The Guardian: “Made in China says everything, economically, about the last decade. Sold in China tells you everything about the next.
Recent output figures from China were greeted with concern after the country reported its lowest GDP growth for three years, although, at 8.1%, its magnificent compared to the UK’s double-dip recession. Still, there is much talk among economists about a “hard landing”, a “property bubble” and “bankrupt banks”. But there is one key fact to remember about the economy in China. It’s that the minimum wage is going up 15% a year, every year, for the next five years. Take a billion workers and give them a 100% pay rise. It changes everything.
Within a generation, China is likely to displace the US as the biggest consumer market in the world. At Tianjin Port, the world’s fifth biggest, container ships used to export Chinese goods to the rest of the world but come back empty. Now they return with the finished and semi-finished goods from the rest of the world to satisfy a ravenous consumer appetite.
In Tianjin’s vast factory zone, across the road from a Foxconn plant making the next wave of Apple iPhones, the Master Kong factory makes more pot noodles than anywhere else in the world. The huge automated production lines, with machine tools imported from Japan and Germany, churn out five billion noodle packets a year – enough to reach to the moon and back. All the raw materials come from China, all of the finished product is consumed in China. Its just one of 23 Master Kong plants on the mainland.
Further south in the “groundscraper” and weirdly Hogwarts-esque Shanghai offices of Ping An, China’s second biggest insurer, 12,000 commission-led telesales agents make one million sales calls every day. It is the largest telemarketing operation on the planet, feeding on the explosive growth of domestic car sales. Last year 14.5m cars were sold in China – or 2m more than in the US, previously the world’s biggest auto market. Nine in 10 were to people who had never bought a car before. Ping An now insures 32m private cars, raking in premiums of £2.2bn 22.3bn renminbi a year. Four years ago, that revenue was below £100m.
Just off outer ring road five in Beijing, a mundane average-income district, the Wu Mart hypermarket is perhaps an early indicator of how domestic consumption will grow.
The store bears more resemblance to a Lidl than a Tesco but, unlike the oddly deserted luxury shops in the city centre, it is teeming. It’s instantly apparent that mid-range western brands are phenomenally popular with middle-income Chinese consumers. Shelf after shelf stocks the likes of Colgate toothpaste, Nivea, Quaker Oats and Snickers bars.
Whole aisles are devoted to disposable nappies. China’s one-child policy, rigorously enforced, means that spending on a sole child is proportionately huge. Hong Kong babies use 50% more diapers than those in the west, and mainland China is heading the same way. Want to invest in China? Maybe buy Procter & Gamble (Pampers) or Kimberly-Clark (Huggies) instead.“
via Chinas great leap forward – into the supermarket | Money | The Guardian.
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