China and India, the two most populous countries in the world, with populations of some 1.3 billion and 1 billion plus respectively, have huge Middle Classes. Leave aside precise numbers for the moment but suffice to say that each of these two nations have a Middle Class numbering several hundred million – and increasing all the while.
Unless you’ve just returned from a lengthy period of incarceration for a series of axe-murders you will know that providers and manufacturers, throughout the globe, of everything from plastic spoons to iPhones drool at the heady prospects of selling to such vast potential markets.
Apart from standing somewhere between the rich and powerful at the one end, and the toiling masses at the other, and attempting wherever possible to keep the two apart geographically, socially and economically, the Middle Class have important roles to play in most societies.
One such is to act as bellwethers for the national economy. So it is not surprising to find that economic forecasters, economists and politicians pay great attention to their Middle Classes.
And because there are many very real similarities between the Middle Class in India and that in China – they have money to spend, they tend to be young(er), they have a stake in stability and prosperity, despite their huge number they are nonetheless surrounded by oceans of poverty – it’s easy to believe that what works for the one will work for the other.
OK, and to a fair degree this is so.
But there are dangers in comparing the Middle Classes in China with that of India and the mistake most likely is the under-estimation of very real differences in their respective state of development.
India has had a sizeable and stable Middle Class for many years. It can be traced back to colonial days. That Middle Class continued to grow and prosper after independence (from Britain) as Indian citizens took over as business leaders, doctors, engineers, judges ….. you name it.
Long story short: India today has a large, educated and productive Middle Class and has had since the early 1950s,(and many would contend, with justification, longer than that.
They have the products: the cars, the nice house, the hi-fi, the Apple Mac: and the services: the overseas holidays, the health services, a goodly choice of schools for their children.
Not all these items are new. Indians can be famously frugal but their choice of spending – more in the services than the goods - is at a quite different stage to their Chinese counterparts.
Bear in mind that Mao Tse-Tung launched his (in)famous Cultural Revolution as late as the early 1960s. This idiocy destroyed China’s Middle Class as, indeed, was its objective.
Even just before and just after this China’s Middle Class looked like an endangered species. It wasn’t until Deng Xiao-Peng – in the late 1980s / early 1990s - let loose the choke on business generally that things began to change.
The scope and speed of that change was, frankly, extraordinary. Within some 25+ years a brand new, all Chinese Middle Class has reappeared – as if from nowhere.
And, in China as in India the Middle Class have a vested interest in peace, stability and prosperity. They have money in their pockets too. In many instances a lot of it. Chinese travel the world for business and pleasure; they buy huge flat-screen TVs and new motor vehicles (with leather upholstery of course).
They are buying them – NOW.
And that’s the difference. At the danger of repetition Chinese Middle Class buyers are ‘catching up’. They buy new cars because the only cars available are new. They buy Apple Macs because they believe them good. White goods are purchased for the home, leaflets accumulated on overseas schools. They dress well, they banquet for any occasion and …… they don’t apologise for wanting the best and being ready to pay for it.
SO WHAT’S YOUR POINT?
Put simply: the Middle Class markets of India and China are at different levels of development. We witness huge payments from Chinese buyers because – well, they are playing ‘catch up’ to some degree. An economist would call the market for Middle Class India as ‘mature’, and that for China as ‘emerging’.
Yes, the Middle Class markets for India and China have many similarities.
No, they are not identical. What works in one may not work in the other.