Perspectives 2008: The next billion-dollar business

Monica Au

A bright outlook for consumer brands in China’s new markets

Dozens of flights have been cancelled, the passengers are getting restless, and the check-in queues here at Heathrow have become long and sessile. Perhaps it’s my Asian face or maybe out of sheer boredom, the American gentleman in front of me turns around and laments how he will miss his connecting flight and consequently, the meeting with his business partners in Xiamen. I mumble sympathetically. Meanwhile, the young woman two spaces down chimes in, “I don’t suppose I’ll make it to Chongqing either. This is so frustrating!”

It seems like only yesterday foreigners on business trips first started showing up with their smart carry-ons in China’s glitzy, first-tier cities. Beijing, Shanghai and Guangzhou — but Chong what? Today, forward-thinking Western companies are dispatching their super troopers to the likes of Chongqing, Xiamen, Nanjing, Chengdu, Wuhan, and Kunming. These lesser urban centers have emerged from the shadows and are now expected to become the country’s growth engines in the coming decade. Although the residents of China’s second- and third-tier cities have lower per-capita disposable incomes, they outnumber those in the first-tier cities by a factor of three. But make no mistake; these new market consumers have a first-tier desire for branded products and experiences.