Southwestern China is a fast-growing region with affluent consumers. As such, it is a region that Australian businesses should consider developing.
In 2019, the Australian Chamber of Commerce surveyed 220 Australian businesses active in China. They were asked which cities they had invested in that year. The Tier 1 cities of Shanghai, Beijing, Guangzhou and Shenzhen made up 79% of the total spend.
This result showed how fast-developing Southwestern China cities like Chengdu, Chongqing and Xi’an are often relegated below Tier 1 cities in importance for foreign businesses.
Yet recent government plans announced for Southwestern China should give Australian businesses confidence that it is a region worth developing.
Take the Chengdu-Chongqing Economic Circle. This is a group of 14 cities with 96 million people driving A$1.47 billion of GDP. In 2021, the Chengdu-Chongqing economic circle represented 6.5% of the national total. Source: People's Government of Sichuan Province (sc.gov.cn). China’s “master plan” for this economic circle is to further develop the cities of Chengdu and Chongqing to act as hubs for the region.
The region is home to sophisticated and affluent consumers. Many have more disposable income than their peers in Tier 1 and Tier 2 cities. Chongqing residents rank third nationwide for spending on luxury items. Louis Vuitton chose Chengdu for one of its three flagship stores in China. The Ministry of Commerce hosted the first cross-border e-commerce expo in Southwestern China in 2021, in recognition of the region’s demand for imported goods.
Chengdu can feel very different to Tier 1 cities. Chengdu locals enjoy a relaxed lifestyle, similar to the Aussie “no worries” way of life. Chengdu also has a thriving party scene and open, LGBTQI+ community.
Australian businesses should explore how their brand can best connect with the diverse consumers across China’s Southwestern cities.
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We commissioned this insight from China Skinny. China Skinny is a Shanghai-based market research consultancy.