China's Consumer Revolution: Distribution Reform, Foreign Investment and the Impact of the WTO
- PDF / 135,266 Bytes
- 18 Pages / 442 x 663 pts Page_size
- 1 Downloads / 208 Views
China’s Consumer Revolution: Distribution Reform, Foreign Investment and the Impact of the WTO Robert Taylor Centre for Chinese Studies, School of East Asian Studies, Floor 5, Arts Tower, University of Sheffield Western Bank, Sheffield, S10 2TN, UK. E-mail: [email protected]
The Chinese leaders have stated that domestic consumption is the key to China’s further economic development. An examination of consumer trends since the initiation of China’s open-door policy in 1978 suggests market segmentation based on growing personal and regional income inequalities. There is also greater quality discernment as markets mature. Furthermore, credit provision is designed to stimulate consumption. It is argued that consumption will additionally be spurred by ongoing reform in the distribution system. Under the command economy, wholesale and retail services were a state monopoly, and this legacy has impeded the development of a nationwide market. Foreign companies have been playing a major role in the transformation of China’s distribution system. Thus, companies like Walmart and Daiei, active in supermarket chains, introduce high levels of service, the use of information technologies in selling and marketing, and scientific management. In response, Chinese domestic concerns need to institute economies of scale and greater integration between supply and retail networks. Finally, membership of the World Trade Organisation (WTO) will force China’s leaders to open the country’s service sector to foreign investors. In conclusion, WTO membership will provide impetus towards greater competitiveness in China’s distribution system, thereby facilitating expansion of consumer markets. Asian Business & Management (2003) 2, 187–204. doi:10.1057/palgrave.abm.9200041 Keywords: consumer demand; distribution reform; wholesale; retail
Introduction: Consumer Trends in China China is no exception to the general rule that, as an economy develops in complexity, the role of its service sector grows. Echoing the government’s goals, Chinese sources, taking an international perspective, outline a time table of development informed by changes in consumption patterns. In the first stage, consumption is focused on basic necessities like food and clothing, while the second phase, characteristic of Western countries when they entered industrial society, is typified by the provision of consumer goods, cars
Robert Taylor China’s Consumer Revolution
188
and improved housing. The third, and as yet final stage, is a knowledge economy of information products and services, to which advanced Western countries have begun the transition. A refinement of these themes will now be applied to contemporary China. As stated above, initially consumption is focused on cheap basic necessities for daily life, and in the Chinese context this is equivalent to a demand structure of 4,000 Chinese yuan gross domestic product (GDP); at the second level of 4,000–7,000 yuan GDP, the need for essentials has been satisfied and further goods and services are consumed; in t
Data Loading...
