China Food & Drink Report 2012 Q2

Given the high savings rate of the Chinese consumer, private consumption will be an outperformer to the manufacturing, investment and external sectors of China in 2012. A high savings rate means that the household sector is relatively well cushioned from any negative economic shock to the investment sector, and consumer spending should stay relatively firm. That said, the consumer will not emerge unscathed from the economic downturn as the negative shock to housing wealth is likely seriously to subdue domestic demand growth. Nonetheless, the tremendous potential of the Chinese consumer market means that foreign direct investment in the Chinese consumer-facing sectors is likely to be more forthcoming over the coming years as investors look to establish a foothold. Big consumer investor companies such as SABMiller, Wal-Mart and Nestlé are all keen on expanding their presence in China, which will imbue greater dynamism into the country’s consumer-facing sectors.