The Chinese economy is volatile, which can make it an intimidating place to do business. In fact, one Chinese official told CNN that “market volatility will be part of the new normal” in China, a market known for up to 10% swings in key indicators in mere hours. Enterprises often embrace the misconception that such volatility inhibits meaningful and accurate forecasting and business planning. But with a projected $5 trillion increase in Chinese household spending power by 2025, this isn’t a market you can afford to dismiss.

Let’s look at the facts. According to the Demand Institute:

  • In the next 10 years, discretionary income in China is expected to increase 70%.
  • By 2025, Chinese consumers will spend $6.4 trillion annually.
  • China has a working population of 770.4 million. Currently, only 11% are considered middle class, meaning we’ve barely glimpsed the economic power of this burgeoning economy.
  • From 2006 to 2014, shipping in China increased tenfold – from 1 to 10 billion packages – showing increasing opportunity for e-commerce.
  • Spending on entertainment and recreational activities like travel, dining out, sports and gaming is only 9.2% in China – much lower than other developed nations – meaning this category is poised for rapid growth as incomes rise.

For perspective, let’s look at similar statistics for the United States:

  • According to the Congressional Budget Office, discretionary spending in the U.S. is actually expected to decrease in relation to GDP in the next 10 years.
  • Working population: 146 million
  • Recreational spending: 17.3%

Recent research published by Goldman Sachs unveiled seven key desires of the Chinese consumer: looking more beautiful, eating better, a better home, mobility, having fun, well-being and luxury items. The market opportunity in China is too persuasive to ignore, and experts like PwC and McKinsey&Company agree that success here is achievable. By turning comprehensive data into meaningful insights and forward-looking analysis, companies will be poised to win in China. Will you seize this opportunity? In our next blog post, we’ll explore how one CPG company did just that.