The paper "China’ s Middle-Class Consumers for Foreign Investment" is a great example of a Marketing Case Study. In the last few decades, the middle class has emerged as an important social group that drives the global economy. This group is essentially an ambiguous social classification, reflecting the determination to lead a comfortable life (Li, 2008). In both the developed and the developing countries, the middle class enjoys reasonable job security and retirement, stable housing, education, and healthcare opportunities and discretionary income that can be spent on leisure and vacation.
According to Dickson (2007), middle-class consumers have been crucial in economic thought for a long time. The middle-class group emerged out of the bourgeoisie, a group that was derided because of its economic materialism but provided the impetus for expanding the capitalist market economy, as well, as trade between nations. With time, the middle class has been viewed as a source of innovation and entrepreneurship - the small business ventures which aid the economy to thrive (Goldman Sachs, 2009). In today’ s economy, middle-class values emphasize hard work, thrift, and education. As such, the middle class is an important source of the inputs needed for sound economic development, that is, physical capital, new ideas and human capital.
In the recent past, the market roles of the middle class have been a subject of intense research studies. Li and Ji (2008) have argued that these roles are new consumerism, which present the middle class as an upscaling of lifestyles and the ever-increasing disconnection between income and consumer desires. In an even more economic vein, the McKinsey Quarterly (2006) has emphasized on the willingness of the middle-class group to spend extra wealth for quality as a force that drives product differentiation.
Therefore, the middle class is playing a critical role in feeding investment in the development and marketing of new products. It is this new market role of the middle class which has become more pronounced with the globalization of trade. Currently, international business efforts are focused on Asia, particularly on China’ s emerging middle class which is becoming the next global consumer group. The Middle Class In China: A Macro-Economic Analysis Of China’ s Middle-Class Consumer Group And Its Attractiveness For Foreign Investment China is geographically a vast country and the world’ s most populated nation.
With a population exceeding 1.3 billion people and a rapidly growing economy, China presents numerous investment opportunities for foreign markets. According to Zhang and Peng (2008), China’ s domestic market has soared dramatically in the last few years such that it is now at par with most Western countries which industrialized a long time ago. In certain industries, China is quickly rising to overtake the United Sates as the number 1 market. As an example, the United States accounted for 37% of global car sales in 2000 while China accounted for only 1%.
Today, China accounts for about 15% of global car sales. Similarly, the People’ s Republic of China has emerged as the world’ s largest market for cell phones, thanks to a burgeoning middle-class population. Much of China’ s economic growth and the stability of the domestic market are attributed to a rising middle-income population. China’ s middle class is defined as the proportion of households with annual incomes of between $6000 and $25000 (Li, 2008).
The size of this group has grown rapidly in the last two decades as has China’ s economic development. The middle-class population in China is large- about 200 million people. For this reason, many businesses are eager to establish positions in the Chinese market. A research study by Li and Ji (2008) predicts that if China sustains its current economic growth rate, the country’ s middle class will become the leading global consumer group by 2016. Despite the challenges that the middle class presents to the market, it is important to understand the specific needs and purchasing patterns of this group.
Essentially, China’ s middle class has a rising purchasing power and is willing to spend more on quality, differentiated products, and powerful brand names.
Dickson, B 2007, “Integrating Wealth and Power in China: The Communist Party’s Embrace of the Private Sector”, The China Quarterly, No. 192, pp. 827-854.
Goldman Sachs Global Markets Institute 2009, “The Power of the Purse: Gender Equality and Middle-class Spending”, 5th August.
Li, C 2008, “The Growth and Present Situation of the Chinese Middle Classes”, Jiangsu Social Sciences, Vol. 5.
Li, C 2009, “Profile of Middle Class in Mainland China”, Working Paper of CASS.
Li, P and Ji, Y 2008, “Size, Identity and Attitudes of Chinese Middle Class”, Society, Vol. 28, no. 6, pp. 67-89.
Masud, S 2009, In China, opportunities abound, but perils remain for equipment vendors,Telecommunications, Vol. 34 (January, 2009), pp 9-10.
The McKinsey Quarterly 2006, The Value of China’s Emerging Middle Class, special edition.
Zhang, B and Peng, M 2008, Telecom competition, post-WTO style, The China Business Review, Vol.27 (May/June2008), pp12-21.
Zhou, X 2005, Survey of the Chinese Middle Class, Beijing, Social Sciences Academic Press.