<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>kojakbt22 <NOBR>
</NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>10:03 pm </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>12626.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR><TD>May 2, 2009
CHINA'S POST-1979 CONSUMER CLASS
</TD></TR><TR><TD><!-- headline one : start --></TD></TR><TR><TD>Hey, big spenders
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Free-spending 'Phoenix' generation seen as both saviours and anti-heroes </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Grace Ng, China Correspondent
</TD></TR><TR><TD><!-- show image if available --></TD></TR><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
</TD><TD vAlign=bottom>
Real estate professional Liu Zhimo (left) browsing at a store in Wudaokou. She is part of a generation that has spending power of S$202 billion but close to zero savings. -- ST PHOTO: GRACE NG
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
BEIJING: Ms Liu Zhimo is doing her part, however small, to help China's economy get through its worst slump in more than a decade.
The stylish real estate management professional has come up with her very own economic stimulus package: She spends every cent and more of her 4,000 yuan (S$880) monthly salary in Beijing's shopping malls.
'I don't save any money,' said Ms Liu, 28, adding that her friends share her free-spending attitude. 'I prefer to spend it all on cosmetics, clothes and dining, and I buy on credit most of the time.'
She hardly bats a mascara-laden eyelash as she spends hundreds of yuan at a time on foreign brands such as Chanel and Dior. But she is equally happy using both of her credit cards to buy local brands at places such as Wudaokou Shopping Centre, which is teeming with students and young information technology professionals from the universities and tech park nearby.
Ms Liu is part of the so-called Phoenix generation, the label for more than 300 million consumers aged 16 to 30 who wield some US$135 billion (S$202 billion) worth of spending power, according to consultancy Pearl Research.
While Beijing has urged the country's generally thrifty people to spend more on products made in China, the Phoenix group needs no encouragement.
'We believe this generation will be the core driver of consumer spending in China,' said Pearl Research managing director Allison Luong.
Members of the post-1979 generation - born after China instituted its one-child policy 30 years ago and amid booming economic growth and an influx of foreign brands - have a savings rate close to zero. Furthermore, they do not spend just their own pay; they have 'six pockets' to dig into - a pair of parents and four grandparents, said Ms Chen Yinan. The postgraduate student, who is in her 20s, recently wrote a paper about her peers' spending habits.
These young consumers 'not only have money. They also have their own perspectives on how to spend money. This group is dramatically different from other age groups in China in terms of habits, lifestyles and ideology', she said.
Unlike the older generation who cling to personal savings because they are haunted by memories of deprivation and a flimsy social safety net during the Cultural Revolution, today's young Chinese have spending habits that fly in the face of traditional Chinese values.
'The post-1979 generation has spending habits quite similar to Americans' - they are heavy users of credit cards, and they may not be aware of the risks of overspending,' said Professor Zhao Hao, a marketing expert at the Cheung Kong Graduate School of Business.
In fact, Chinese aged 18 to 24 are the most active users of credit cards, according to a Nielsen survey of 11,500 Chinese consumers across 18 cities last year.
Foreign brands are already recognising that the Phoenix generation is their bread-and-butter in China.
Lancome, the largest luxury cosmetics brand in China, tailored its anti-ageing product line to convince young people to start caring for their skin earlier, said the McKinsey consultancy.
Gucci and Louis Vuitton have come up with 500-yuan to 1,000-yuan bags exclusively for sale in China so that young women can afford to buy the real thing rather than settle for fakes.
Analysts reckon that rural farmers, as well as young urban Chinese, many of whom are first-time buyers of big-ticket items such as cars and white goods, helped to drive up consumption in the first quarter. That was when the government gave rebates on cars and electronics products to boost spending.
But while farmers have been heralded by China's media as heroes of domestic consumption, the post-1979 consumers have received nary a mention even though they have the highest ratio of spending to income across the entire population. This group does not contribute much to domestic consumption in the short term because of its relatively lower income, said Prof Zhao.
'But when the post-1979ers reach their 40s, I expect them to contribute much more to domestic spending than the current group of middle- to high-income earners who drive consumption,' he said.
Ironically, it may be their extravagance that also makes the Phoenix generation the anti-heroes of domestic spending in China. At a high-end Beijing shopping mall, a woman in her 20s decked out in Gucci and Prada from head to high-heeled toe told The Straits Times she had five credit cards.
'I don't need to look at price tags when I buy things as I'm spending my uncle's and parents' money,' said the woman, who gave her name as 'Bebe'.
By contrast, the government media has highlighted websites and blogs popular among young Chinese professionals that extol the virtues of frugality.
Beijing office worker Wang Hao, 24, is one of 55,000 participants in a '100-yuan-a-day' spending campaign. In his blog, he said 'the financial crisis has given a lesson on spending to young people in China'.
Still, the day may come when the post-1979ers are recognised for both their earning and spending power.
In 2020, the annual disposable income of Chinese consumers is expected to more than quadruple from 15 billion yuan last year to 65.4 billion yuan, Euromonitor has forecast. Ms Liu looks forward to this: 'I'm confident the economy will recover soon, and I'll be earning more in future. So I can still spend more now.'
