Research conducted by investment and securities provider Guotai Junan Securities states that in the future, consumption expenditure is expected to rise in small cities and among older age brackets, news portal Jiemian.com reported.
The research found that because of uneven income distributions, there is a marked difference in the level of spending on consumer items in different regions. This provides opportunities for Chinese enterprises to carve out new markets.
These new markets will be concentrated in third- or fourth-tier cities where people are more sensitive to price changes, seeking out the lowest prices for goods in supermarkets or on e-commerce sites. As incomes increase, these consumers start spending more on brands and higher quality goods.
Market adjustments - changing supply and demand - are taking place in small cities. These derive partly from more use of online shopping, where e-commerce companies are now concentrating their market strategies as top-tier markets have become saturated.
Older generations are becoming a more important force in driving up consumption spending. These people, born in the 1960s or 1970s, have benefited most from China's reform and opening-up and have strong purchasing power. They are starting to engage with online e-commerce.
By contrast, consumers in first-tire cities want more customized quality products which are more difficult for enterprises to provide. The generation born in 1950s tend to be thrifty and prefer cheap things.
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