Consumer China

Betting on the rural consumer

  • Published 03 Sep 2009

With a population of 721m, even incremental changes can have a palpable effect on consumer spending.

Turning China's 721m rural residents into consumers is truly a challenge. Meagre incomes, poor financial services, uncertain property rights and rudimentary utilities are just some of the barriers to the creation of a viable consumer market. In truth, rural China remains more concerned with getting by than with dreaming the consumer dream. However, with more than twice the population of the US to play for, the potential to be had from even incremental changes is vast. We think that in many places and through the offices of a myriad small-scale reforms, these incremental instances of progress are now underway. It is now possible for virtually the first time to forecast credibly the advent of rural consumerism over the next five to 10 years. The spread of modern finance to rural areas (see Financial China), the inception of rural healthcare and pension schemes, the build out of transport and IT infrastructure, the gradual clarification of property rights, the monetisation of land, the spread of rural enterprises and increases in the scale, mechanisation and efficiency of farming are all set to lift the spending power of rural communities from current low levels over the coming years. The cumulative effect of these changes not only on the countryside but also on the scale and nature of the national economy will be transformational.

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