</TD></TR></TBODY></TABLE>
CHINA'S POST-1979 CONSUMER CLASS
</TD></TR><TR><TD><!-- headline one : start --></TD></TR><TR><TD>Hey, big spenders
</TD></TR><TR><TD><!-- headline one : end --></TD></TR><TR><TD>Free-spending 'Phoenix' generation seen as both saviours and anti-heroes </TD></TR><TR><TD><!-- Author --></TD></TR><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Grace Ng, China Correspondent
</TD></TR><TR><TD><!-- show image if available --></TD></TR><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Real estate professional Liu Zhimo (left) browsing at a store in Wudaokou. She is part of a generation that has spending power of S$202 billion but close to zero savings. -- ST PHOTO: GRACE NG
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
BEIJING: Ms Liu Zhimo is doing her part, however small, to help China's economy get through its worst slump in more than a decade.
The stylish real estate management professional has come up with her very own economic stimulus package: She spends every cent and more of her 4,000 yuan (S$880) monthly salary in Beijing's shopping malls.
'I don't save any money,' said Ms Liu, 28, adding that her friends share her free-spending attitude. 'I prefer to spend it all on cosmetics, clothes and dining, and I buy on credit most of the time.'
She hardly bats a mascara-laden eyelash as she spends hundreds of yuan at a time on foreign brands such as Chanel and Dior. But she is equally happy using both of her credit cards to buy local brands at places such as Wudaokou Shopping Centre, which is teeming with students and young information technology professionals from the universities and tech park nearby.
Ms Liu is part of the so-called Phoenix generation, the label for more than 300 million consumers aged 16 to 30 who wield some US$135 billion (S$202 billion) worth of spending power, according to consultancy Pearl Research.
While Beijing has urged the country's generally thrifty people to spend more on products made in China, the Phoenix group needs no encouragement.
'We believe this generation will be the core driver of consumer spending in China,' said Pearl Research managing director Allison Luong.
Members of the post-1979 generation - born after China instituted its one-child policy 30 years ago and amid booming economic growth and an influx of foreign brands - have a savings rate close to zero. Furthermore, they do not spend just their own pay; they have 'six pockets' to dig into - a pair of parents and four grandparents, said Ms Chen Yinan. The postgraduate student, who is in her 20s, recently wrote a paper about her peers' spending habits.
These young consumers 'not only have money. They also have their own perspectives on how to spend money. This group is dramatically different from other age groups in China in terms of habits, lifestyles and ideology', she said.
Unlike the older generation who cling to personal savings because they are haunted by memories of deprivation and a flimsy social safety net during the Cultural Revolution, today's young Chinese have spending habits that fly in the face of traditional Chinese values.
'The post-1979 generation has spending habits quite similar to Americans' - they are heavy users of credit cards, and they may not be aware of the risks of overspending,' said Professor Zhao Hao, a marketing expert at the Cheung Kong Graduate School of Business.
In fact, Chinese aged 18 to 24 are the most active users of credit cards, according to a Nielsen survey of 11,500 Chinese consumers across 18 cities last year.
Foreign brands are already recognising that the Phoenix generation is their bread-and-butter in China.
Lancome, the largest luxury cosmetics brand in China, tailored its anti-ageing product line to convince young people to start caring for their skin earlier, said the McKinsey consultancy.
Gucci and Louis Vuitton have come up with 500-yuan to 1,000-yuan bags exclusively for sale in China so that young women can afford to buy the real thing rather than settle for fakes.
Analysts reckon that rural farmers, as well as young urban Chinese, many of whom are first-time buyers of big-ticket items such as cars and white goods, helped to drive up consumption in the first quarter. That was when the government gave rebates on cars and electronics products to boost spending.
But while farmers have been heralded by China's media as heroes of domestic consumption, the post-1979 consumers have received nary a mention even though they have the highest ratio of spending to income across the entire population. This group does not contribute much to domestic consumption in the short term because of its relatively lower income, said Prof Zhao.
'But when the post-1979ers reach their 40s, I expect them to contribute much more to domestic spending than the current group of middle- to high-income earners who drive consumption,' he said.
Ironically, it may be their extravagance that also makes the Phoenix generation the anti-heroes of domestic spending in China. At a high-end Beijing shopping mall, a woman in her 20s decked out in Gucci and Prada from head to high-heeled toe told The Straits Times she had five credit cards.
'I don't need to look at price tags when I buy things as I'm spending my uncle's and parents' money,' said the woman, who gave her name as 'Bebe'.
By contrast, the government media has highlighted websites and blogs popular among young Chinese professionals that extol the virtues of frugality.
Beijing office worker Wang Hao, 24, is one of 55,000 participants in a '100-yuan-a-day' spending campaign. In his blog, he said 'the financial crisis has given a lesson on spending to young people in China'.
Still, the day may come when the post-1979ers are recognised for both their earning and spending power.
In 2020, the annual disposable income of Chinese consumers is expected to more than quadruple from 15 billion yuan last year to 65.4 billion yuan, Euromonitor has forecast. Ms Liu looks forward to this: 'I'm confident the economy will recover soon, and I'll be earning more in future. So I can still spend more now.'
</TD></TR></TBODY></TABLE>
