The New Chinese Consumer: Potential Markets for Foreign Companies

In 1978 the Chinese leaders launched the open door policy, committing themselves to an ambitious programme of macroeconomic reform in order to enable China to join the ranks of developed countries during the early decades of the twenty-first century. An integral part of that policy is the utilisation of market forces to make China’s goods competitive at home and abroad. Under the terms of a market economy, rising living standards, on which the leadership has staked its legitimacy, are increasingly seen as key incentives for China’s workforce and management. Increasing personal discretionary income is in turn creating more consumer demand, even though there are already widening disparities in wealth between urban and rural residents. Greater purchasing power for a wide range of consumer goods in the cities is nevertheless setting a trend for future demand in the villages. Significantly, more and more sectors of the Chinese economy, including retailing and distribution, are becoming open to foreign investment, and the products of wholly owned foreign companies and joint ventures may increasingly be sold on Chinese domestic markets. Overseas manufacturers may elect to export or localise their operations. In any case China offers a range of potentially lucrative consumer markets which require careful targeting through market research and advertising.