China will account for five percent of global consumption by 2020, according to the Boston Consulting Group.
By then, China will have 280 million affluent consumers, which is defined as households with a minimum of $20,000 in disposable assets. The country already accounts for $590 billion in buying power and is growing rapidly, Boston Consulting Group says.
Spending by China’s affluent class is expected to reach $3.1 trillion by 2020, more than such countries as Germany, France or India. The rise in consumerism makes investment in the Chinese consumer market more attractive than it has been in several years.
Experts are loooking to the Chinese retail sector as a potentially attractive investment. Increasing the domestic demand and lessening the country's dependence on exports has been a main focal point of the Chinese government's five-year plan running through 2015, and China's recently installed new leadership class has pointedly made boosting domestic consumption a key focus of economic policy.
In the first three quarters of 2012, consumption was the largest growth contributor to China’s economy, accounting for 55 percent of growth during that period, according to the Financial Times.
China is expected to overtake Japan as the second-largest consumer market in the world within the next three years.
Affluent consumers are expanding in lower-population cities, a trend that is expected to benefit local Chinese firms over foreign competition.
According to the Boston Consulting Group’s annual multi-country consumer report, China remains the most consumption-friendly market globally with 37 percent of Chinese consumers planning to increase discretionary spending next year.
According to the China Beige Book, a survey of 2,000 executives, 61 percent of retailers reported higher sales in the fourth quarter of 2012 than in the third quarter, and 72 percent predict higher sales in the next six months.