The target year is 2020, and the subject on the minds of many world economists: the Chinese consumer.
In a report published last month, “Consuming China: How to get ready for the next stage,” McKinsey & Company predict that consumption will replace investment as the driving force of China’s GDP growth. Meanwhile, Dong Tao, Asia chief economist for Credit Suisse, boldly predicted that in 2020 Chinese consumption will overtake that of the United States and become the world's largest consumer market.
“Meet the Chinese consumers of 2020” another recent McKinsey study described the profiles to expect of China’s mainstream consumers.
The most "shrewd" consumers
Chinese shoppers are famous for their pragmatic consumer approach, which will not change even as their revenues increase. They often set a budget before buying and evaluate the usefulness of goods. Only when a potential Chinese buyer is clear that a product is worth the money do they start looking for the most cost-effective deal.
The McKinsey report shows that this “savvy” Chinese shopping style, taking the trouble to carry out pre-purchase research before buying, won’t change in the coming decade. And this is particularly obvious while price comparisons are becoming more and more accessible with Internet.
Changing spending patterns, aspirational temptations
Just like their counterparts in the developed countries, the Chinese will change their spending habits from pursuing solely the necessities to becoming mature consumers who are more demanding about goods and services. For example, the emotional factors such as whether or not the commodity can reflect the personality of the buyer will greatly influence their purchase decisions. This is because as income increases the personal expression and self-awareness of consumers will grow continuously. This not only applies to commodities such as cars or personal care products, but also to mass merchandise such as milk or detergent.
As a consequence, niche brands are likely to become more popular in tomorrow's China. So far, general public brands have been very successful in China. This is partly because when consumers were buying their first refrigerator, first car or first phone of their lives, they had little experience or guidance about a good’s quality or safety apart from the brand and its reputation. But as Chinese shoppers become more experienced buyers, they’ll gradually gain that sense of security that prompts people to choose niche brands. Besides, this will also become a way of "trading up" to reflect their personality.
About the loyalty to brands
Though Chinese consumers adore branded goods, their fidelity to a certain brand is much lower than that of their Western counterparts. They generally prefer to choose from several of their favorite marks.
What this implies is that as the Chinese become richer, the young and affluent class will grow more loyal to the brands they love. On the other hand, there will also be a substantial growth of brands that Chinese shoppers can choose from so the large consumer goods companies will face greater competition and have to adapt to this trend.
It’s only in the last ten years that China has started to have modern retail channels. Shopping is not just a necessity but also a recreational activity for many households. This is particularly true for migrant workers or the consumers in smaller provincial cities. But the entertainment value of shopping malls will decrease as the recreational industry and personal consumption patterns develop.
For instance, in 2020 e-commerce will account for 15% of China’s retail sales. Certain categories of consumer electronic goods will contribute up to 40 % of these sales while the e-commerce in daily necessities should grow from 1% today to about 10%.
What does China need to do now?
It’s still another eight years before China technically turns into a consumption-led economy. So what does it lack most on its way to this transformation? The answer is a system in which vigorous laws, regulations and market governance are set up to encourage spending.
In the American, Japanese or European markets, from buying water to whatever is sold in markets such as food or shoes, consumers are much more protected from buying fake goods because of vigorous governmental inspections. Anyone committing fraud will face a severe penalty and can lead to the ruin of a company. These strict consumer protection systems result in the safest consuming markets in the developed world.
Needed: a sound consumer protection system
In contrast, Chinese markets are still in chaos. A terrifying example is that even after the revelation of the scandal of children being poisoned with melamine-tainted infant milk, similar vicious incidents were discovered in 2009 and again recently in Gansu, Chinghai and Jilin provinces where the melamine dose exceeded the allowed maximum by 500 times.
The original poisoning caused the death of several toddlers while affecting tens of thousands of the others in 2008. At the same time, endless scandals involving counterfeit goods such as the oil recycled from garbage, adulterated drugs and liquors continued to be disclosed.
While it is the “World’s factory”, alas, China is far from producing its own “world-class brands” for its domestic consumers. To improve such an adverse market and give birth to a healthy consumption-led economy, China has a long way to go in reforming its consumer protection system.
Quality control is the typical characteristic of a consumer society. China hasn’t yet become a consumer society. Consumers haven’t been taken seriously so its businesses don’t grasp the notion of brands. They don’t yet know how to manage and use brands properly. China's way of getting involved in globalization has been by providing the grunt labor.
Thus, what China is most lacking in the transitional period over the next few years is neither capital, nor techniques, but vigorous systems and dependable laws.
Another key to lead China into a bona fide consumer economy is the safeguard of a quicker and more stable growth of people’s real revenue to lay the foundation for spending power.
