Alongside China's slowing economical growth, crack down on corruption (gifts, banquets etc..), luxury and high-end drop in consumption, an interesting trend is slowly, but steadily taking roots; China's transformation from an export and investment driven economy into a one propelled by domestic household consumption.
As to 2013, Compared to developed economies as the USA, EU and Japan, where domestic consumption as a share of the total GDP holds up to 69%, 59% and 61% respectively; China's household consumption figures are way behind, with only 34%. Alongside the associated weaknesses, the latter fact presents also an enormous opportunity, not to be missed. Supported by the unstoppable migration and urbanization pace, which according "Mckinsey" predication will reach 60% by 2020, from 50% in 2012, the 10ml annual migrants, moving from rural areas to big urban metropolis are mostly young people, seeking for a better life. And here is where opportunities are to be found. The Urban Household Chinese "Upper Middle Class", classified according to "Mckinsey" as those with annual disposable income in between RMB 106,000 – 229,000, are to grow tremendously from 2012 – 2022, from 14% in 2012 to 54% by 2022 as a total per-cent of Mainland China's urban household, estimated to fetch more than 300million by then.
Shenzhen as "The City of & for The Future" is well prepared to ride on the wave.
A small fishing village called "Baoan country", In the middle of nowhere, just on the Eastern shore of the Pearl River Delta, located in the Southern part of the Guangdong province; Welcome to Shenzhen, the "Pearl of the South".
35 years backwards, in 1979 when Deng Xiao Ping granted the city with its SEZ (Special Economic Zone) title, it had a vision. Going back to the present, Shenzhen model 2015 is the living proof that its vision has materialized into reality; A bustling megacity.
Located within the flourishing Guangdong province, just across the border of the Asia's financial hub of HK and the "Vegas of Asia", Macau, Shenzhen has a huge untapped potential. It's not by coincidence that it has being referred to as "The City of The Future". Building on its weakness (no history) to develop its strength (creative hub) Shenzhen is focusing on attracting young talents and branding itself as the "Silicon Valley of China". And as figures demonstrate, work has paid of; Shenzhen has the youngest population alongside all major cities in Mainland China, with the average age only 33 years old.
From daily alimentary products up to diverse service provider, different industries offer different possibilities, each with its own pros and cons. It's Nevertheless, the coffee and restaurants (F&B) retail industry, which by no others means is the most alluring domain to keep in mind.
With a city average annual GDP growth consecutively surpassing the nation's one during the last 30 years. Looking at figures from the "Statistics Bureau of Shenzhen", displaying a continuous growth of 17.3%, 16.5% and 10.6% retail sales, respectively along the last 3 years and an unstoppable influx of young talent and urbanization boom from the nearby provinces of Hubei, Hunan, Sichuan and Guangdong itself, Shenzhen retail consumption and food in particular, is set to explode.
From an economical angle; Its SEZ distinct position, GDP future prospective growth, highest per capita disposable income in China, strong consumption power and high FDI which renders its business environment more alluring for potential investors in general and young talented professionals and university graduators in particular. In addition to the latter, thanks to its comfortable weather, vicinity to HK, green and natural environment, young inhabitant average age and city personality etiquette, labeled as the "City of migrants" given to its young, open-minded, tolerant and innovative personality, makes it the ultimate migration destination for the 80th and 90th young Chinese generation. Those youth who are fed of the professional stress and deteriorating life conditions of the big Mainland metropolis of Shanghai, Beijing and Guangzhou, looking for a better solution, on how to balance social and professional life; this is Shenzhen's unique selling point and competitive advantage.
As so it's not to a big surprise that Shenzhen's rising young demographic of brand sensitive consumers persuades many international and HK-based brands to opt for the city as its South China or Mainland China market overall entry channel.
To further emphasize Shenzhen's youth-focused prowess we can have a quick comparison between Shenzhen and its "oldest sister" Guangzhou.
Taking a look at the two figures displayed below, it's evident that the former is overwhelmingly prevailing over the latter among the main international fast fashion brands when it comes to present and future plan out its penetration and expansion strategy in China. And trust those global brands that they have being doing their homework; according to JLL consultancy company, Shenzhen's residents disposable income of RMB 44,600 in 2013, is going to almost double by 2020. To summarize, It is to show that when age and young fashionable potential demographic is on the radar, at present and moreover in the future, Shenzhen and not Shanghai or Beijing, is the "Place to go to".