Welcome!

Microsoft Cloud Authors: Pat Romanski, Lori MacVittie, Andreas Grabner, Jim Kaskade, John Basso

News Feed Item

The Affluent Will Be a Major Driver of Consumption Growth in China

Research by The Boston Consulting Group Shows That Affluent Consumers Will Represent $3.1 Trillion of Buying Power by 2020; Companies Need New Strategies to Appeal to This Market

BOSTON, MA -- (Marketwire) -- 11/14/12 -- The affluent will be a powerful force behind the growth of China's consumer market and account for 5 percent of global consumption by 2020, according to a new report released today by The Boston Consulting Group (BCG). The report, titled "The Age of the Affluent: The Dynamics of China's Next Consumption Engine," discusses the rapid rise and significance of this consumer class.

Much attention has been paid to China's middle-class and high-net-worth individuals. But the affluent -- richer than members of the middle class but not as wealthy as the superrich -- have spending habits and attitudes that are distinct. With annual household disposable incomes of at least $20,000, these consumers are set to become an important driver of growth, especially for premium product and service categories.

Today, the affluent are 120 million strong, and their annual buying power is $590 billion. By 2020, this group will number 280 million -- 35 percent of China's urban population or 20 percent of its total population. Additionally, the annual buying power of the affluent will reach $3.1 trillion. That will be nearly the equivalent of Japan's total consumption in 2020, 28 percent more than Germany's, and three times more than South Korea's total consumption.

Businesses that aspire to continued success in China -- and in their home markets -- need to deepen their understanding of this complex, diverse, and rapidly growing group.

The Affluent Opportunity

Vincent Lui, a BCG partner and a coauthor of the report, stated, "Reaching the affluent is important not only because of their sheer numbers but also because they have the financial resources and willingness to purchase premium goods and services." According to BCG's research, $20,000 in annual household disposable income (which equates to $38,000 in developed countries) is an inflection point -- the point at which consumers accelerate trading up in the categories that matter most to them.

The categories most poised to grow are those with products and services that are differentiated and those that have higher thresholds for affordability. These categories include cars, overseas travel, and luxury goods such as watches, jewelry, leather, apparel, accessories, skin care, and cosmetics.

"Businesses need to establish lasting relationships with these consumers," added Jeff Walters, a BCG partner and a coauthor of the report. "The time to get to know them is now."

Distinct and Evolving Consumers

According to the report, China's affluent consumers have several key attitudes and behaviors that set them apart from the middle class and the superrich. The affluent trade up for emotional gratification. They seek status and recognition. And they are relatively sophisticated, traveling abroad and adopting new brands. Although they are willing to pay more for convenience, they buy with a shrewd "investor's" eye.

The affluent are also a rapidly evolving class. Increasingly, more affluent are living in lower-tier cities, affluent women are becoming key decision makers, affluent men are trading up in new categories, and the "veterans" of affluence are pursuing experiences. An important subgroup is the "sugar generation" -- the children of current affluent consumers. This generation currently accounts for 10 percent of the affluent class, a number that is expected to grow to 30 percent in five years. Notably, these young consumers, who have led "sugarcoated" lives, seek out products and brands that set them apart -- from their peers and their parents.

Justin Fung, a BCG principal, noted, "To tap this consumer market, businesses need to continually rethink how they position their brands and how they connect with these evolving consumers -- in China and abroad."

"Strategies that companies develop for China will help them succeed in their home markets as well," according to Youchi Kuo, a BCG expert principal and coauthor of the report. "Consumers worldwide -- including the affluent -- are facing economic pressures. By mastering the affluent market in China, which appreciates luxury but is also conscious of value, companies will be better equipped to reach their local affluent consumers."

This report parallels the findings of "The $10 Trillion Prize: Captivating the Newly Affluent in China and India" (Harvard Business Review Press, October 2012), a new book by BCG consultants Michael J. Silverstein, Abheek Singhi, Carol Liao, and David Michael. This book combines data from BCG's 2011 survey of 24,000 global consumers with extensive in-the-field interviews to draw key insights about the coming consumer boom in China and India.

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected].

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 77 offices in 42 countries. For more information, please visit bcg.com.

About bcgperspectives.com

Bcgperspectives.com is a new website -- available on PC, mobile phone, and iPad -- that features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back almost 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed via PC, mobile, iPad, Facebook, Twitter, and LinkedIn.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
Amazon has gradually rolled out parts of its IoT offerings, but these are just the tip of the iceberg. In addition to optimizing their backend AWS offerings, Amazon is laying the ground work to be a major force in IoT - especially in the connected home and office. In his session at @ThingsExpo, Chris Kocher, founder and managing director of Grey Heron, explained how Amazon is extending its reach to become a major force in IoT by building on its dominant cloud IoT platform, its Dash Button strat...
Complete Internet of Things (IoT) embedded device security is not just about the device but involves the entire product’s identity, data and control integrity, and services traversing the cloud. A device can no longer be looked at as an island; it is a part of a system. In fact, given the cross-domain interactions enabled by IoT it could be a part of many systems. Also, depending on where the device is deployed, for example, in the office building versus a factory floor or oil field, security ha...
In addition to all the benefits, IoT is also bringing new kind of customer experience challenges - cars that unlock themselves, thermostats turning houses into saunas and baby video monitors broadcasting over the internet. This list can only increase because while IoT services should be intuitive and simple to use, the delivery ecosystem is a myriad of potential problems as IoT explodes complexity. So finding a performance issue is like finding the proverbial needle in the haystack.
The idea of comparing data in motion (at the sensor level) to data at rest (in a Big Data server warehouse) with predictive analytics in the cloud is very appealing to the industrial IoT sector. The problem Big Data vendors have, however, is access to that data in motion at the sensor location. In his session at @ThingsExpo, Scott Allen, CMO of FreeWave, discussed how as IoT is increasingly adopted by industrial markets, there is going to be an increased demand for sensor data from the outermos...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at 20th Cloud Expo, Ed Featherston, director/senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...
SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2017 New York. The 20th Cloud Expo and 7th @ThingsExpo will take place on June 6-8, 2017, at the Javits Center in New York City, NY. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Internet to enable us all to im...
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
"Once customers get a year into their IoT deployments, they start to realize that they may have been shortsighted in the ways they built out their deployment and the key thing I see a lot of people looking at is - how can I take equipment data, pull it back in an IoT solution and show it in a dashboard," stated Dave McCarthy, Director of Products at Bsquare Corporation, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Everyone knows that truly innovative companies learn as they go along, pushing boundaries in response to market changes and demands. What's more of a mystery is how to balance innovation on a fresh platform built from scratch with the legacy tech stack, product suite and customers that continue to serve as the business' foundation. In his General Session at 19th Cloud Expo, Michael Chambliss, Head of Engineering at ReadyTalk, discussed why and how ReadyTalk diverted from healthy revenue and mor...
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
Financial Technology has become a topic of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 20th Cloud Expo at the Javits Center in New York, June 6-8, 2017, will find fresh new content in a new track called FinTech.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Unsecured IoT devices were used to launch crippling DDOS attacks in October 2016, targeting services such as Twitter, Spotify, and GitHub. Subsequent testimony to Congress about potential attacks on office buildings, schools, and hospitals raised the possibility for the IoT to harm and even kill people. What should be done? Does the government need to intervene? This panel at @ThingExpo New York brings together leading IoT and security experts to discuss this very serious topic.
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smar...
"Dice has been around for the last 20 years. We have been helping tech professionals find new jobs and career opportunities," explained Manish Dixit, VP of Product and Engineering at Dice, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.