China Consumer Market
 

Asia Consumer Market 

Asia’s consumer base is big

The vast and heterogeneous Asia-Pacific region contains some of the largest and richest economies, as well as some of the smallest and poorest. It is home to half of the world's urban population and 11 of the 20 largest cities in the world. China and India together contain 37 per cent of the world’s total population. Asia-Pacific’s urban population has increased by five times since 1950 and the United Nations (World Urbanization Prospects) project that by 2020, 48% of Asia will reside in urban areas. This may climb to 55% by 2030. Asia contains more than 60% of the world's human population, with 3.96 billion people in 2006 and over 600,000 communities and numerous subcultures. Economies like China, India, Japan and ASEAN provide a big middle class base of consumers. Companies are constantly thinking of ways to extract more profits out of this diverse and big regional market. Among the richer economies like Singapore, the top consumer expenditure items are transport and communication, rent and utilities, food and beverage, and leisure.

Asia’s private consumption expenditure: now declining but expected to grow in medium term

The IMF reported that consumption as a share of GDP in emerging Asia is low by international standards and has been declining for some time (70% in 1970, 60% in 1980, 55% in 1990, 52% in 2000 and to 48% in 2005). This is due to increased precautionary savings caused by the Asian crisis, reduced economic growth, limited social safety nets, population ageing and tightened domestic bank credit.

However, the very same set of factors which have caused decreased consumption are beginning to change. Increasing number of workers is expected to retire and consume out of their savings. Consumers have become less cautious in the wake of the Asian crisis. Ongoing banking sector reforms like improved risk management systems can develop household credit instruments. These potentially can reduce precautionary savings in the medium term around 2015, as households would be less likely to save for emergencies.

Emerging Asia: Projected Impact of Aging on Consumption (United Nations)

The United Nations projected that the rise in consumption in Asia by 2015 is highest for Singapore (18%), then South Korea (15%), Hong Kong (10.6%), Thailand (9.4%), China (7.8%), Malaysia (5.3%), Philippines (3.4%), Indonesia (3.3%) and India (3%).

The United Nations also projected that the Elderly Dependency Ratio by 2015 would be highest in Asia for Hong Kong (19.8%), South Korea (18.1%), Singapore (18%), Thailand (13.4%), China (13.3%), India and Indonesia (both at 9.4%), Malaysia (9.1%) and then Philippines (7.5%).

Infrastructure improvements can also grow private consumption expenditure

Consumption of durable goods and services depend on the availability of infrastructure like roads, electricity, telecommunications, and health services.  World Economic Forum conducted an Infrastructure Quality Ranking in its Global Competitiveness Report with a scale from 1 to 7. (1 means poorly developed while 7 means among best in the world). Australia and Hong Kong, scoring around 6.2 are highest ranked in Asia above global average of 4. Malaysia, Japan, Korea, New Zealand, Taiwan and Thailand scored around 5.Indonesia, China, India and Philippines are below global average of 4 now.