Es donde más gente habrá, en pocos años, con mucha capacidad de compra, con mucho dinero para comprar todas esas mierdas que ya tenemos los occidentales y que no nos las vamos a comprar de nuevo…
The wild, wild east
A booming middle class is creating the world’s most dynamic consumer market
MORE THAN FIVE centuries ago Christopher Columbus scrawled in his copy of Marco Polo’s “Travels” that the Middle Kingdom would bring mercacciones innumeras (an immeasurable amount of commerce). Columbus never reached that promised land. China has continued to disappoint foreign businessmen ever since, not least because many ordinary Chinese people have been too poor to buy anything.
That is changing as the country’s middle class is growing explosively (see chart). In 2010 mainstream consumers—those with enough money to buy cars, fridges and phones but not Rolls-Royces—made up less than a tenth of urban households. In a new forecast, McKinsey predicts that by 2020 they will make up well over half. BCG reckons that urban private consumption will rise from $3.2 trillion today to $5.6 trillion in 2020.
Apple expects China soon to become a bigger market for its products than America. In the quarter ending in June, its sales in greater China were 112% up on the same period a year earlier. Six of its ten busiest stores across the globe are in China. At the height of the recent turmoil in the Chinese stockmarkets Apple’s boss, Tim Cook, reassured investors that “I continue to believe China represents an unprecedented opportunity over the long term.” Apple’s shares bounced back.
Where should intrepid marketers go to capitalise on these riches? The wealthy east coast is now widely believed to be saturated, which suggests that firms should head inland. The Economist Intelligence Unit (EIU), a sister firm of this newspaper, recently pinpointed the top emerging cities, based on forecasts for things like long-term growth in population and disposable income (see map). It found that a few inland cities like Chongqing and Chengdu are indeed attractive, but many excellent prospects remain in the east. Obscure but booming cities within reasonable distance of the coast, like Suqian and Xuzhou, are likely to do well, and lucrative niches remain even in well-established magnets such as Beijing, Shanghai, Guangzhou and Shenzhen.
As the middle class expands, so it evolves. Some may grow tired of blingy offerings, but millions of others will try their first Western brand this year. “Every three years a new generation is created here,” explains Charles Hayes of Ideo, a consultancy. Even within cities, consumer groups are highly segmented. Donald Blair of Nike, an American sportswear giant, says his firm maps consumer behaviour here “by shopping district and even by street”, so it can customise offerings and outlets.
A big winner has been China’s e-commerce, a market that is now larger than America’s. Forrester, another consulting firm, expects gross merchandise value in this sector to exceed $1 trillion by 2019. Outside the big cities bricks-and-mortar stores are thinner on the ground, so online shopping is becoming increasingly important. Even where shops are readily accessible, consumers often go “showrooming”, looking at goods in physical outlets but buying them more cheaply online. This is happening the world over, but in China the trend has been accentuated by the ubiquity of smartphones, the reliability of online-payment systems and the spread of same-day delivery services.
How would you like your shirt?
This poses a grave threat to old-fashioned retailers. Li & Fung, a supply-chain firm based in Hong Kong, pioneered global outsourcing two decades ago. It has over 3,000 outlets, a third of them in China. Victor Fung, its honorary chairman, sees the era of mass production giving way to one of mass customisation. Markets are fragmenting and smartphones are empowering consumers to get “directly involved in what they buy, where it is made and how they buy it”. Zhao Xiande of CEIBS in Shanghai points to Red Collar, a firm that used simply to make and export garments. Now it lets customers the world over design their own shirts online and makes them to order. Another outfit, Home Koo, offers custom-built furniture online.
All this e-commerce is producing some remarkable business-model innovations. Thanks to the convergence of mobile commerce and social media, observes Miles Young, chairman of Ogilvy & Mather, an advertising firm, China is the world’s epicentre of “social commerce”. Studies by BCG show that Chinese consumers are much more likely than American or European ones to interact with brands through social media.
To try to keep up with all these changes, Mr Fung has kitted out a shopping mall in Shanghai with technologies from IBM that allow detailed tracking of shoppers on site and online. Known as the “Explorium”, it allows retailers to experiment with various multi-channel business models and promotions. Digital disruption challenges retailers everywhere, he says, but in his view China is the most promising place to look for answers.
