“I don’t think we should get overly concerned about the slowing growth rate in China, which is often confused with a decline overall,” Mintel’s chief China market strategist Paul French tells just-style.
“This is a sign of maturity and growing sophistication among consumers in tier 1 cities and is completely understandable and expected after half a dozen years of go-go spending. All the conditions remain for strong continued retail sales in tier 1 China – white collar wage rises are still in the 6-7% per annum range,” says French.
He adds that the slowdown is a sign that the 300m middle class people in tier 1 and a few in tier 2 are reaching maturity.
“These people benefited from the reforms massively in the last few years with white collar wage rises in excess of 10% per annum and the transfer to the private property market and asset ownership.
“This group is now saving for larger ticket purchases [booming sales of cars and growth in international tourism travel from China] and financial products like insurance, healthcare, critical illness, education funds and old age funds.”
French emphases that much of the slowdown is coming from tier 1 cities, while stronger growth is taking place in tier 2, 3 and 4 cities.
“This is completely natural too and good in the long term as it will address the unevenness of China’s retail market with a western level of consumption and retail infrastructure in Shanghai, Beijing and a few other places and retarded retail in tiers 2/3 and below.
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