Spending Power in China

Essay by itstanleyUniversity, Bachelor'sB+, October 2008

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IntroductionChina is the third largest country by area, and largest by population. Most of its people live in the eastern region of the country. The majority of its population is rural, while Shanghai, the world's largest city, has a population of 13.6 million (Samuel, Li and McDonald, 1996, p21). Having a GDP of $US23.5 billion (SSB, 1992), Shanghai has been a leading port city and a representative of the part of China. With the increase of personal income, purchasing power and savings, the Chinese consumer market has become highly attractive to foreign companies. "With this growing level of consumer spending power coupled with the interest of the Chinese Government in increasing the country's foreign dealing, it seems like that China will become one of the most important consumer markets over the next decade or so." (Samuel, Li and McDonald, 1996, p20)Many studies show that the Chinese consumers and market behaviour are unique, as well as the retail and distribution system in China.

Therefore, the understanding of this uniqueness and the consumer purchasing behaviours are important to many foreign companies prior to expanding their business into China. "the foreign companies seeking to implement Western retailing procedures are unlikely to realize the full potential of the market unless they take into account the shopping behaviour peculiar to the Chinese." (Samuel, Li and McDonald, 1996, p21)In the research study "The purchasing behaviour of Shanghai buyers of processed food and beverage products" conducted by Dr. Nicholas Samuel, Elton Li, and Heath McDonald, has undertaken to study the buying behaviour of Shanghai buyers toward the processed food and beverage products and perhaps to provide sufficient information to foreign companies in deciding their retail strategy for sales maximization.

The research undertaken is a combination of both a problem-identification research and a problem-solving research. Since...