While a large portion of my study in China was devoted to education, there was also a desire to observe consumption in light of China’s economic growth. There is no question that China has experienced an economic boom throughout the past few years. Yet, beyond its emerging GDP is the digital economy that has developed beyond expectations.
According to the China Gap, “Currently, China’s e-commerce market is the largest in the world, with an estimated $US210 billion in revenue in 2012. Since 2003, the market has experienced a growth rate of more than 110 percent per annum. Recognizing the continued increase of technology and China’s newfound purchasing power, this digital economy is expected to consistently progress. By 2020, China’s e-commerce market is predicted to be as large as the present markets in the US, Japan, Britain, Germany and France combined.”
(In light of this information, I decided to visit both local markets and plazas to get a feel for China’s new consumer.)
First visit: Various Shops—The Bargaining Arena. It’s a Jungle out here…
One of the challenges given to the American students was to learn how to bargain in China. Bargaining is second nature to the young Chinese students. They state, “We’ve seen our parents do it all of our lives. The women are normally the best because they buy everything for the house. You have to know that can always get a better price.” The bargaining here is like a dance between the buyer and seller. The seller starts extremely high, the buyer starts extremely low, and in the end both may find a happy medium. The other aspect of buying in local shops is the presence of fakes-copies…
Example: I saw an array of copy designer bags, upside down Nikes, Adidas named Addidos and five different versions of Calvin Klein shirts: Calvin Kleur…etc.
One must be careful in this arena, and be very clear on what you want amidst several sellers yelling at you to enter their store. It’s a serious financial game of focus.
Second Visit: The Hongkou Plaza
The Hongkou Plaza was in walking distance from my hotel in Shanghai and was on the list of places to visit. The plaza opened in December of 2011, greeting 71,000 guests on its opening day and it seems to have sustained its momentum. Unlike other shopping areas, there’s no bargaining here. Prices are almost identical to mall prices one would find within the United States. While the plaza may draw a large crowd, the question remains if it is drawing a strong consumer base. When speaking to Chinese consumers it was clear that the plaza serves as a great place to eat and have a good time, however it’s not the ideal place to purchase their favorite brands. “We go online to get the best deals. The malls are too expensive.” It was clear that the young Chinese consumer feels comfortable buying most items online due to its convenience and low cost.
Poverty & Plenty
I must say that the most intriguing aspect of China’s economy is that wealth and poverty seem to occupy the same space. This is truly a developing country. In other words while walking the streets of Shanghai it is easy to see an individual strutting in designer attire right next to the person washing his clothes in a bowl on the street. The old word and new world seem to coexist. Luxury vehicles and motorcycles zoom past old gentlemen carrying buggies down the street. The truth is. …There is no “other side of the tracks” here. The economy is definitely developing at a faster pace for some than for others. However, the rising cost of goods and overwhelming cost of housing hinders many Chinese citizens from experiencing the life they desire. Needless to say, it will be interesting to see if the economic predictions will turn out to be accurate prophecies of China’s growth.