Want to make money? Follow the money… Follow China
In America, the world’s leading economy, the middle class keeps shrinking.
In China, the world’s second-largest economy, the middle class is booming.
Since China joined the World Trade Organization in 2001, its middle class grew from 5 percent of the population to nearly 35 percent today. And while America’s middle class is difficult to define because of cost-of-living disparities across the country, during this same time period, as higher and lower income brackets increased, the middle class fell from nearly 60 percent to just under 50 percent.
As China’s standard of living grows, so too has its manufacturing standards. Just a generation ago, China exports flooding the global marketplace were driven by lower-end products – shoes, towels, socks, basic electronics, shirts, housewares and similar products produced and sold cheaply.
With its economic growth hitting 6.9 percent in 2017, China is on trend to overtake the United States in critical growth sectors: Artificial intelligence, Internet development, online shopping, digital payment methods, new-energy vehicles, etc.
Remember our Top Trend for 2017, Silicon Valley: Rust Belt 2.0? We forecast China would begin to overtake the US in high-tech advancement. That trend has become reality. The Chinese government today is heavily investing in the High-Tech Industrial Complex, while the US heavily invests in its Military Industrial Complex.
China’s standard of living increased as the country moved from low-end manufacturing to high-end production. Consequently, its consumers are changing their consumption habits. They’re moving from low-end to high-end, now accounting for 12 percent of the world’s luxury-products market.
And with China’s middle class projected to expand from 430 million today to 780 million in mid-2025, those higher-priced, higher-quality product lines, from food to fashion, will expand with it.
While middle-class malls and big-box stores shutter at a record pace in the US, malls and retailers catering to upper-middle-class consumers in China’s urban centers are surging.
Starbucks, for example, with sales struggling in the US, is looking to China, where sales surged more than 30 percent in the fourth quarter. Its new high-end Starbucks Roastery in Shanghai almost instantly became the highest-grossing Starbucks store in the world. The 30,000-square-foot facility, with a copper-vaulted ceiling and artful woodwork, grosses $448,000 a week in sales, with an average order of $29.
And, while China goes high end, “America runs on Dunkin’” 99 cent coffee in a Styrofoam cup.
TREND FORECAST: China’s development into a broader-based, more diverse economy means higher-end purchases, travel, higher education and other benefits of a healthy, growing middle class will – despite periodic economic and equity-market downturns – continue to expand.
OnTrendpreneurs® are cutting-edge, trend-focused entrepreneurs. They know that of all the world’s markets, China – with 1.3 billion people and a government focus on sustained economic growth – is sure to follow Starbucks and other higher-end merchandisers in providing the population with the “best of the best” and recognize it as a launching pad for innovative, cutting-edge products and services.
As rich and powerful as the Chinese economy is, rather than investing in “new,” it has mostly acquired, “copied” and improved existing product lines and technologies. With government as the guiding, controlling force behind business development and a strong one-nation culture, China’s market is wide open for new products and business initiatives from pop culture to high fashion.