According to the National Bureau of Statistics, retail sales in China increased 14.9% year-on-year to CNY2.12trn ($272bn) in the first-quarter.
Theoretically speaking, it said that urban retail sales rose 15.5% to CNY1.43trn, on the other hand retail sales in rural areas jumped 13.7% to CNY685.5bn, as per the news published on Kmcity.
Talking about food products, their sale in the quarter increased 22.4% year-on-year, on the other hand those of apparel were up 27.2%. Likes of meat, poultry, and eggs increased 32.5%, but the most notable growth was seen in the jewellery segment, which increased by a whopping 37.9%. Moreover, sports and entertainment products saw sales increase up to 14.5%.
The pivotal factor responsible for such an impressive increase remains the increase in personal income over the last few months. It is worth mentioning in this regard that personal income increased $65.4 billion, equivalent to 0.6 percent, while the DPI (Disposable Personal Income) increased $53.8 billion, equivalent to 0.5 percent, in the month of February, if the figures of Bureau of Economic Analysis are to be believed.
As is the case with any country, economic development, increasing buying power & most importantly changing consumption patterns are the main drivers of growth in China's retail market. Apart from that, Chinese government is working overtime to encourage spending by customers to spur growth in the fastest-growing economy of world as it minimizes corporate investment. Not so long ago, Wen Jiabao, the Prime Minister, lowered duties for farmers, enhanced minimum wages as well as sanctioned plans for raising income-tax thresholds.
Interestingly, rural incomes have increased quicker as compared to the urban incomes in the last two years or so, as food and grain prices have also increased and the government has minimized agriculture taxes. Despite all this, retail sales in rural areas, statistically home to three-fifths of the population, in general amount to only half the level in urban areas, government data indicate.
Urbanization and rising incomes are luring foreign retailers such as Carrefour and Wal-Mart Stores, which are boosting their expansion in China after the govt. lifted restrictions to adhere to its WTO obligations.
As per the RNCOS report, "China Retail sector Analysis (2006-2007)" The more the economy expands and the more integrated it becomes with the regional and global economy, the more dramatic will be the implications for its partner economies.
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