By Jiang Jingjing (China Daily)
Updated: 2007-08-24 10:29

Chinese women have become a major consumer force with distinct characteristics that need to be closely watched if companies are to succeed in prying open women's wallets, says Ernst & Young.

In a report entitled The Rise of Female Consumerism in China, the professional services provider found huge economic and social changes in China in recent decades have had a dramatic impact on the average female consumer, which has far-reaching effects on spending patterns.

Conway Lee, partner and industry leader of retail and consumer products practice at Ernst & Young, said the economic status of modern Chinese women has been greatly influenced by the rapidly changing environment, a woman's educational background and the commercial opportunities open to her.

"This means that not only does she have control over how she spends her own money, but she also has a big influence over how household income is spent - perhaps more than people actually realize," Lee said.

The report says women have a substantial say over how paychecks are spent, noting that 78 percent of married women make the decisions for grocery and clothing purchases for the family.

When it comes to big-ticket purchases, such as cars and houses, 23 percent of married women indicated they have the ability to make independent purchase decisions. The remaining 77 percent said decisions are made after spousal discussions - however, they said their personal preferences have a major influence over the final decision.

The rising economic influence of women is causing a level of female empowerment unprecedented in the history of China, particularly as women choose to increasingly express themselves in society in new ways that are outside the more "traditional" roles as mother or nurturer, Lee said.

"Women are more economically independent overall than before. Backed by economic and social change, greater gender equality is giving rise to what we call the 'female yuan', a part of spending which is powerful and gaining in currency by the day."

Some 88 percent of Chinese women in cities would continue to work to earn their own income even if their husbands or families could financially support them to stay at home, according to the report.

More women choose to spend today and save tomorrow: 65 percent of female consumers spend 60 percent or more of their salary.

The total purchasing power of young women living on their own or married in childless households is projected to rise to $260 billion in 2015 from $180 billion in 2005.

David Lung, partner of the retail and consumer products practice of Ernst & Young, said Chinese women are shaping the consumer landscape in China to such a degree that companies need to have a profound awareness of who these consumers are and what their needs are.

"Failure to do so may undermine a company's ambitions in one of the world's biggest and most exciting consumer markets," he noted.

The report also says the '80s generation, a product of China's one-child policy, have a higher propensity to spend and as a consequence, has led to the deferment of savings to the future. Consumption patterns show that even lower-income urban women are willing to spend a large portion of their income on aspirational goods.

Luxury goods project wealth, status and sophistication, and tend to reinforce the notions of social and career advancement. This means retailers need to adjust their market positioning to reflect women's aspirations, especially since this generation will be regular consumers of luxury items as they enter their 30s and beyond, Lung said.

For foreign and domestic retailers, this is significant because China's luxury goods market is the third largest and among the fastest growing in the world. Moreover, as female empowerment is also influencing purchases at home, the impact is felt beyond the retail industry.

"This isn't just about cosmetics and jewelry. 'Female yuan' also means greater participation by women in economic decisions that were traditionally thought to be the preserve of men," Lee noted.

So companies selling real estate, cars, financial services and products, which typically marketed their products to appeal to men, should be aware of repositioning themselves so that they equally appeal to women, he said.