Table of Contents
Introduction
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- In this report we answer the key questions
- Defining the Middle Class
- Consumer research
- Abbreviations
Executive Summary
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- Key issues
- The impact of regional development on the Chinese middle class
- Attitudinal differences across key middle class segments
- Balancing financial security and material wealth
- Adapting Western lifestyles in the home, leisure and entertainment and social dining
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- Figure 1: Discretionary spending on household items, by target groups, March 2013
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- Figure 2: Discretionary spending on dining out, by target groups, March 2013
- Polarisation of middle class consumption – tightening belts on the “nice-to-have” luxuries
- “LOHAS”: promoting health and sustainability
- What we think
The Emerging Middle Class
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- Key points
- Chinese middle class on the rise
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- Figure 3: The growth of china’s middle class, 2000-15
- Increasing average incomes and a high savings rate
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- Figure 4: Growth rate of incomes and expenditure of urban households, by region, 2009-11
- High savings rates in China…
- The incentive to reduce the savings ratio
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- Figure 5: Changes in lifestyle habits – “I put more money into savings”, by monthly personal income, February 2013
- Home ownership on the rise
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- Figure 6: Type of primary residence, April 2012
- Middle class consumers prioritise clearing their mortgage
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- Figure 7: Middle class housing situation, March 2013
- Increasing car ownership
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- Figure 8: Middle class car ownership and plan to purchase of cars, March 2013
- Multinational and local private companies are lifting consumers into the middle class
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- Figure 9: Employment status, March 2013
Key Issue: The Impact of Regional Development on the Chinese Middle Class
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- Issues at a glance
- Economic growth in Central and Western region drives middle class growth
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- Figure 10: GDP and growth rate in Eastern region, 2012
- The Northeast starts to shine
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- Figure 11: GDP and growth rate in Northeast region, 2012
- Henan leads the way in Central China
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- Figure 12: GDP and growth rate in Central region, 2012
- “Go West” initiative attempts to boost growth in Western China
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- Figure 13: GDP and growth rate in Western region, 2012
- What it means
Key Issue: Attitudinal Differences Across Key Middle Class Segments
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- Issues at a glance
- Psychographic and demographic profile of China’s middle class consumers
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- Figure 14: Consumer segments amongst the middle class consumers, March 2013
- Progressive affluent spenders
- Trendy-aspirers
- Value-led buyers
- Conservative spenders
- What it means
Key Issue: Balancing Financial Security and Material Wealth
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- Issues at a glance
- Regardless of personality type, the middle class share several key traits
- Financial products for today and for the future: to enjoy and to safeguard
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- Figure 15: Factors that lead to a happy life, March 2013
- A desire to plan for the future shapes the middle class’s priorities
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- Figure 16: Current financial situation, March 2013
- Emotional needs must be balanced against financial security
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- Figure 17: Proportion of cash that spend on different expenditure items, by household income, 2011
- Opportunity to offer variety of insurance plans to customise according to middle class’s lifestyle risks
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- Figure 18: Insurance in China, by value, 2009-11
- Figure 19: Investment/planned investment for future security, October 2012
- Middle class investing in their children’s education
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- Figure 20: Type of children’s education, April 2012
- Multigenerational support for education costs
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- Figure 21: Financial impact of children's education, April 2012
- A need to understand that education is an obligation, not just an option
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- Figure 22: Examples of education planning products offered by HSBC, June 2013
- Consumer finance sets off along with the growth of the middle class
- Poor customer service is holding the market back
- Credit card rewards can potentially benefit different middle class profiles
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- Figure 23: Credit card ownership, April 2012
- What it means
Key Issue: Balancing Western Culture and Local Acceptability
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- Issues at a glance
- The influence of Western culture and “face”
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- Figure 24: Any agreement with shopping habits, March 2013
- Cross-cultural differences in brand associations
- Middle class’s demand for “Westernised” housing and home environment
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- Figure 25: Monthly expenditure on household and electrical items, March 2013
- A hunt for high-quality products
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- Figure 26: Discretionary spending on household items, by target groups, March 2013
- IKEA successfully targets the middle class’s home living aspirations – Western, contemporary, innovative and price
- The lessons to be learned from IKEA’s Western competitors
- Promoting Western and international dining experiences
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- Figure 27: Discretionary spending on dining out, by target groups, March 2013
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- Figure 28: Agreement with attitudes towards full-service restaurants, by income, August 2012
- Figure 29: Monthly expenditure, by target groups, March 2013
- Foreign foodservice outlets’ geographic expansion strategies to attract more potential middle classes
- Changing restaurant formats to appeal to more sophisticated tastes
- Foreign foodservice outlets offer exceptional experiences
- A chance to expand Western-style social dining into lower tier cities
- What it means
Key Issue: Polarisation of Middle Class Consumption Creates large Market Gap for Mid-level Brands
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- Issues at a glance
- Some are spending but financial insecurity and price sensitivity barrier to greater consumption
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- Figure 30: Changes in financial situation over the previous year, by target groups, March 2013
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- Figure 31: Discretionary spending, by target groups, March 2013
- Figure 32: Agree with shopping habits “I am happy to pay a high price to have the latest gadgets”, by target groups, March 2013
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- Figure 33: Father's/ Mother's working background, April 2012
- The battle between conformity and individualism
- Financial insecurity intensifies the need to project status
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- Figure 34: Agreement with shopping habits, by target groups, March 2013
