Chen Juan has an unusual dream.
"My ideal picture," says the marketing director of Galanz, the
largest microwave manufacturer in the world, "is of a Chinese
peasant coming home after a day in the fields and cooking supper in
Until recently, most people - including Chinese peasants - would
have laughed at such a vision. Galanz built its brand, as did almost
every other consumer goods company in China, by selling to the
prosperous citizens of boomtowns on the east coast.
But now, say business analysts and economists, China is poised
for a consumer-products revolution. Whereas the burgeoning elite in
China's major industrial cities has spent the last several years
cashing in on an export boom, an emerging middle class in the
country's interior has only recently begun to see the fruits of
economic liberalization. As government policies shift to encourage
consumer spending, businessmen may finally realize their fantasies
of an enormous, untapped consumer marketing frontier.
"We have to increase the number of people with a microwave oven
from 200 million to 1.2 billion," says Ms. Chen, a gleam in her eye
as she measures the prospect. "That's where our future lies."
And after many years of waiting the future has arrived, says
Andrew Grant, head of McKinsey & Co., the consulting firm, in China.
"At the moment, China's consumer economy is about the size of
Italy's, but in two years' time it is going to start adding an Italy
every year," says Mr. Grant, noting that while the average Italian
spends $11,511 on consumer goods each year to China's $543, the
middle kingdom's enormous population makes up for the difference.
The emergence of a solid middle class, in cities and towns across
the country, will transform the Chinese market, predicts Shaun Rein,
founder of the Shanghai-based China Market Research Group.
"The second- and third-tier cities are where the real money is
going to come from in the next 10 years," he predicts, referring to
the provincial cities that do not yet enjoy the prominence of
Beijing, Shanghai, or Shenzhen. "Everybody is starting to understand
that that is where they need to be."
Chen has had her eye on such smaller cities for some time, but
then Galanz always has had a nose for a trend. In 1992, its founder
Qingde Liang sensed the first stirrings of an acquisitive middle
class and got out of the eider export business to make home
With the big East Coast cities saturated, Chen is focusing on
"country towns," cities with a million or so inhabitants that are
now the company's fastest growing market, accounting for 80 percent
of Galanz's microwave sales growth this year.
And that market is set to grow even larger as 300 million more
Chinese move into urban areas over the next 10 years in a continuing
mass population shift that will see 100 cities grow to a population
of more than 3 million.
The bulk of these new urbanites will become members of the middle
class, though their incomes - around $5,000 a year - will be modest
to begin with. …