These Lower-Tier Chinese Cities Will Have 2 Million or More 'High-Income' Residents by 2030

Chinese cities like Foshan, Wenzhou, or Changsha may not be considered to be among the country's luxury epicenters, but a new study by The Economist Intelligence Unit finds that by 2030, lower-tier cities like these will have more “high-income” consumers than Beijing has now. According to the “Chinese Consumer in 2030” report released this week, 35 percent of China’s population is predicted to be “upper-middle class” or above by 2030. This will amount to about 480 million people, marking a massive increase from the current estimate of 132 million upper-middle class people in China (10 percent of the population). The Economist defines a concept of “upper-middle class” as anyone with disposable income of at least US$10,000. Meanwhile, luxury retailers will be especially interested in tracking the growth of “high-income” earners, which it categorizes as those with RMB200,000 (almost US$30,000) in disposable income—a group that will surpass 10 million people in Shanghai by 2030 (up from around 4 million now). But it’s not just the staggering Tier 1 city growth in high-income consumers that is especially of interest to luxury brands—it’s also their populations' rapid expansion in smaller cities across China. The report finds that Shanghai, Beijing, Shenzhen, and Guangzhou will continue to dominate as the top four cities for number of high-income consumers, respectively, in 2030. But a staggering number of smaller cities will also have passed up where the top tier is at now, which is set to have a dramatic impact on the ways retailers target consumers in these cities. Tianjin is expected to surge to fifth place by 2030 as the government works to incorporate it into the “Jing-Jin-Ji” metropolis. Meanwhile, southern cities Hangzhou and Suzhou will be sixth and eighth, while Sichuan powerhouses Chongqing and Chengdu will come in seventh and ninth. The 2030 high earner population projections for all of these cities are higher than Beijing’s number as of 2015, which is about 2 million people. Many other smaller cities ranking after Chengdu will surpass this 2 million benchmark, including Wenzhou, Nanjing, Foshan, Changsha, Qingdao, and Ningbo. Rounding out the list of top 20 cities for high-income individuals will be Wuhan, Wuxi, Jinan, Xiamen, and Xi’an. Growing incomes will lead to diversified spending and a demand to upgrade to more premium brands and expensive options, says the report, which notes that the average Chinese consumer must now allocate 30 percent of their income to food. It also notes that even beyond the top 20 cities listed, there are prime options for growth, including Zhuhai in Guangdong, which will have a population with 36 percent high-income consumers by 2030, while Shaoxing in Zhejiang will have 26 percent. Income growth will not take off in all cities equally, however, as the ones primed for growth have specific advantages (for example Qingdao and Ningbo are port cities while Foshan is part of the Pearl River Delta Economic Zone that also encompasses its giant neighbors Shenzhen and Guangzhou). The report notes that “those undergoing industrial restructuring risk being left behind,” and China will still suffer from rampant income inequality geographically even as some cities reach the levels Beijing and Shanghai are at now. This article was published earlier in our weekly newsletter. Sign up through our “Newsletter Sign Up” box on the right.

These Lower-Tier Chinese Cities Will Have 2 Million or More 'High-Income' Residents by 2030

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Published November 04, 2016

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These Lower-Tier Chinese Cities Will Have 2 Million or More 'High-Income' Residents by 2030