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Updated: 2007-06-27 11:12

As ordinary people pay more attention to needs such as health, convenience and comfort, their consumption habits are also changing.

According to the National Bureau of Statistics, the average income of China's urban residents continued to grow rapidly last year. The 2006 survey about Chinese residents' quality of life by Horizon Research Consultancy Group also shows that urban residents are optimistic about income and living standards in the coming year.

Improving living standards enables city dwellers to go beyond basic material satisfaction, and pay more attention to demands such as health, convenience and comfort. But the trend also leads to changes in their consumption habits, which poses a new challenge for Chinese companies.

Health & convenience

Currently, 86 percent of urban residents recognize health as top priority, according to the Horizon Research's Health Index report of China's urban residents. As more people become white-collar workers, spending on sports, pressure-relief and healthcare services and products will increase. We have already seen people paying more to stay healthy. Presently, urban residents spend an average 62.42 yuan for tonics each month and 148.4 yuan at gyms.

Meanwhile, urban residents' entertainment interests are growing increasingly varied. According to the 2006 Life Style Survey of Chinese Urban Residents, city dwellers are spending more and more time in front of TV and computer screens. A click of a mouse or remote control helps people get the information and entertainment they want.

Meanwhile, visiting pubs, online chatting and attending parties are becoming popular among young city residents.

As their purchasing power rises, people are also presented with more choices. And urban residents are attaching more importance to individual expression. The phenomenon reinforces the idea that people are more concerned with emotional demands. Our study finds that 74.5 percent urban residents hope their clothes, accessories and so on are different from others and reflect their personal tastes.

The tastes of urban residents are changing at a rapid pace. Take clothes for example: during the past six months, urban residents bought 4.6 pieces of clothing on average. People born after 1980 bought 6.4 pieces of clothes.

Meanwhile some products that were used to be considered durable goods are now becoming fast moving consumer goods. More than 16 percent of urban consumers change mobile phones every year, and 26.1 percent of them change handsets every two years.

The trend makes it difficult for new products stay in fashion. No matter how popular they are when they launch, they will be quickly replaced by new items.

Traditional Chinese consumers focus mainly on the functionality of products, but now urban residents put more emphasis on personal demands, such as taste and style. We have found urban residents have spent an average of 10,000 yuan on fashion in the past year, about one-fifth of their total expenditure.

Fashion is now becoming an important part of the economy. More than 40 percent of city dwellers think fashion is an important part of their life and are willing to spend more to become fashionable.

There is a phenomenon worth mentioning regarding fashion spending. People at different income levels are willing to pay for something beyond their income level. For example, low-income urban residents have developed a taste for luxury products and some of them are willing to buy luxury goods by reducing their expenditure on daily consumption.

Also, those with comparatively lower incomes, such as fresh graduates and young students, allocate more than one-third of their expenditures on fashion consumption, far more than senior white-collar workers and the new rich. We found that more than 20 percent of the people we surveyed have saved for a while to buy luxury goods.

The trends we mentioned above are now the most dramatic changes in the economic life of Chinese people. But they only represent the nation's affluent city residents. Actually, despite growing consumption, there is still a huge low-income population with very limited purchasing power.

Yuan is chairman of Horizon Research Consultancy Group and Wang is a project manager