- Balancing quality, price and branding and still standing out from the crowd
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- Figure 35: Any agreement with shopping habits, by target groups, March 2013
- Figure 36: Agreement with shopping habits, by target groups, March 2013
- Growing demand for small luxury and “masstige” brands
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- Figure 37: Any agreement with shopping habits, by target groups, March 2013
- Fast fashion finds a foothold amongst the middle class
- Some international brands are struggling to find a place in the mid-market
- Middle ground brands to fill a market void
- Local companies are starting to build stronger brands
- Chinese brands can appeal to international customers as well as the domestic middle class
- What it means
Key Issue: LOHAS: Health and Sustainability
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- Issues at a glance
- Middle class more concerned about health and lifestyle
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- Figure 38: Agree with descriptions of healthy lifestyle, by monthly personal income, November 2012
- Busy urban lifestyles make the concept of slow living popular
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- Figure 39: Factors that lead to a happy life, by target groups, March 2013
- LOHAS – emerging awareness of healthy lifestyles
- LOHAS concept food and beverage and dining to target the middle classes
- Bringing the LOHAS concept into the restaurant sector
- Eco-tourism: Middle class looking to get back to nature
- Eco-resorts start to gain traction in China
- Moving towards eco-living in the future
- What it means
Appendix – Current Financial Situation
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- Figure 40: Current financial situation, March 2013
- Figure 41: Current financial situation, by most popular factors that lead to a happy life, March 2013
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- Figure 42: Current financial situation, by next most popular factors that lead to a happy life, March 2013
- Figure 43: Current financial situation, by most popular discretionary spending, March 2013
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- Figure 44: Current financial situation, by next most popular discretionary spending, March 2013
- Figure 45: Current financial situation, by other discretionary spending, March 2013
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Appendix – Changes in Financial Situation
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- Figure 46: Changes in financial situation, March 2013
- Figure 47: Changes in financial situation, by most popular factors that lead to a happy life, March 2013
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- Figure 48: Changes in financial situation, by next most popular factors that lead to a happy life, March 2013
- Figure 49: Changes in financial situation, by most popular discretionary spending, March 2013
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- Figure 50: Changes in financial situation, by next most popular discretionary spending, March 2013
- Figure 51: Changes in financial situation, by other discretionary spending, March 2013
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- Figure 52: Changes in financial situation, by demographics, March 2013
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Appendix – Factors that Lead to a Happy Life
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- Figure 53: Factors that lead to a happy life, March 2013
- Figure 54: Most popular factors that lead to a happy life, by demographics, March 2013
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- Figure 55: Next most popular factors that lead to a happy life, by demographics, March 2013
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Appendix – Monthly Expenditure
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- Figure 56: Monthly expenditure, March 2013
- Figure 57: Monthly expenditure, by current financial situation, March 2013
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- Figure 58: Monthly expenditure, by changes in financial situation, March 2013
- Figure 59: Most popular have done in the last three months expenditure, by demographics, March 2013
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- Figure 60: Next most popular have done in the last three months expenditure, by demographics, March 2013
- Figure 61: Most popular plan to do in the next three months expenditure, by demographics, March 2013
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- Figure 62: Next most popular plan to do in the next three months expenditure, by demographics, March 2013
- Figure 63: Monthly expenditure – neither, by demographics, March 2013
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Appendix – Repertoire Analysis
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- Figure 64: Repertoire of monthly expenditure have done in the last three months, March 2013
- Figure 65: Current financial situation, by repertoire of monthly expenditure have done in the last three months, March 2013
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- Figure 66: Changes in financial situation, by repertoire of monthly expenditure have done in the last three months, March 2013
- Figure 67: Monthly expenditure have done in the last three months, by repertoire of monthly expenditure have done in the last three months, March 2013
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- Figure 68: Repertoire of monthly expenditure plan to do in the next three months, March 2013
- Figure 69: Current financial situation, by repertoire of monthly expenditure plan to do in the next three months, March 2013
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- Figure 70: Changes in financial situation, by repertoire of monthly expenditure plan to do in the next three months, March 2013
- Figure 71: Monthly expenditure plan to do in the next three months, by repertoire of monthly expenditure plan to do in the next three months, March 2013
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- Figure 72: Repertoire of monthly expenditure have done in the last three months, by demographics, March 2013
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Appendix – Discretionary Spending
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- Figure 73: Discretionary spending, March 2013
- Figure 74: Most popular discretionary spending, by demographics, March 2013
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- Figure 75: Next most popular discretionary spending, by demographics, March 2013
- Figure 76: Other discretionary spending, by demographics, March 2013
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Appendix – Shopping Habits
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- Figure 77: Shopping habits, March 2013
- Figure 78: Any agreement with shopping habits, by current financial situation, March 2013
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- Figure 79: Any agreement with shopping habits, by changes in financial situation, March 2013
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Appendix – Cluster Analysis
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- Figure 80: Target groups, March 2013
- Figure 81: Current financial situation, by target groups, March 2013
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- Figure 82: Changes in financial situation, by target groups, March 2013
- Figure 83: Factors that lead to a happy life, by target groups, March 2013
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- Figure 84: Monthly expenditure, by target groups, March 2013
- Figure 85: Discretionary spending, by target groups, March 2013
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- Figure 86: Any agreement with shopping habits, by target groups, March 2013
- Figure 87: Target groups, by demographics, March 2013
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