Analysis and Development of China's Rural Consumer Market

Author: Minzhu and Jian Gao Publishing House
Publisher:
Publish Date: 2001-02-01
Features: Expanding the rural consumer market is only one important aspect of solving the critical issues of "rural, farmers, and agriculture" in China. Since the reform and opening-up, China's agriculture has achieved rapid development, and the lives of farmers have significantly improved. However, addressing the "three rural" issues remains a complex, arduous, and long-term task. This requires management scientists, government officials, and other relevant professionals in China to study Deng Xiaoping Theory diligently, uphold the spirit of seeking truth from facts, think deeply, strive to explore, and continuously summarize experience in practice. These words are true, but it is easy to say and difficult to do. This book is edited by Professor Cheng Siwei, Vice Chairman of the Standing Committee of the National People's Congress, Chairman of the China Minzhu Party, Director of the Management Science Committee of the National Natural Science Foundation of China, and President of the China Society of Soft Science. It is written by renowned experts and professors from the National Bureau of Statistics, the National Development and Reform Commission, the Chinese Academy of Social Sciences, the Ministry of Agriculture, and the China Information Institute of Commerce and Technology. The book is highly scientific, rigorous, and readable, possessing certain academic value. The Emergency Research on China's Reform and Development Issues is a project funded by the National Natural Science Foundation of China, which employs management science methods to study problems of concern to national leaders and the general public (including experts and scholars) that urgently need resolution. This series of books covers research on various topics, including how the government manages enterprises, housing reform, enterprise management, the East Asian financial crisis, social security, the reform of public institutions, overseas investment management, and the rural consumer market.
Excerpt: Housing is the largest consumer preference for Chinese farmers. Consumer behavior is influenced not only by their current absolute income but also by others' consumption expenditure and income (consumption demonstration) and their own past income and expenditure (consumption habits). The long-lasting "housing boom" in rural China is largely attributed to these two factors. Due to prolonged exposure to traditional Chinese culture and customs, farmers often regard owning their own home as a lifelong primary goal. Therefore, when their income increases, their primary consumption target is to build a house. Moreover, because housing has a strong "visibility" in rural areas, it often becomes a symbol of the owner's achievement, status, and wealth, easily sparking desires for comparison among people. Some farmers are willing to invest heavily in money and labor, repeatedly demolishing and rebuilding their homes to update them. Although farmers' incomes have increased since the reform and opening-up, housing consumption has consistently accounted for 14% to 18% of their consumption structure, second only to food and more than clothing. Research shows that in developed, moderately developed, and underdeveloped regions, for every additional yuan in per capita net income of farmers, per capita housing consumption expenditure will increase by 0.034 yuan, 0.0014 yuan, and 0.034 yuan, respectively. Additionally, for every 1% increase in per capita net income, per capita housing consumption expenditure will, on average, increase by 0.3316%, 0.0333%, and 1.4021%, respectively. The improvement in farmers' non-agricultural employment and their upward mobility in income levels (from below 5,000 yuan to above 5,000 yuan per capita net income) both expand housing consumption demand but do not significantly affect farmers' marginal propensity to consume. In my survey, I found that even in central regions like Jiangxi and Anhui, households have entered the third generation of the housing boom. The third-generation housing consists of multi-story buildings with aluminum alloy doors and windows, fine decoration, and an emphasis on exterior design and interior comfort. In Ba Yi Township, Nanchang County, Jiangxi Province, 3,800 out of 7,000 households have built new multi-story homes. A three-story house costs as little as 100,000 yuan and as much as 200,000 yuan. Farmers often save for years and even go into debt to complete this "major event."