China's GDP crossed $1 trillion in 2000. In only 14 years after that, the GDP reached more than $10 trillion, with the per capita GDP reaching $8,000 in 2015. Such a steady and high GDP growth has considerably increased people's income levels and purchasing power. As a result, the mentality of Chinese consumers has undergone a remarkable change. If 20 years ago they saw price as the paramount factor while shopping, today their focus is more on brand and quality.
Moreover, Chinese people born in the 1980s and 1990s have become the main consumer group. Unlike their parents, many of these people can afford to spend lavishly thanks to their higher levels of income or the financial support they get from their well-off parents. No wonder they attach more importance to quality than price.
Chinese manufacturers, on the other hand, have long basked in their low-price strategy, because China's large population and vast market helped them make a lot of money despite people's low levels of income. And being able to make easy money, they have failed to anticipate the fast changing economic landscape in China and the ensuing changes in consumer behavior.
Chinese outbound tourists' shopping spree sounds an alarm bell for domestic manufacturers and should spur them to change their operation strategy to better meet the pent-up demand of consumers at home.
Policymakers can play a constructive role in this regard. For example, they can use favorable tax policies to encourage corporate innovation and technological upgrading so that enterprises can make more better-designed and value-added products. Also, they can take measures to help reduce transaction costs and thus cut the production costs of enterprises-both are part of the supply-side reform that has become a catchphrase in the Chinese media.
Until the corporate sector makes substantial headway in churning out reliable and high-quality products that cater to the demand of the growing middle class in China, people will continue to travel abroad for shopping despite being as patriotic as their critics.
The author is a senior writer with China Daily. xinzhiming@chinadaily.com.cn
I’ve lived in China for quite a considerable time including my graduate school years, travelled and worked in a few cities and still choose my destination taking into consideration the density of smog or PM2.5 particulate matter in the region.