China: sophisticated demand, dramatic supply

More than 1,000 businessmen from 420 companies, government officials and economists participated in the first Nielsen China Forum in Shanghai.

Mitch Barns, the president of Nielsen’s China affiliate told at the forum that thanks to the long and steady development of the Chinese economy consumers have more money to spend now than before. This situation urged FMCG manufacturers to improve product supply. Chinese consumer confidence has grown and shoppers’ demand is more sophisticated than before. Mr Barns pointed out that a couple a years ago there had hardly been competition on the supplier side, but recently the number of available goods multiplied, new companies entered the market and distribution improved as well. Shopping frequency increased in both traditional and modern stores. Slightly elevated food prices also contributed to the fact that FMCG retail sales augmented by 14 percent in 2009 in the five most important cities. Mitch Barns also told that despite positive trends it is not easy for a company to expand in China because competition is very strong. His opinion about brands was that multinational companies have few China-specific innovations, while local companies who know their consumers very well increased their innovation activity. The result: local companies have been successful in the premium segment, which used to be the exclusive domain of international companies.