China’s middle class will triple in the next 10 years, according to a new report by the Boston Consulting Group (BCG). By 2020, it should have 280 million affluent consumers, representing 35% of the country’s consumption and 5% of the world’s total consumption.
The report, titled The Age of the Affluent: The Dynamics of China’s Next Consumption Engine, says “China is projected to overtake Japan and become the world’s second-largest consumer market” in the next three years.
Today, writes Caixin media, China’s affluent population is estimated at around 120 million people, with a combined annual buying power of around $590 billion.
According to the BCG report, China’s affluent class is defined as having an annual household disposable income between $20,000 and $1 million. The upper affluent class – those earning between $40,000 and $1 million -- will account for 20% of the 280 million affluent. Their spending is expected to be multiplied by five in the next ten years, representing $3.1 trillion.
"Much attention has been paid to China's middle class and high-net-worth individuals," said Vincent Lui, a BCG partner and an author of the report, according to China Daily. "But the affluent - richer than members of the middle class but not as wealthy as the super-rich - have spending habits and attitudes that are distinct."
The report said affluent consumers replaced their old belongings quickly as a way to pursue emotional gratification, status and recognition. It also described them as being relatively sophisticated, a trait they exhibit in their willingness to travel abroad and try out new brands, according to the China Daily.
"A lot of affluent consumers buy luxury brands in response to social necessity and peer pressure," said Angela Wang, managing director of BCG.