A Wealth of Opportunity

Chinese Consumers and Their Shifting Demand for Financial Services

November 2, 2016
Louise Keely, President, Brian Anderson, Associate Program Director, and Ben Cheng, Senior Methodologist  

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Over the past several decades, China has brought hundreds of millions of citizens out of poverty and created a thriving consumer class that has made it the second-largest consumer market in the world in aggregate terms. But, on a per-capita basis, consumption is a fraction of the level in mature economies.

A Wealth of Opportunity: Chinese Consumers and Their Shifting Demand for Financial Services finds vast untapped demand among Chinese consumers for household financial services products such as deposit accounts, credit cards, and debit cards. It identifies two scenarios for how growth in Chinese financial services could accelerate consumption. Under the most likely scenario, expanded access will add $650 billion to Chinese consumption over the next decade, but it could be as much as $950 billion.

In this report, we describe the forces that drive demand for financial services in China and how those forces will change in the next ten years, producing the added consumption we estimate is possible.

Among the report’s key findings:

  • Compared to the United States, household financial services penetration in China lags far behind the level expected based on relative levels of affluence and urbanization.
  • Household wealth in China is highly concentrated among urban consumers who have financial accounts (i.e., credit, savings, checking, etc.). Within that group, the top 10 percent hold nearly two-thirds of assets.
  • The rise in demand for financial services will vary across consumer groups depending on geography (rural vs. urban), level of wealth, and age cohort.
  • Rural, less affluent consumers will drive the growth of entry-level financial services such as deposit and savings accounts.
  • Urban, affluent consumers will drive growth of more complex financial products, but adoption will depend on age.

 

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