Two Chinas

For a long time now, I’ve been shaking my head at the naivety of those who think that China is nirvana for marketers of all sorts of consumer products. “Over 1 billion people, all of them potential customers!” is the clarion call of these excitable people.

In terms of personal income and buying power, what you’ve got in China is essentially two countries. About 200 million people, mainly living along the eastern seaboard, are enjoying many of the benefits of China’s rapid economic expansion. The flow of new wealth does trickle into inner China, but it only trickles. The “other” China, the one made up of 900 million people, is NOT enjoying the benefits of China’s economic expansion. In fact, many of them are seeing their purchasing power drop as China is wracked by unprecedented inflation.

If you want to get a bit of understanding of the real China, take a look at this excellent piece in Time Magazine from a few years ago: “Seeds of Fury”

Bottom Line: If you’re selling something that costs more than a dollar, most people in China can’t afford it. Besides, if there really is a market for what you’re selling in China, the Chinese are very likely going to figure out how to sell the same thing at a lower price than you sell it at, if they haven’t already.

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Filed under China, Economics

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