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Chinese consumers spend big in smaller cities


China¡¯s logistics network and online payment platforms have passed this year¡¯s test on singles¡¯ day shopping extravaganza. Going forward, the flurry of goods sold online and delivery of those items are expected to be even stronger as smaller and lower tier cities join in the party.

Winter is here, temperatures fall, but shopping fever shoots up. There¡¯re plenty of excuses to buy in the forth quarter--the National day holiday, Singles¡¯ day shopping festival, Christmas and New Year. But with economic growth stepping down a notch, how is China consumer confidence holding up?"

"The overall consumer confidence in this quarter is actually a record for China." Patrick Dodd, China Managing Director of Nielson said.

As Mr. Dodd¡¯s firm finds out.

The latest surveyed Consumer confidence Index in China remains at 110, higher than the US, Brazil and Russia, but slightly lower than India.

On the yearly basis, it¡¯s a 4 points rise. Consumers¡¯ willingness to spend is at the highest in three years.

Faster growth of income in smaller cities are contributing the most to the optimism. Yet another major fact that shows market potential.

And probably what¡¯s more interesting is just how connected they are to the internet and e-commerce. 50% of people in tier 4 cities are actually buying, you know, goods online right now. Get to know them better, understand their needs, and find how to connect with them online and offline." Patrick Dodd said.

And that gives commerce infrastructure a pressure test.

China¡¯s logistics sector is a good example. That applies to financial services as well.

"Hard infrastructure is actually there, credit bureau, we have that. But there¡¯s not enough information. You know, for some who have never had a mortgage or credit card, they don¡¯t have any information in the system." Hai Ling, Greater China President of Mastercard said.

And Ling says a relaxed interest rate allows banks to better measure risks, and the country¡¯s financial institutions are more confident to diversify their funding plans for consumers.

But afterall, you still need a place where products can be felt and touched.

"The experience in store, you know, many retailers, this is still an experience for people. It¡¯s an outing. I do believe that most retailers will have both online and offline type of platform, particularly if they have unique products to sell.: Patrick Dodd said.

China now has 3000 malls, like this one in Beijing. Commercial property space is growing at 30% a year, much faster than residential property development. Better retail facilities bring more customers, healthy consumerism then feeds into the commercial property industry---a virtuous circle that bodes well for China¡¯s urbanization drive.


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