At the 18th Congress of the Chinese Communist Party, the government set the goal of doubling China’s gross domestic product (GDP) as well as the per capita income of urban and rural residents by 2020. This is the first time the Chinese Communist Party has concretely mentioned the target of doubling people’s income.
To accomplish the goal, the authorities have to find the entry point of a sustained breakthrough in reforming income distribution, such as the introduction of an inheritance tax. Even if the starting point is as low as, say, 10%, it will still play a role. For the rich, this might encourage them to consider anticipating consumption or transfering their assets. All of this can to a certain extent stimulate spending. As for the value-added tax, even if it’s revised down by a symbolic 1%, it could still relieve the pressure on businesses, increases people’s revenue and promote consumption.
The government should widen its policies for stimulating consumption, and explore appropriate measures such as tax exemptions, tax rebates, and interest subsidies. For example, goods such as automobiles and cosmetics which were once considered as luxury items, and therefore subject to a consumption tax, have become basic consumer goods. The consumption tax should either undergo a gradual reduction or simply be abolished.
As China enters a middle and late industrialization period, and a peak of urbanization, services-led consumption in the sectors of housekeeping and elderly care should be included in government policy to promote the Chinese economy. Not only will this help China’s economic growth, but also improve people’s well-being.
With Halloween arriving, we have dug up the would-be ghosts of documented evil and bloodshed from the past.
When Hallows Eve was first introduced as a Celtic festival some 2,000 years ago, bonfires and costumes were seen as a legitimate way to ward off ghosts and evil spirits. Today of course, with science and logic being real ghostbusters, spine-chilling tales of haunted forests, abandoned asylums and deserted graveyards have rather become a way to add some mystery and suspense to our lives.
And yet there are still spooky places around the world that have something more than legend attached to them. From Spain to Uzbekistan and Australia, these locations prove that haunting lore is sometimes rooted in very real, and often terrible events.
Shahr-e Gholghola, City of Screams - Afghanistan
The ruins of Shahr-e Gholghola, the City of Screams, in Afghanistan
According to locals, ghosts from this ancient royal citadel located in the Valley of Bamyan, 150 miles northwest of Kabul, have been screaming for 800 years. You can hear them from miles away, at twilight, when they relive their massacre.
In the spring 1221, the fortress built by Buddhist Ghorids in the 6th century became the theater of the final battle between Jalal ad-Din Mingburnu, last ruler of the Khwarezmian Empire, and the Mongol Horde led by Genghis Khan. It is said that Khan's beloved grandson, Mutakhan, had been killed on his mission to sack Bamyan. To avenge him, the Mongol leader went himself and ordered to kill every living creature in the city, children included.
The ruins today bear the name of Shahr-e Gholghola, meaning City of Screams or City of Sorrows. The archeological site, rich in Afghan history, is open to the public and though its remaining walls stay quiet during the day, locals say that the night brings the echoes of fear and agony. Others claim the place comes back to life eight centuries ago, and one can hear the bustle of the city and people calling each other.
Gettysburg, Civil War battlefield - U.S.
View of the battlefields from Little Round Top, Gettysburg, PA, USA
Even ghosts non-believers agree there is something eerie about Gettysbury. The city in the state of Pennsylvania is now one of the most popular destinations in the U.S. for spirits and paranormal activities sight-seeing; and many visitors report they witness exactly what they came for: sounds of drums and gunshots, spooky encounters and camera malfunctions in one specific spot… just to name a few!
The Battle of Gettysburg, for which President Abraham Lincoln wrote his best known public address, is considered a turning point in the Civil War that led to the Union's victory. It lasted three days, from July 1st to July 3rd, 1863, but it accounts for the worst casualties of the entire conflict, with 23,000 on the Union side (3,100 men killed) and 28,000 for the Confederates (including 3,900 deaths). Thousands of soldiers were buried on the battlefield in mass graves - without proper rites, legend says - before being relocated to the National Military Park Cemetery for the Unionists.
Since then, legend has it, their restless souls wander, unaware the war has ended. You can find them everywhere, on the battlefield or in the town's preserved Inns and hotels turned into field hospitals back then.
Belchite, Civil War massacre - Spain
Old Belchite, Spain
Shy lost souls wandering and briefly appearing in front of visitors, unexplainable forces attracting some to specific places of the town, recorded noises of planes, gunshots and bombs, like forever echoes of a drama which left an open wound in Spanish history…
That wound, still unhealed, is the Spanish Civil War; and at its height in 1937, Belchite village, located in the Zaragoza Province in the northeast of Spain, represented a strategic objective of the Republican forces to take over the nearby capital city of Zaragoza.
