China
has been forecast to be the world’s largest consumer market in 2016. It’s an
opportunity for investors and businesspersons to implement their market development
and investment especially in the field of tourism and online shopping.
“In 1993, when I took a trip to Italy, people mistaken me as
Japanese, as there were very few Chinese traveling overseas. In 2005, there were 13 million credit
cards in China. In 2007, I went
to Egypt and met a lot of Chinese tourists. Most of them were in their twenties
and early thirties, touring around the pyramids and posing for photographs with
their fingers showing a “v for victory” sign.” Said Helen (2010).
From the experience Helen had, this expressed that Chinese economy
was growing rapidly in the past few years. In the year 2010, Bloomberg (2010)
reported that China has overtaken Japan as world’s second largest economy and
now, it was believed that China will surpass U.S. in three years later (Kenneth
2013). Although China’s per capita income is three and a half times less than
U.S. and Brazil, still they predict that it will increase from 50 percent to 70
percent within five years. The increasing of per capita income will change the
way China operate which lead to the improvement of their economy.
Also,
Northeast Ohio Media Group LLC (2013) informed that it was surprisingly to find
out that there are around two thousands international students studied in Case
Western Reserve University and more than 400 students were from China. This has
been proven by Brookings Institution Analysis (2013) where the research indicated
that United States attracts 21 percent of all student study abroad. This is the
highest percentage among all the countries. Also, China’s student had the
highest percentage which is 25.4 percent among all the international students
who studied in US. Neil Ruiz, a senior analyst for the Brooking Institution believed
that this would help to increase the local economy. According to China Daily
USA (2013), the research shows that China’s student contribute $4.4 billion to
the US economy. This shows that how powerful the China’s market and economy are
where it started to influence the economy of US.
In
2013, BBC (2013) mentioned that China experienced a hard time during the global
financial crisis in 2009, but its economy recovered quickly and returning to
growth. How is this happened? According to BBC (2013), it stated that the debt
crisis that happened in Eurozone by early 2012 is believed to be the beginning
for the growth of China. The crisis causes the Eurozone countries have to seek
help from other countries and China, as one of the biggest markets for Chinese
goods would be their target. Besides that, it is also believed that China is
benefited from the foreign market. The research done by Jack (2011) support
this statement as he mentioned that China are massive exporting country. This
is because China has huge amount of resources such as coal. “China is the
world’s biggest producer and consumer of coal” reported by BBC (2013). This
means that China is depending more on foreign country, as shown in the
statistic below:
(Source:
Jack 2011)
This
statistic illustrated China’s annual OFDI flows from 1982 to 2008. From the
chart, we can conclude that China’s foreign investment has growth rapidly from
the year of 2002. This has contributed to the growth of China in the past few
years. Furthermore, China’s five years plan might contribute to the growth of
economy as well. The five years plan allows China to draw out the area they
should focus and enable them to plan their economy strategically and
systematically. Based on Rapoza (2013), they said that China is now in 12th
five year plan. In the plan, they focus more on high tech and value-added
production, such as green energy. It means that they are started to invest in a
new sector and this lead to the growth of their economy.
In
my opinion, investors and businesspersons should take this opportunity to
expand their market and investment in China. Imagine that only students itself
have already contributed $4.4 billion, can you estimate how much would traveler
and shopper contribute? “The land of treasure”, portrayed by Nanyang newspaper about
China where they currently had organized a seminar that held on 21st
of September which mainly focused on how to invest and develop market in China.
With the title of “China In and Out”, it was hold by a Tannet Group Limited
General Manager, Catherine Chong. In the seminar, Catherine Chong suggested
that investor who are interested in China market, should study on the government’s
policy, brand registration as well as the shopping trend.
Government’s
policy is regarded as the five’s year plan which the government wish to
implement. Besides that, Catherine Chong stated that to register a brand, it
costs about RM2000 to RM3000. It is good to register the brand in order to
secure the right as branding is very important in China. In the study that has done
by Atsmon, Dixit, Wu (2011) from McKinsey&Company, it showed that Chinese
consumers prefer to buy luxury goods nowadays. This is because they want the authentic
products as it is meaningless for them to spend on the counterfeit products.
Thus, they are shifting to their favorable international well-known brand as it
is more reliable and trustable.
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(
Sources: Atsmon, Dixit, Wu 2011)
Besides,
the research done by McKinsey, Rhodes (2013) also discover the same result from
her study as she said that Chinese have become a key driver for the luxury
industry especially in Western Europe. Qian hui (cited in Rhodes 2013) stated
that shopping for luxury goods is the main objective for most Chinese tourists during
a trip to France. Also, according to Assouline (cited in Rhodes 2013), she said
that luxury brand is no longer for nobility only but also the middle class. All
the statements above show the important of branding in China and it is believe
that the branding demand will continue to grow. In short, the businesspersons
are encouraged to establish a brand in order to approach the China market.
Apart
from that, businessperson and investor can also seek opportunity from the
industry of tourism. As what I have mentioned earlier, shopping for luxury
goods is their main concern now. Referring to this, it helps to improve the tourism
industry as well. They are willing to travel abroad to look for the luxury good
and branding product. They prefer to buy luxury goods in other country because
it was 20 to 30 percent cheaper compare to their own country. Also, it actually
save cost when travelling abroad to purchase the good as the highest tax for
luxury goods in China can be up to 57 percent (Rhodes 2013).
It
turns out that Chinese tourists became the world’s major spenders in 2012 (Cripps
2013). According to US Travel Association (2013), there are around 500,000
thousands Chinese travel to US in 2008, and they spent around $3.5 billion. In
the year of 2012, result showed that they had spent $102 billion on
international tourism which has increased 40 percent compare to 2011. This
shows a dramatically changed from 2008 to 2012. Now, it is believe that there will
be 100 million Chinese travels abroad in 2015, which indicate that the profit of
tourism industry will increase as well (Cripps 2013). This figure allows the
businesspersons and investors to forecast the opportunity they can gain from
the field of tourism.
Furthermore,
Catherine Chong found out that online shopping is a new trend for Chinese in
the current year. She encourages businesspersons to conduct their business with
the aid of internet which is known as e-commerce. She mentioned that China has about
1.4 billion population and 67 percent of it was internet users. Jing and Zhou
(2012) from China daily stated that the revenue China gain from online shopping
in 2011 is about $125 billion. It makes China became the third largest online
market in 2011.
There
are few reasons which explained why Chinese prefer online shopping. Firstly,
the creation of apps in mobile phone has provided the convenience of
information search for the consumers. They can check out all the options of the
desire products and purchase it just by clicking it. Secondly, online shopping
provides shipping service as well so that they do not need to go out from their
house (Singh 2013). These two reasons show that online shopping allows the
consumers to compare and view choices easily and shop conveniently.
The
most common e-commerce platform in China is Tao Bao. It is a C2C marketplace
which sell variety kind of product such as cloths, daily household products and
digital products (Tech in Asia 2013). Tao Bao has around 500 million users, it
sold average 48 thousand products every minute and earned 4.3billion per day. Thus,
it was suggested that investors and businesspersons can start to seek business
opportunity from internet.
In
conclusion, the growth of China’s economy has brought a lot of advantages to
every country as well as their people. Meanwhile, it also influences the
economy of other countries and creating business opportunity for
businesspersons and investor. Of course, it was suggested not to be too rely on
others country, but it is good to build a mutual beneficial relationship with
China and start approaching China market for business opportunity.
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