Consulting the latest official data regarding the economic situation in China (ref. august 2012) published few days ago, there are two key points that are worthy of comment. These two points are in some ways like a current that runs contrary to what we would expect. There is another recent report (by The Women of China Magazine) about the consumer attitude trend regarding domestic women (overall if we consider the luxury market) that could balance the recent not-so-optimistic official data. Let us consider these figures.
In August (y/y), Chinese exports grew by 2,7% while imports decreased 2,6%. Just the previous July the trend was positive, by 4,7%, and in June even by 6,3%, signaling a slowdown. In the current situation of weak global demand, China should foster an opposing situation of increasing internal demand (and consequently rising imports), while exports slow down in order to give other industrial countries the possibility to recover from their lowest level of production index. Unfortunately this is just a dream and not the realty. Some analysts suggest that the current and continuous strict Chinese internal monetary policy cannot sufficiently boost internal demand, and as a consequence they ask for a more expansive monetary policy. On the other side, other analysts note that the red warning light of the inflation rate is still on (even if August was less critical than July), and that the potential real estate market bubble is still a real danger. They insist on keeping the current parsimonious monetary policy. Fundamentally, there are no signs that something will change soon, and we should not expect China to become a worldwide consumption locomotive because, simply, this is not China’s most important goal.
The central government and the incoming president will face a lot of unsolved challenges. They will need to balance the overall situation between the necessity of continuous economic growth and an effective policy of the distribution of created wealth. Indeed they will try to boost the increase of GDP and internal consumption as well, and then they will want to improve or at least stabilize the enormous difference between the different social classes and areas of the country. They will also continue modernization but with a more sustainable environmental policy, and at same time without forgetting the ancient traditions; some components of communist party still feel strongly that China has lost much of its Maoist purity, and among the poorer class there is a rejection of the deep lifestyle differences between the socially excluded and the richest classes.
Policy and economy must go forward in the same direction and with balance between them, otherwise the Chinese dream could experience a dramatic stop. “Getting rich is glorious” has become a slogan of the past, a new one could be “Better China, Better life,” similar to the 2010 Expo Shanghai slogan, “better city better life.” Let’s forget China as a world locomotive and we can consider USA or, in Europe, Germany as well.
Realistically, we should continue to hope that the development of the Chinese society can continue, maybe a bit more slowly and overall with a more balanced social network than before. If this happens, the important signals shown by recent marketing research results regarding the evolution of Chinese consumer behavior can give the right impulses in that direction.
Some fundamental changes were noted in a recent report about Chinese women and their consumer attitudes over the last decade. First, considering the women that live in the ten largest cities in China, their presence and leading role in society is now full of significance. With their new capability to have and manage their own personal income they have shifted from an higher rate of saving versus spending in the early 200’s, to the opposite where now they spend more than they save. This is a soft revolution, both social and economic, and it signals a new path for society where women are a very important market element to be considered. Their needs and their actions will be every more at center of attention of the players that want to achieve positive results in the Chinese market.
Second, if we were to analyze their shopping baskets, we would find a lot of similarity with the women of the west. Living in Paris or Rome or New York or Shanghai or Beijing is not that different anymore. People do the same things, seek the same goods, spend money in the same way and, overall, the women are fully globalized. If a woman in Milan can walk down Via Montenapoleone buying clothes, accessories, or cosmetics while holding an Iphone in her hand and discussing her affairs and dreams of traveling to some exotic beach, we can shoot the same picture on Nanjin road in Shanghai. Chinese women, young and highly educated, modern and global, are now a strong motor for the development of internal consumption. They may soon be a fundamental actor for the slogan “Better China, Better life.” A male chauvinist society will no longer be able to stop another effect of globalization. Finally soft pink power will contribute to confirm this evolution of Chinese society. There may not be any women in the Communist Party Politburo this coming November, but some millions of women in the country will continue, as a quiet river, to participate actively to this new direction.