China: The World’s Largest Market

By Ken Gassman

In terms of size, China’s 1.3 billion people make it by far the world’s largest market; it is nearly 20 percent larger than second-place India with its 1.1 billion people.

China has surpassed Britain as the world’s fourth largest economy. It consumes roughly 25 percent of global steel, 30 percent of cement, and is the world’s largest market for electrical appliances.

Although its per capita Gross National Income (GNI) remains very low – about $6,600 as compared to the U.S. at $41,950 or Europe at $21,120, it is rising rapidly. At one time, China may have looked like a communist country where almost everyone was equal. But today, there are great disparities in wealth levels and standards of living. Nearly half of China’s population lives on less than $2 per day. In today’s society, the traditional greeting for the Chinese New Year – the equivalent of saying “Merry Christmas” or “Happy New Year” – is Gongxi facai or “congratulations on getting rich.”

Despite Mao Zedong’s mantra of “communism” – ‘’from each according to his ability, to each according to his need” as well as his disastrous Great Leap Forward and Cultural Revolution programs, the roots of which began in 1949 and lasted well into the 1990s, Chinese businesspeople are ferocious and thoroughbred capitalists at heart.

“Mao Zedong Thought” may remain a core part of China’s official ideology, and the “Yan’an Spirit” of self-sacrifice and simple living may be professed by Chinese officials, but real world Chinese own property, drive luxury cars, and have sons and daughters who have graduated from Harvard.

China’s transformation from communism to capitalism has left the vast majority of its people much better off. While it has created a society of haves and have-nots, rapid economic growth coupled with the country’s strong family-oriented culture have created a society where children have gone off to the cities to make money which is mostly sent back home to poverty-stricken rural regions.

With China’s admission into the World Trade Organization in 2001, the country officially became a major participant in the global economy.

 

However, China’s business model is very different from almost any other in the world. In many ways, it is like the U.S. with a huge land mass, a large domestic market of consumers, ambitious entrepreneurs who want to be businesspeople, and the ability to build world-class products – Lenovo computers, for example. On the other hand, China operates under an authoritarian and paranoid political system that crushes dissent, controls information, and injects itself into every facet of business.

 

In his book on how to do business in China, One Billion Customers, author James McGreggor states, “With one foot firmly in the past, and the other stepping into the future, China is simultaneously the world’s largest startup and turnaround.”

 

McGreggor goes on to say, “Commerce in China is all about making money, just as anywhere in the world, but business is also intertwined with China’s struggle to change and adopt the ways of the West while retaining its Chinese ‘essence’.”

 

Before going any further, it is important to state that quantitative data on the jewelry and luxury goods market in China are totally obscured in a government-induced veil of secrecy. Some peg this country’s diamond and jewelry consumption at as high as $17 billion, or roughly 14 percent of global sales. Others believe it is far lower – perhaps in the $12 billion range – accounting for a more moderate 9 to 10 percent of global jewelry and watch sales.

 

In addition, the government releases statistics at its own pace. For example, IDEX Online Research was able to uncover very little information from 2005; it appears that statistics are most complete beginning in 2003 and earlier years. In most developed countries, government statistics are only a few months behind, rather than a few years behind.

 

IDEX Online Research relied on several sources for its research. Occasionally, it has not been possible to corroborate all statistics cited.