Industry Insights

China in the Top Spot

Happy New Year to you!

That’s the Chinese New Year I mean.  It was November 30, 1988 when I first went to China, taking the old 4-hour train from Hong Kong up to Guangzhou.  Back then, Shenzhen was just a wide spot on the way barely noticeable after crossing the HK/SW border.  On the train ride it struck me that I kept seeing three things:  people, bicycles, and working buffalos on farms.  The roads in central Guangzhou were nearly devoid of individual cars as people peddled en masse.   A mere six year later I returned and took the same train route.  Looking out the window I thought ‘This kind of looks like California now’.  Over the years I kept seeing bicycles, buffaloes and farms replaced by factories, residential towers, automobiles, trucks of all shapes and sizing carrying goods out for export, modern retail outlets, and newly advertised familiar and not so familiar brands.

You probably know that China is an export behemoth and world’s second largest economy.   Increasingly though, it has become a huge internal market itself.   Just for fun I did some internet searching and found these areas where China is the world’s #1 producer or consumer or nearly so.  These quickly turned up:  crude steel in 2011 (44% of global total)*, gold production in 2009 (13% of total)*, automobile production in 2010 (24% of total)*, beer production in 2009 (25% of global total)**, and apple juice concentrate production in 2008***.  In luxury goods purchases the China market was #2 in 2010 with 25% of the global total and is expected to take top spot in 2015.  Also of note, three movies grossed over US$1B worldwide in 2011 and for those China accounted for 5% to 13% of ticket sales****.  I found lots of other example where it takes #1, or is #2 with a trajectory to #1 apparent (some fast food restaurants, certain tablets, etc.).

China has affected the world’s supply chains (apparel, toys, electronics, etc) and direction of capital investments enormously.  Increasingly – where it creates the most revenue for any single market P&L – how companies plan and allocate their market strategies, brand building, promotion dollars and people deployment will be more and more influenced.

How will this affect your business and what should you be doing now?  Or in five short years?

In the meantime . . . Kung Hei Fat Choi!  Wish you a prosperous New Year!

Sources:  *Wikipedia, **, ***, ****

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