Chinese might consume more than ever, they certainly do not buy as much as previously anticipated, and certainly not that much American stuff. Retail analyst Paul French looks into the issue at The Daily Star.
The Daily Star:
More than a decade later, many are waiting for the payoff. Certainly, lots of American companies have made money, but many actual workers have paid a real price. What went wrong? In part, American businesses assumed that a wealthier China would look like, well, America, says Paul French, a longtime Shanghai-based analyst with Access Asia-Mintel. He notes that Chinese consumers have spent far less than expected, and the money they do spend is less likely to be spent on American goods.
There is a long list of missteps, French says. Home Depot, for example, overestimated the desire for do-it-yourself home projects and high-end materials in a country with an unbelievably cheap labour force and a thriving black market. Kodak learned it couldn’t forever dump its unsold film on a consumer base looking to make their first cameras digital ones. The Gap had to learn that a thriving middle class does not want to dress shabby-chic. In general, French says, European companies have done much better than American ones because they’ve had to practice selling across borders and cultures for decades.
Many US executives also assumed that as China got richer, its citizens would spend more of their income. But the opposite has happened: The country’s savings rate is now climbing faster than its spending. China’s households save more than a quarter of their money, while Americans save less than 4%.
More in The Daily Star.
Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.
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