Forget big city lights and slick streets, China’s next consumption surge may have its roots in the rural sector.
In a country of 1.3 billion people, half live in villages. That’s 650 million rural Chinese consumers, and according to a report released by Nielsen on Thursday, China’s rural consumer market is a $500 billion opportunity that’s been largely untapped until now.
Dale Preston, senior vice president, Analytics and Consulting at Nielsen Greater China says the rural market has been overlooked because companies have so far largely focused on the middle class and top-tier cities.
But rising wages are changing China’s shopping landscape.
“We’re seeing that in rural areas, consumers’ lifestyles are improving. They are getting more money and they want to experience brands for the first time,” says Preston. “They have a real desire to improve their lives… these consumers are ready to buy.”
Ironically, inflation, which has worried investors and policy makers over the past year, has been the farmer’s friend. “One of the main drivers for China's rural consumption boom is the rise in food prices which has raised income among farmers,” says Frederic Neumann, Managing Director and Co-head of Asian Economics Global Research at HSBC
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