Instead of being a simple step in their operation, it became the field of an intense battle opposing the loyalist army and that of General Francisco Franco's. Between August 24 and September 6, more than 5,000 people were killed, including half of Belchite's population. The town was left in rubble. As a way to illustrate the Republicans' violence, Franco decided to leave the old town in ruins and build a new Belchite nearby. All the survivors were relocated there, but they had to wait 15 years for it to be complete.
If nothing particular happens in new Belchite, home to around 1,500 residents, the remains of old Belchite offer their share of chilling ghost stories. Some visitors say they felt a presence, someone watching them, sudden change of temperatures and strange sounds. The ruins of the old village have been used as a film set for Terry Gilliam's The Adventures of Baron Munchausen - with the crew reporting the apparition of two women dressed in period costumes - and Guillermo del Toro's Pan's Labyrinth. And in October 1986, members of the television program "Cuarta Dimensión" (the 4th dimension) spent a night in Belchite and came back with some spooky recordings of war sounds.
Gur Emir, a conquerer’s mausoleum - Uzbekistan
Gur Emir (Tomb of Timur) in Samarkand, Uzbekistan
The news echoed through the streets and bazaars of Samarkand: "The Russian expedition will open the tomb of Tamerlane the Great. It will be our curse!" It was June 1941, and a small team of Soviet researchers began excavations in the Gur-Emir mausoleum in southeastern Uzbekistan.
The aim was to prove that the remains in the tomb did in fact belong to Tamerlane — the infamous 14th-century conqueror and first ruler of the Timurid dynasty who some historians say massacred 1% of the world's population in 1360.
Still, on June 20, despite protests from local residents and Muslim clergy, Tamerlame's tomb was cracked open — marked with the inscription: "When I Rise From the Dead, The World Shall Tremble."
Only two days later, Nazi Germany invaded the Soviet Union, with the people of Samarkand linking it to the disturbing of Tamerlane's peace. Amid local protests, the excavation was immediately wrapped up and the remains of the Turkish/Mongol conqueror were sent to Moscow. The turning point in the war came with the victory in the Battle of Stalingrad — only a month after a superstitious Stalin ordered the return of Tamerlane's remains to Samarkand where the former emperor was re-buried with full honors.
Gamla Stan, a royal massacre - Sweden
The red house of Gamla Stan, Stockholm, Sweden
After Danish King Kristian II successfully invaded Sweden and was anointed King in November 1520, the new ruler called Swedish leaders to join for festivities at the royal palace in Stockholm. At dusk, after three days of wine, beer and spectacles, Danish soldiers carrying lanterns and torches entered the great hall and imprisoned the gathered nobles who were considered potential opponents of the Danish king. In the days that followed, 92 people were swiftly sentenced to death, and either hanged or beheaded on Stortorget, the main square in Gamla Stan (Old Town).
Until this day, the Stockholm Bloodbath is considered one of the most brutal events in Scandinavian history, and some people have reported visions of blood flowing across the cobblestoned square in early November. A little over a century later, a red house on the square was rebuilt as a monument for the executed — fitted with 92 white stones for each slain man. Legend has it that should one of the stones be removed, the ghost of the represented will rise from the dead and haunt the streets of Stockholm for all eternity.
Port Arthur, gruesome prison - Australia
Port Arthur Prison Settlement, Tasmania, Australia
During its 47-year history as a penal settlement, Port Arthur in southern Tasmania earned a reputation as one of the most notorious prisons in the British Empire. The institution — known for a brutal slavery system and punishment of the most hardened criminals sent from the motherland— claimed the lives of more than 1,000 inmates until its closure in 1877.
Since then, documented stories have spanned the paranormal gamut: poltergeist prisoners terrorizing visitors, weeping children roaming the port and tourists running into a weeping 'lady in blue' (apparently the spirit of a woman who died in childbirth). The museum even has an 'incidence form' ready for anyone wanting to report an otherworldly event.
Poveglia Island, plague victims - Italy
Poveglia Island, Italy
Located off the coast of Venice and Lido, Poveglia sadly reunites all the classical elements of a horror movie: plagues, mass burial ground and mental institute (from the 1920's).
During the bubonic plague and other subsequent pandemics, the island served as a quarantine station for the sick and anyone showing any signs of what could be Black Death contamination. Some 160,000 victims are thought to have died there and the seven acres of land became a mass burial ground so full that it is said that human ash makes up more than 50% of Poveglia's soil.
In 1922 a retirement home for the elderly — used as a clandestine mental institution— opened on the island and with it a fair amount of rumors involving torture of patients. The hospital and consequently the whole island was closed in 1968, leaving all the dead trapped off-land.
Poveglia's terrifying past earned it the nickname of 'Island of Ghosts'. Despite being strictly off-limits to visitors, the site has been attracting paranormal activity hunters looking for the apparition of lost and angry souls. The island would be so evil that some locals say that when an evil person dies, he wakes up in Poveglia, another kind of hell.
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