China’s Rural Consumption Market: with Focus on the Suburbs of Beijing


Furong Jin and Jonghyuk Oh






As the Chinese government changed the economic growth paradigm to domestic demand economy after the 2008 financial crisis, Korean enterprises now should view China as the domestic demand market rather than a production base and accelerate advancement into the China market. To do so, Korean enterprises need to pay attention not only to the urban regions but also to the rural market that is recently being vitalized. The future urban market is expected to expand continuously on the strength of the Chinese government’s rural consumption vitalization policy.

Under the circumstances where Chinese rural areas emerge as the important market, this research derived the ways for Korean enterprises to advance into the Chinese rural market through analysis on current conditions of Chinese rural consumption market, characteristics of rural consumers, and the case analysis on the enterprises that have advanced into the rural market. To conduct effective analysis, this research used diverse analytical methods such as statistical analysis together with literature research, questionnaire survey, and case study.

The analysis results of the current rural consumption market conditions showed that the average annual expansion of the Chinese rural consumption market is 9% in terms of absolute size. In the 2000s, however, the size of the Chinese rural consumption market has continuously decreased due to the urban population increase, along with urbanization and rapid growth of income level of urban households. Furthermore, the rural area consumption composition has changed and the food expenditure has decreased drastically, whereas the expenditures on clothing, housing, durable consumption goods, and transport communication service have increased.

The rural consumption in China has been restricted by slow income growth, low purchasing power, obsolete infrastructures, low-level public services, and inadequate distribution system. However, the Chinese government is currently promoting policies, such as the increase in rural household incomes, promotion of short-term consumption boosting policy, construction of modern distribution network and supply chain, and improvement of the social welfare system. As a result, the rural consumption market is expected to be gradually vitalized.

In order to determine the characteristics of rural consumers, a questionnaire survey was conducted on rural households in the suburbs of Beijing. The results of the survey showed that the rural consumers preferred high-quality, inexpensive, and practical products. They acquired the information on these products mainly through TV and word-of-mouth. The survey results regarding the knowledge of Korean products showed that in the image of Korean products, “so-so” was the most responses, and regarding the decision factors for purchasing Korean products, quality was most cited, followed by price and design, and regarding the preferred Korean products, home appliances were most cited, followed by health food, stationery, baby products, and cosmetics.

The enterprises, which were successful in the Chinese rural market, consisted mostly of Chinese local enterprises. However, the foreign capital enterprises, including the Korean enterprises, are still limited to the first-tier large city markets. In addition, their advancement into the rural areas, which are latent markets, is minimal. The foreign capital enterprises are unaware of the characteristics of the rural markets. Moreover, they are less competitive in brand awareness, price, distribution network, and convenience in after-sales service than the local enterprises. The key success factors of the enterprises, which have been successful in the Chinese rural market, included sufficient market analysis, development of products based on the demands of the rural consumers, construction of broad distribution network and supply chain, and friendly customer service.

The research suggests some promising fields for advancing into the Chinese rural market, such as leisure food and baby food (food sector), heating facilities and sanitary equipment (housing), cellular phones (durable consumer goods), baby goods and cosmetics (daily necessities), additional services for cellular phones (transportation and communication), and stationeries (education, cultures and entertainment services). Meanwhile, the advancement ways of Korean enterprises into the rural market have been derived.

First, rural areas in the suburbs of large cities, instead of the complete rural areas, should be targeted. The rural areas near the large cities have high levels of income and consumption. Furthermore, the purchasing power is formed to a certain extent, accessibility to large cities is satisfactory, and the urban consumption culture is influential. As a result, the risk involved for the advancement into a rural market can be reduced.

Second, practical and inexpensive products should be developed for the consumers in the rural areas as opposed to expensive and high-tech products, which are equipped with diverse functions.

Third, rural and natural environment-specialized products should be developed. During the stage of product development, characteristics of rural consumers and special environment factors of the rural areas (such as frequent thunderstorm and unstable voltage) should be considered.

Fourth, the existing distribution network should be actively utilized and the broad supply chain should be built. Direct sales seemed difficult for small and medium-sized enterprises to adopt; however, indirect sale methods via distributors have to be utilized positively. If the supply chain is not secured properly, the distribution cost will rise, thereby affecting the product prices and rural consumption.

Fifth, the TV and the surrounding people should be utilized for product promotion. Contrary to urban consumers, who acquire product information mainly through the Internet, newspapers, or magazines, rural consumers collect product information through TV and acquaintances. As a result, TV should be actively utilized and brand promotion should be performed through word of mouth by the influential people in the corresponding areas.

Sixth, a strategic marketing plan for the rural area is also important. In some part of the rural areas, customary consumption during events, such as consecutive holidays or big holidays, still remains; therefore, this needs to be positively utilized.

In addition to these, the meticulous pre-survey on the market, customized advancement through market segmentation and selection of target market, construction of broad service network and friendly customer service, enhancement of quality competitiveness and coping with infringement of intellectual property rights, reinforcement of CSR, positive utilization of the government policies, and establishment of the relationship with the government, all of which can be applied equally to the urban market, should not be neglected.

The government should reinforce research on the rural market, build a network between the central and local governments, and make efforts to raise the national image.