[The middle class in china is increasing explosively. “It will change the industry environment of Korea”]

 

With the increasing of the middle class in China, There will be a new chance to the Korean companies. The growth of the middle class in china which is the biggest market in the world will make the popularity of the high-value added product and the economical consumer goods which are the reflection of consumer's characteristic.

 

The increasement of the middle class in china will be the reason for change of the korean companies' strategy which have been concentrated on the export of intermediary goods. There can be new competition in the new market. So the swift preparation is needed.

◆The explosive growth of the middle class in China... It is expected the population of China will attain four hundred million people in 2020years.

There are many prospects that the fast economic growth of China will make the explosive increasement of middle class in near future. The American Consultant Company Mackinji reported the prospect. The proportion of Chinese urban middle class who is having the disposable income about 16,000~34,000＄ will increase from 6% to the 51% in 2020year. The families will increase from 14million families in 2010 year to 1hundred million and 67million families(4hundred billion peoples) in 2020year.

 

Recently, Chinese government's Institution "The Renovation and Development Institution of China" analyzed that the number of the middle class in china will be attained to 6 hundred million people in 2020 years. The reason of explosive growth in Chinese middle class have some reasons. Rapid urbanization, economical growth are the representative factors. The 7% ranges of economical growth at least in a year. The growth of middle class is a natural phenomenon.

 

With this trend, The chinese leadership is also showing their will to raise the middle class in China. On The Chinese Community Party's 18th National Representative Forum, The leadership of China proposed the goal about the personal income for the first time.

They showed the will for consume-centered economy proposing the goal of increasement of GDP and Personal Income twice between 2010-2020year.

 

No-Joong-Lim, the investment strategy team leader of the IM invest stock company, analyzed that the chinese leadership who had been concentrated on the growth-centered economy are changing their policy to the stable growth policy which is concentrating on dispose. So the middle class will get more strength.

 

Jae-Jin-Han, the researcher of Hyun-Dae Economy Academy, said that "China will accelerate their consume-centered growth policy in their economical growth trend. Then This policy will grow the middle class population which is apt for the international standard. However, Many experts indicate the necessity of bic-scale land market and financial market before the rapid growth of middle class population.

 

Researcher Han, diagnosed that "Institute social security system and lack of financial item market have to be solved for the expansion of middle class. So, their goal will be achieved when they prepare the system for the real income. Byung-Seo-Jeon, the guest professor of Kyeong-Hee University pointed out "promotion of middle class is not only depend on the increase of payment but also development of financial asset. So, the important point in growth of middle class is depend on the development of real estate and financial item market."

◆China is expecting the expansion of domestic market... The company in Korea should increase the export of financial item.

The change of Industrial structure is forecasted with the increasement of "people who can afford to shop" more than "people who have money to live on" in China. The China which had been concentrated on the production of industrial goods will be developed to the largest domestic consumption market. This result will make the popularity of consumer goods like fashion product, luxuries, leisure product, and consumer goods in high price. This change can make joy and sorrow of the korean companies.

The company of complete product or economical consumer product(Cosmetic, Clothes and Food Business) will get a chance to take part in the new large market from now on.

 

Professor Jeon said "Especially, Korea is competitive in Beauty, Plastic surgery, Cosmetic product and Fashion parts. We can see the sign of jackpot from the companies which made new branch already or selling their products well." However, Expansion of middle class mean the improvement of payment. So the company which is advanced in China already need the measure for payment. Professor Jeon also warned "Sizinping's leadereship informed the minimum wage system in china. Then they will achieve the goal of duple average wage in the near future. So, The company which was aimed at the low labor cost in china will undergo hard time or kick out from the Chinese market."

 

 

There are many comments that Korean company have to prepare for the fast growing of Chinese middle class. Especially, they analysis that we have to change our export items from the intermediary goods like Semiconductor and Petro-Chemistry to the complete products which is targeting the middle class in China.

 

A researcher, Hyo Jin Kim in Dong-Bu stock firm, said that "The Korean companies need overall improvement in trade constitution. Because, they are high in export rate of the Intermediary goods but low rate in consumer goods export. Also, the other researcher pointed out the fact "As the growth in chinese consumer market is accelerating, We have to expand the item category in consumer goods for the preoccupation in the chinese' document market. So, We need to find the small businesses which have export competence. Then we have to raise the selected companies"

 

Entering into the Chinese domestic market, We need to procure the best competence comparing with the global businesses. Team's leader, No-Joong-Lim , diagnosed that "The growth of Chinese domestic market is not only good chance for the Korean but also for the other countries. So the competition between many global companies will be more intensed."

Original article

http://news.donga.com/3/all/20121111/50763256/1

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