Cuckoo Clocks for $700 Show China Consumers’ Growing Money PowerBloomberg News
German, Malaysian and Korean firms target discerning shoppers
Chinese consumers trust foreign products, seek healthier foods
Nine handmade cuckoo clocks from Germany’s Black Forest region were a big hit at China’s Canton Fair in Guangzhou last week. Priced at as much as 5,000 yuan ($724) each, the high-end timepieces sold out in an hour.
"Chinese consumption power is rising," said clock seller Wang Chenghao, project manager of a Sino-German joint-venture company, Qingdao Sino-German Ecopark Industrial Development Co., set up to boost trade between the countries. "Chinese consumers increasingly pursue better quality goods and higher quality lives."
Other firms trying to tap into China’s rising class of quality-conscious consumers were also upbeat, as buyers at the sprawling fair sampled products ranging from Malaysian durian ice cream to New Zealand goat’s milk and Korean ginseng chicken soup. It was a stark contrast to the sparsely populated exhibitions promoting Chinese food products to foreign buyers.
Consumer spending powered the economy in the first quarter, with purchases by private shoppers and government driving 77.2 percent of growth. Increased consumption is helping shift the economy away from its past heavy reliance on debt-fueled, investment-led growth.
As they get wealthier and older, consumers are seeking healthier products and traveling abroad more often. While retail sales growth has slowed, the ratio of high- and middle-end products in total online consumption increased to 34.4 percent last year from 26.8 percent in 2012, according to the research-arm of e-commerce giant Alibaba Group Holding Ltd.
"China is no longer solely a producer, but an end-consumer as well," said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. "My Spanish colleagues even complain that Chinese consumers have in recent years pushed up the price of Black Iberico pork," the high-end meat that comes from acorn-fed, pure-bred Iberian black pigs.
Glimlife Australia Pty Ltd. was promoting fish oil, pain relief balms for rheumatism and arthritis, and Manuka honey, which sells for as much as 600 yuan for a 500 gram jar because of its antibacterial properties.
"There’s a big market in China and consumers can accept higher prices," sales executive Steven Leung said. "But competition is tough. We have to do well in pricing and marketing."
The Canton Fair claims to be the world’s largest such gathering, where more than 24,000 exporters and 180,000 buyers, mostly foreign, ink deals in booths spanning exhibition space equivalent to 2,500 basketball courts.
Supermega Market Ltd. of New Zealand started targeting China in 2012. Now sales there are almost a third of the total after it began selling in Beijing, Hebei and Zhejiang provinces.
The dairy products company is trying to find new local retailers and distributors for its products and wants China’s share of sales to reach 50 percent within one to two years, said Li Yihong, a representative at its subsidiary, Beijing Xinniufeng Trading Co.
Though Supermega’s imported milk costs about 20 percent more than similar local products, Li said consumers don’t trust local brands and value the quality and safety of foreign ones.
"We want to bring the best milk to China," she said. "The potential is huge. We’ve only reached a few places and already sales are at 30 percent."
— With assistance by Xiaoqing Pi, and Kevin Hamlin
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