businesses should ditch the "one-size-fits-all" theory if they want to capture the purchasing power of Chinese consumers.

"This survey bears out the fact that China is an increasingly sophisticated, much more complex and far less monolithic consumer market than it was perhaps previously believed to be," says Kevin M. McConnell, senior partner at O'Connell and Co., which specializes in foreign direct investment and general business matters in China. "There is every reason for U.S. business to believe that this increasing complexity and sophistication is going to continue."

The top five U.S. product categories most attractive to Chinese consumers are:

  1. Books/videos/music
  2. Consumer electronics
  3. Home appliances
  4. Apparel and fashion accessories
  5. Health and beauty care products

Younger consumers (aged 20 to 29) are most open to buying American products, along with consumers in major cities such as Shanghai and Beijing, and purchasing differences can vary according to age and gender:

  • Younger consumers say that they buy imported products to enhance their image and status. In particular, young, male consumers with middle-to-high income say they value the status and image associated with American products
  • Younger consumers are more likely to consider American fashion and consumer electronics to be status symbols
  • Male consumers are more interested in purchasing American athletic equipment and licensed beverages or tobacco products, while more women prefer to purchase gourmet foods from the United States

The survey also reveals that packaging also plays a significant role among Chinese consumer purchasing decisions, as a majority of respondents said they prefer American or western packaging, particularly for health and beauty care products.

Packaging color also factors into Chinese consumer purchasing decisions. The survey reveals that 37 percent of consumers say that they prefer blue packaging for American products, which is nearly double the next color choice of white at 19 percent. As for gender differences, men prefer "cold" colors such as blue and black; women prefer "warm" colors such as red and purple; and younger consumers prefer packaging colors such as black and white.

"China presents tremendous opportunity for U.S. businesses, and not just as a manufacturing base," says David Abney, president of UPS International. "China is one of the fastest growing markets for U.S. exports. Our hope is that the survey findings will help U.S. businesses consider what opportunities may exist for their products in China."

The UPS study, conducted by Research International, was a quantitative study of 1,200 Chinese consumers in six cities: Beijing, Shanghai, Guangzhou, Shenyang, Chengdu and Wuhan. Respondents were all between the ages of 20 and 59 and have high household income levels in China.