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| FACTBOX-Growth in Asian consumer spending lies in China, India |
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| Reuters | |||
| Tuesday, 16 June 2009 08:45 | |||
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The shift from savers to spenders in Asia will likely be led by young consumers in China and India
Kevin Plumberg Source: Reuters HONG KONG, June 12 (Reuters) - The shift from savers to spenders in Asia will likely be led by young consumers in China and India, who are unencumbered by debt and want to improve their social status by buying clothing, computers and cars. Consumers in these countries are some of the least indebted in Asia, relative to the size of their economies, and certainly have fewer debts than their counterparts in Britain and the United States, where consumer leverage relative to gross domestic product reached 100 percent in the second quarter of 2008. They are hungry for technology, whether that means mobile phones or personal computers, and for higher quality food, fashion and entertainment. Below are anecdotes, statistics and forecasts on China's and India's consumers and what they are buying. CHINA: Gross domestic product per capita is much lower in interior and central cities, municipalities and provinces compared with coastal areas, which had benefited from the export boom of the last decade. GDP per capita for the nation was $3,259 in 2008. However, in coastal areas and cities, GDP per capita is two to three times higher. Area: Location: GDP per capita (USD): Shanghai East $10,440 Beijing East $9,072 Tianjin East $7,984 Zhejiang East $6,076 National -- $3,259 Sichuan West $2,213 Guangxi West $2,154 Chongqing West $2,594 Strategists and asset managers expect growth in domestic spending in China, led by inland consumers, to offset the drag from weak exports. Policy incentives have been aimed at getting people in rural areas spending more on electronics, appliances, automobiles and property. Who is spending in China? The so-called single-child generation, between 20-29 years old, has consistently seen the biggest growth in average personal income and has been spending more. This age group is expected to grow from roughly 21 million in 2009 to more than 25 million by 2012. Age Annual growth in monthly personal income (%) 2006 2007 2008 20-29 33.6 29.3 24.6 30-39 21.6 26.9 18.1 40-49 14.0 16.9 17.1 50-59 8.9 9.6 11.6 Chinese consumer patterns? The single-child generation is spending more on clothing (13 percent of household income) and entertainment, including eating out (9 percent), versus 30-39 year-olds (11 percent on clothing and 7 percent on entertainment), 40-49 year olds (10 percent and 6 percent) and 50-59 year olds (7 percent and 4 percent). Interestingly, saving and investment levels are similar across age groups, though the 50-59 year-olds save 5 percentage points more of their household income than the single-child generation. China become the biggest automobile sales market in the world in January and sales remain robust. Merrill Lynch said in a report that in the Western city of Xi'an, buyers of new vehicles have to wait 2-3 weeks for some popular brands because inventories have been run down so much. The popular brands are FAW-Volkswagen and SAIC-GM-Wuling. China is expected to produce double digit growth in PC shipments annually between 2010 and 2012, Gartner analysts say. 2009 2010 2011 2012 Professional mkt Units Forecast: 24,354,929 26,700,345 29,752,883 33,401,516 Growth Forecast: 4.5 9.6 11.4 12.3 Home Mkt: Units Forecast: 18,212,040 21,120,018 24,537,290 28,410,485 Growth Forecast 1.6 16.0 16.2 15.8 INDIA: India's retail sector is expected to grow 63 percent between 2008 and 2013 to become a $833 billion market, though retail chains currently make up only 5 percent of stores, according to consulting group A.T. Kearney. In coming months, sales will likely come from small, locally-owned food and clothing retailers, such as Pantaloon (PART.BO), rather than high end, overseas brands, analysts said. Mumbai and New Delhi are homes to affluent households, the bulk of which reside in urban areas or are concentrated in the larger metropolitan areas. In fact, of the top 20 neighbourhoods in India, in terms of number of millionaire families, as many as 18 are in Mumbai City 2008 GDP per capita (USD) Mumbai $2,600 New Delhi $1,734 Calcutta $1,564 Ahmedabad $1,142 Bangalore $1,268 National $999 Lucknow $550 Indian consumer patterns? Indian mobile operators have been adding more than 10 million users a month, making it the worlds fastest-growing wireless services market. With more than 400 million users at the end of April, India lags only China in market size. Still, just over a third of the population have a phone. Gartner estimates about 120 million mobile phones are sold every year, which should rise to 160 million a year by 2013. The Indian car market, which reported a volume sales growth of 1 percent last fiscal year to March, is forecast to grow 3-5 percent in 2009-2010 with momentum picking up in the second half of the year when the economy is seen recovering, the Society of Indian Automobile Manufacturers said. India's PC market is smaller than China's, but is expected to grow faster in coming years, Gartner says. 2009 2010 2011 2012 Professional mkt: Units Forecast 6,548,392 7,594,916 9,183,680 11,035,722 Growth Forecast -0.8 16 20.9 20.2 Home Mkt Units Forecast 2701320 3346677 4385977 5653140 Growth Forecast -0.8 23.9 31.1 28.9 (Sources: Credit Suisse, Gartner, Indicus Analytics, JPMorgan Asset Management, Merrill Lynch, Morgan Stanley, NationMaster.com) (Additional reporting by Janaki Krishnan and Devidutta Tripathy in NEW DELHI, Kelvin Soh in TAIPEI and Narayanan Somasundaram in MUMBAI; Editing by Neil Fullick)
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