How to win back Chinese consumers

China is upgrading its industries, promoting innovation and spurring consumption. If these endeavors succeed, China can win back its consumers again.

Yet, the obscure price structure and heavy tax burden in China squeeze companies' room to reduce prices.

The reports of conflicts between sellers and consumers in China during the Spring Festival indicate some businesspeople care little about their image and reputation and care only about quick profits, which they pursue under the loose supervision of administrative departments.

Chinese people's spending in foreign countries has continuously increased in recent years, becoming an important driving force for economic growth in some countries, even when domestic consumers are still feeling the pinch of sluggish economic growth. If this momentum is unchecked, China will always find its consumption a tire leaking air as it bids to advance its own economic growth.

Destocking and solving overcapacity are two urgent tasks for the Chinese economy. The robust consuming of Chinese tourists abroad is a lively testimony to their buying potential at home. The flow back of consumers is a key to the supply-side reform of China.

So on the one hand, the government should cut taxes to relieve the tax burden on companies, which would enable them to put more money into research and development. On the other hand, it needs to reduce the increases to prices of commodities in the process of circulation, and lower the costs of logistics.

Also, to establish a well-regulated consumption environment, where trust and honesty are valued more than quick profits, there should be harsh law-based punishments for wrongdoers, including the watchdog departments and officials who fail in their duties.

The government should also continuously reduce the costs for consumers to defend their legal rights and interests, because they are the key factor connecting all parts of the economy.

The article was first published in Beijing Times on Feb 18.

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