Report identifies China's new "patchwork" of consumers

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The latest country briefing report from the Economist Intelligence Unit details the changing consumption patterns of China's new rich and the expanding consumer marketplace. According to the report, although China is predominantly a peasant and working-class society it presents a fragmented and bewildering picture with incomes varying drastically region by region and between urban and rural areas, as do consumer behaviour and preferences.

Urban consumption patterns are changing rapidly. The average consumer in the city used to enjoy a secure lifestyle, living in a state-owned flat with a guaranteed job, his staple needs taken care of, and with a modest pool of savings that could be used to satisfy a pent-up appetite for consumer goods.

Change is accelerating with state-owned enterprise reform and the dismantling of the iron rice bowl system this same consumer is facing an uncertain-and more expensive-future. Free handouts from the danwei (work unit) are fewer now, and the consumer's job may even be in danger. Even if his livelihood is secure, China's consumer today may have to provide for laid-off relatives. He is also becoming a better-educated and more prudent shopper, acutely aware of the purchasing options available.

Meanwhile luxury goods companies are continuing to see relatively high sales growth in China, and are concentrating on young, urban professionals in the top income bracket, who often work for private or non-state enterprises. In between is an emerging urban, middle-class segment with annual earnings increasing towards the $1,000 level. By the end of 2000, the average disposable income per head in China's urban areas was Rmb6,280 ($757) compared with Rmb500 ($60) in 1981.