Chinese consumers are fast becoming the world’s most discriminating and knowledgeable. They are also quite brand licentious. The choice of top global brands there is much wider than in America, Europe or Japan. This has resulted in fierce competition, pushing firms to come up with ever more inventive offerings. Audi developed longer saloon cars to cater to wealthy Chinese with chauffeurs, which are now sold globally. Chinese consumers prefer pulpy juices, so Coca-Cola modified its juice formulations; Minute Maid Pulpy is now a billion-dollar global brand. Even Apple’s Mr Cook says his company takes Chinese tastes into account when it designs new products for the world.
Mr Young believes that China is leading the world in bringing together the “internet of things” (which connects machines to each other) with the internet used by people. Firms such as Suning, an electronics retailer, Haier and Xiaomi are all connecting smart gadgets with consumers through WeChat and other social media. This seems to be happening more quickly in China than in the West.
Are you being served?
Much of this new economy is moving on from supplying goods to providing services. In most rich countries services make up at least three-quarters of GDP, but in China they account for only half. The rising middle class is demanding better services in everything from health care to finance to entertainment. Both foreign and local investors are rushing in to fill the gap.
Two decades ago films made by Walt Disney, an American entertainment giant, were banned on the Chinese mainland, but now China is Disney’s most promising market. The company’s latest “Avengers” film earned over $200m in local theatres in its first two weeks. In May Disney opened its largest-ever retail store in Shanghai. And next year Shanghai Disney, a $5.5 billion theme park, will be ready to receive the crowds. Dalian Wanda, which made its fortune in property, is building a massive $8 billion film studio in Qingdao and will be spending over $30 billion on theme parks across China, confronting Disney head on.
Kai-fu Lee of Innovation Works believes that service startups are capable of creating billion-dollar industries. He points to Helijia, a firm valued at $300m that provides pedicures in people’s homes. “They can train workers affordably; Chinese love getting pampered; and our urban density allows this…you can’t do this in Kansas.” His firm is funding firms delivering services ranging from haircuts to car maintenance.
Jean Liu, president of Didi Kuaidi, thinks the sharing economy will allow scarce resources to be used more efficiently. Her ride-sharing firm counts both Tencent and Alibaba as investors. It offers everything from fancy cars and taxis to shuttle buses and car pools—or even someone on a bicycle to drive you home in your own car. It clocks up 6m rides a day, far outpacing Uber.
Neusoft, based in Shenyang, a city in China’s gritty industrial north-east, was started in 1991 with just $3,000 by Liu Jiren, an erstwhile academic. It is now one of China’s biggest IT-services providers. Having created a computer operating system that quickly got ripped off, his firm nearly went under. That taught him the value of protecting intellectual property. When he was a visiting scholar at an American government laboratory, he noticed that academics worked closely with corporate researchers. That inspired him to invest heavily in R&D. Among many other things, Neusoft makes systems that allow medical records to be viewed on mobiles. It is also developing a shared-services business model for medical equipment that will allow users to pay by transaction.
What helped Neusoft take off, says Mr Liu, was that there were no SOEs to block new software firms. “The Chinese state today is technologically sophisticated…but that was not the case at the start of the IT boom,” says Mr Liu. “We got lucky because the IT sector was so new, so driven by talent, that the government didn’t understand how it worked.”
Abrazos,
PD1: Para que te hagas una idea de cómo van a evolucionar el negocio de los móviles, de los smartphones, están los las perspectivas (mira Asia):
Ahora puedes dudar entre invertir en Telefónica, con varios mercados maduros, o comprar una operadora asiática…
PD2: El ser humano es bueno por naturaleza. Está hecho a imagen de Dios. Y aunque en muchos casos su apariencia sea que no es bueno, en el fondo reside toda su bondad. La gente es buena. Puede que den sensación unos pocos de ser desalmados, pero en su interior son también buenos y proclives a acercarse algo a Dios. En las catástrofes, ahora con los refugiados sirios, la gente demuestra enseguida su bondad. Hasta los tíos que hay en la cárcel, si rebuscas en su interior, es gente buena también.
Lo malo es que como somos muy memos, enseguida le buscamos los defectos a los otros. No nos paramos a mirar sus motivaciones, o puede que no sepan lo que están haciendo, o lo que han hecho. Los vemos con nuestros ojos pecadores y les juzgamos enseguida y, quizás estemos muy equivocados y lo que vemos en otros son fruto de la ignorancia, o de que no tienen por qué ser iguales a nosotros…
