June 12, 2009 / 8:34 AM / 8 years ago

FACTBOX-Growth in Asian consumer spending lies in China, India

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 (Refiles to correct spelling of Tianjin in first table)
 (For story see [ID:nHKG266563])
 By Kevin Plumberg
 HONG KONG, June 12 (Reuters) - The shift from savers to
spenders in Asia will likely be led by young consumers in China
and India, who are unencumbered by debt and want to improve
their social status by buying clothing, computers and cars.
 Consumers in these countries are some of the least indebted
in Asia, relative to the size of their economies, and certainly
have fewer debts than their counterparts in Britain and the
United States, where consumer leverage relative to gross
domestic product reached 100 percent in the second quarter of
2008.
 They are hungry for technology, whether that means mobile
phones or personal computers, and for higher quality food,
fashion and entertainment.
 Below are anecdotes, statistics and forecasts on China's
and India's consumers and what they are buying.
 CHINA:
 Gross domestic product per capita is much lower in interior
and central cities, municipalities and provinces compared with
coastal areas, which had benefited from the export boom of the
last decade.
 GDP per capita for the nation was $3,259 in 2008.
 However, in coastal areas and cities, GDP per capita is two
to three times higher.
 Area:     Location:    GDP per capita (USD):
 Shanghai      East                 $10,440
 Beijing       East                  $9,072
 Tianjin       East                  $7,984
 Zhejiang      East                  $6,076
 National       --                   $3,259
 Sichuan       West                  $2,213
 Guangxi       West                  $2,154
 Chongqing     West                  $2,594
 Strategists and asset managers expect growth in domestic
spending in China, led by inland consumers, to offset the drag
from weak exports. Policy incentives have been aimed at getting
people in rural areas spending more on electronics, appliances,
automobiles and property.
 Who is spending in China?
 The so-called single-child generation, between 20-29 years
old, has consistently seen the biggest growth in average
personal income and has been spending more.
 This age group is expected to grow from roughly 21 million
in 2009 to more than 25 million by 2012.
 Age    Annual growth in monthly personal income (%)
               2006     2007       2008
 20-29         33.6     29.3       24.6
 30-39         21.6     26.9       18.1
 40-49         14.0     16.9       17.1
 50-59          8.9      9.6       11.6
 Chinese consumer patterns?
 The single-child generation is spending more on clothing
(13 percent of household income) and entertainment, including
eating out (9 percent), versus 30-39 year-olds (11 percent on
clothing and 7 percent on entertainment), 40-49 year olds (10
percent and 6 percent) and 50-59 year olds (7 percent and 4
percent).
 Interestingly, saving and investment levels are similar
across age groups, though the 50-59 year-olds save 5 percentage
points more of their household income than the single-child
generation.
 China become the biggest automobile sales market in the
world in January and sales remain robust. Merrill Lynch said in
a report that in the Western city of Xi'an, buyers of new
vehicles have to wait 2-3 weeks for some popular brands because
inventories have been run down so much. The popular brands are
FAW-Volkswagen and SAIC-GM-Wuling.
 China is expected to produce double digit growth in PC
shipments annually between 2010 and 2012, Gartner analysts say.
                     2009        2010        2011      
2012
 Professional mkt
 Units Forecast:  24,354,929  26,700,345  29,752,883
33,401,516
 Growth Forecast:        4.5         9.6        11.4      
12.3
 Home Mkt:
 Units Forecast:  18,212,040  21,120,018  24,537,290
28,410,485
 Growth Forecast         1.6        16.0        16.2       15.8
 INDIA:
 India's retail sector is expected to grow 63 percent
between 2008 and 2013 to become a $833 billion market, though
retail chains currently make up only 5 percent of stores,
according to consulting group A.T. Kearney.
 In coming months, sales will likely come from small,
locally-owned food and clothing retailers, such as Pantaloon
PART.BO, rather than high end, overseas brands, analysts
said.
 Mumbai and New Delhi are homes to affluent households, the
bulk of which reside in urban areas or are concentrated in the
larger metropolitan areas. In fact, of the top 20
neighbourhoods in India, in terms of number of millionaire
families, as many as 18 are in Mumbai
 City        2008 GDP per capita (USD)
 Mumbai                         $2,600
 New Delhi                      $1,734
 Calcutta                       $1,564
 Ahmedabad                      $1,142
 Bangalore                      $1,268
 National                         $999
 Lucknow                          $550
 Indian consumer patterns?
 Indian mobile operators have been adding more than 10
million users a month, making it the worlds fastest-growing
wireless services market. With more than 400 million users at
the end of April, India lags only China in market size. Still,
just over a third of the population have a phone.
 Gartner estimates about 120 million mobile phones are sold
every year, which should rise to 160 million a year by 2013.
 The Indian car market, which reported a volume sales growth
of 1 percent last fiscal year to March, is forecast to grow 3-5
percent in 2009-2010 with momentum picking up in the second
half of the year when the economy is seen recovering, the
Society of Indian Automobile Manufacturers said.
 India's PC market is smaller than China's, but is expected
to grow faster in coming years, Gartner says.
                   2009       2010       2011        2012
 Professional mkt:
 Units Forecast  6,548,392  7,594,916  9,183,680  11,035,722
 Growth Forecast      -0.8         16       20.9        20.2
 Home Mkt
 Units Forecast    2701320    3346677    4385977     5653140
 Growth Forecast      -0.8       23.9       31.1        28.9
 (Sources: Credit Suisse, Gartner, Indicus Analytics, JPMorgan
Asset Management, Merrill Lynch, Morgan Stanley,
NationMaster.com)
  (Additional reporting by Janaki Krishnan and Devidutta
Tripathy in NEW DELHI, Kelvin Soh in TAIPEI and Narayanan
Somasundaram in MUMBAI; Editing by Neil Fullick)

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