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BUSINESS

Mainland China Up 7% to Reach $6.7 in Licensed Sales

By Karina Masolova, karina@plainlanguagemedia.com

For those of you heading to China Licensing Expo in Shanghai—or who are just thinking of doing business in the fifth-ranking market for licensed goods worldwide, we’ve put together a quick cheat sheet breaking down the numbers behind mainland China.

China is remarkable in terms of its relatively rapid slowdown. In 2013, licensed retail sales grew by 8.0%; in 2014, by 9.2%; and in 2015, by 6.0%. In comparison, the 2015–2016 growth rate of 7.0% was an improvement, but it still outperformed GDP at 6.7% in 2016. In this way, China more closely resembles a mature market like the U.S. or U.K., where licensed sales tend to outperform GDP.

While mainland China has enjoyed double-digit GDP throughout the last decade, these growth rates are not expected to be seen again. The biggest challenge for the country’s economy is expected to be the move of “temporary” factory laborers from its large cities and back into the countryside. The decline of its China’s cheap manufacturing labor base will mean that the country’s economy will grow more reliant on imports as well as consumer spending. As mobile penetration increases and ecommerce systems develop, domestic spending is expected to remain stable even in rural areas.

Most of the new growth in China is expected to come from its Tier 2 cities, from which the new middle class is already emerging. The Chinese consumer is increasingly becoming more brand-conscious, and are eager to “trade up” as their fortunes improve. The biggest spending categories, generally, are food/beverages (although it will necessarily be capped at a certain point), apparel, leisure, health and beauty, and travel.

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