Video – China’s Emerging Market

How the paradigm in China will shift

The McKinsey August China report brings into focus the coming paradigm shift that will transform China from a servant to a master on the world stage.

The article argues a more consumer-centric economy allocates capital and resources more efficiently while simultaneously generating more jobs and expands growth equally and rapidly. This is a major transformation opportunity for China in addition to the market demands and influence of the empowered Chinese consumer.

Point 1: China needs to immediately raise rates of consumption
Point 2: Chinese consumption relative to GDP is lower than other countries
Point 3: Households account for the lowest end of total spending

When the US market collapsed millions of Chinese migrants in Chinese factories lost their jobs. The Chinese government responded with a $600 billion stimulus package and new lending opened up by state-owned banks. The Chinese government is now adamantly focused on stoking Chinese consumption to match its stimulus.

Provided China can mend the social safety net and encourage savings accounts currently stored between mattress covers to be invested back into the economy. Balance will be restored with the creation of more jobs and higher wages.

The opportunity for US companies is to uncover new ways to unleash the spending power of Chinese consumers.