China retail still going strong – Paul French

Retail analyst Paul French dismisses worries in the retail industry their business is going downhill in China. Real growth is now taking place outside the larger cities, he tells in Just-Style.

Just-Style:

“I don’t think we should get overly concerned about the slowing growth rate in China, which is often confused with a decline overall,” Mintel’s chief China market strategist Paul French tells just-style.

“This is a sign of maturity and growing sophistication among consumers in tier 1 cities and is completely understandable and expected after half a dozen years of go-go spending. All the conditions remain for strong continued retail sales in tier 1 China – white collar wage rises are still in the 6-7% per annum range,” says French.

He adds that the slowdown is a sign that the 300m middle class people in tier 1 and a few in tier 2 are reaching maturity.

“These people benefited from the reforms massively in the last few years with white collar wage rises in excess of 10% per annum and the transfer to the private property market and asset ownership.

“This group is now saving for larger ticket purchases [booming sales of cars and growth in international tourism travel from China] and financial products like insurance, healthcare, critical illness, education funds and old age funds.”

French emphases that much of the slowdown is coming from tier 1 cities, while stronger growth is taking place in tier 2, 3 and 4 cities.

“This is completely natural too and good in the long term as it will address the unevenness of China’s retail market with a western level of consumption and retail infrastructure in Shanghai, Beijing and a few other places and retarded retail in tiers 2/3 and below.

More in Just-Style.

Paul French is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers’ request form.