Center
Targeting lower-income consumers
(CRI)
Updated: 2006-06-05 15:33
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In an interview with The Wall Street Journal, Andrew Grant, managing director of McKinsey's greater China business, said that smart foreign companies should figure out ways to sell to the emerging lower middle classes or face being sideswiped.
The suggested measures include expanding their operations from the rich coastal cities to second-tier inland cities, cutting prices of their products, and creating brands for various segments of the Chinese market.
They also include training more local Chinese personnel instead of the current hiring practice of looking for managers of Chinese origin from Hong Kong or Singapore.
The McKinsey report said China's future middle-class consumers will look very different from those in the West, where the wealthiest are among people aged 45 to 54. In China, the wealthiest members of the middle classes in the next few decades will be younger, aged 25 to 44, indicating that better educational opportunities will normally lead to higher-paying jobs.
Grant told The Wall Street Journal that bearing this in mind, foreign companies should make money on sales of mass consumer goods and services rather than high-margin luxuries.