With another 200 Million Chinese people expected to join the middle class by 2025, who will be making the purchasing decisions in these household and what will they be buying?

It`s the mothers. The highest percentage of a Chinese family’s disposable income is spent on their child after that it's the household. Mothers, by and large, decide how that money is spent and what brands they spend it on. This means that they control a very large portion of China consumer spending which is often much larger than their husband`s purchasing power. Any company attempting to sell consumer goods in China must understand this demographic and how they think. But what are the top priorities for mothers?

Health, Education, Household goods & Cars is what we believe mothers care about. Whilst middle class consumers have rising purchasing power and are increasingly willing to pay more for higher quality, brand names, and differentiated features, they are still price sensitive and recognizing who is doing the purchasing is essential to success in the marketplace. Brands need to connect emotionally and forge a strong brand position.

Health. The expansion of the middle class is not just stimulating investment in private hospitals but also in dental services, cosmetic specialties, rehabilitation services and elderly care. Spending that would previously have been seen as a luxury items is becoming a standard cost of living for the middle class. Patients usually want to go to clinics attached to the highest-reputation hospitals and private health insurance is now a necessity for many families to facilitate this.

Education. In a country as populated as China it`s all about differentiating yourself for the other thousands of equally qualified people and with the one child policy still in force the child is the center of the family. Academic achievement reflects successful parenting and tiger mothers often only allow their children to engage in activities that would help further their academic ambitions: Exam preparation classes, Foreign language lessons, Arts and music classes, role play centers for social education and physical exercises. No expense is too great to further the potential of the families child.

Household goods. Buying habits are changing in a subtle shift away from a focus on ‘Value for money” to quality and value added goods that have a track record for good safety. As urbanization accelerates, consumer spending is becoming more like that of the West’s middle class. Urban Chinese are shopping to meet emotional needs, driving a skyrocketing demand for middle-class goods, food, and entertainment.

Cars.  Nothing says you have made it better than a car. Demand simply keeps on rising for both domestic and foreign brands with China becoming BMW`s biggest market in 2013.  Increasingly it is women who now make the final decision about which car to purchase and forefront in their minds is Quality & Safety.

As marketers focus on China’s middle class they will also have to prepare to serve an even more affluent upper tier of that demographic which, in many cases, will be located outside of China’s first-tier cities. According to consulting firm McKinsey, China will soon undergo a shift from its current “mass middle class” to a new category of upper-middle-class Chinese consumers. Calling this cohort the “new mainstream,” the firm identifies them as consumers with household incomes between ¥106,000 and ¥229,000 ($16,000-$34,000). Perhaps even more striking, their numbers will swell from just 14 percent of urban households today to 54 percent by 2022, according to McKinsey’s estimates. It is not uncommon for women to keep the family bank accounts in their own names and give their husbands a weekly allowance hence it will be the mothers of this new mainstream that will be holding the purse strings and the demographic that must be catered to. Chinese women are emerging as one of the most confident bodies of consumers in the world. And they have the money to keep on spending.

A selection of incredible photographs from China Pre-1900 showing both the ordinary lives of Chinese people as well as the Empress Dowager Cixi and Foreign troops sent to quell the Boxer Rebellion. The imgaes are taken form the collections of: Albert Khan (1860-1940), John Thompson (1837-1921) and Jonathon Goforth (1859-1936) & China Magazine.

By Kerry Brown for China Brain.

`The New Emperors’ looks at the nature of power in modern China, and in particular at the key location where most of this power is now placed – the Standing Committee of the Politburo, which, since 2012, has had a mere seven people sitting on it. It is on this body that the key strategic decisions about China’s economic and political direction are made. The members of this group are superficially very similar. They are all men, all ethnically Han, and all in their fifties or sixties, They are lifelong members of the Communist Party, and own total allegiance to it. They have served almost all their professional careers in entities either under its control or at its centre. But looking a little more closely at the biographies of these seven individuals shows that under the surface there is great diversity, and that the current Communist Party of China is not a monolithic entity, but more akin to a dynamic organism, adapting, reshaping, changing and evolving. The sole shared quality is their allegiance to the Party’s continuing hold on power, and its centrality in modern Chinese political life.  This could be called their common cause, as the Party’s faithful servants and guardians.

In this book, my approach has been to map out a new concept of what power is in modern China, and how people exercise it. I argue that the key issue is not about factions, with their neat delineations and boundaries and misleading rationality, but more networks, loose, liquid and constantly shifting and changing. The concept of network, outlined in works like that of the great Chinese sociologist Fei Xiaotong, serves to capture the dynamism of political debts, allegiances and negotiations in China. The transition from the leadership of Hu Jintao and Wen Jiabao to Xi Jinping and Li Keqiang illustrates this. This was a succession process without overt public campaigning. The sole figure who did seem to be pushing for his promotion onto the Standing Committee, Bo Xilai, failed spectacularly in achieving his aim, and is now in jail for claimed corruption crimes. All the other figures had to promote their cause in a subterranean, calculating way, building up support and capital amongst business, provincial, family, party, ministerial, intellectual and military circles. Those that secured the widest support had the best chance of succession. The final casting vote in the process was the benediction given at the very end by retired former elite leaders, such as Jiang Zemin and Zhu Rongji.

The outcome of the process over 2011 and into 2012 was a Standing Committee where membership was largely based on specific constituencies and skills that successful figures brought to a leadership that is faced with some of the toughest issues of continuing reform faced in the country over the last four decades. Of the seven, six had served at the highest level in Provincial government, in charge of major economies, some of them working in two or more large provinces as Party bosses. The exception, Liu Yunshan, figures in the leadership as ideological leader, a former journalist for the Xinhua news agency in Inner Mongolia whose route to the top had largely been through the state propaganda and information management apparatus. His membership shows how critical this area is for the new leaders. The rest had all had provincial and central ministerial records to lay down as evidence of their abilities.

In the `New Emperors’ I look at the previous statements, actions and records of the leadership before they were promoted in 2012. In Xi Jinping, we see the member of an elite Party family whose father remains immensely respected and admired, and whose networks were of great assistance to his son in coming through Fujian, Zhejiang and then Shanghai before being brought to the Centre in 2007. Xi Jinping has been called the `peasant emperor’ in China, someone who knew hardship as a youth but who is now seen as a member of the new aristocracy.  Li Keqiang is also linked to former elites through his wife, but has a stronger intellectual background, studying law in Beijing in the 1980s and then completing a Ph D in economy in the early 1990s. Li’s stewardship of Liaoning and Henan provinces shows someone who was able to manage crises, but about whom there are questions over his skills as an implementer.

For Zhang Gaoli, the story is simply about an official from the state oil industry who was able to deliver staggering high levels of GDP growth in the provinces he was put in charge of through skillful recruitment of business networks. Zhang Dejiang, a North Korean trained economist, showed different tactics in Zhejiang, and then Guangdong province, using high levels of physical coercion to deal with acrimonious disputes, speaking out strongly against the private sector, but showing total pragmatism when put in charge of provinces with huge private entrepreneurialism, never letting ideology standing in the way of economic success. Wang Qishan is the maverick of the current leadership, someone who came from a mixed professional background, studying history and then working at a think tank in Beijing and only joining the Party when he was already in his thirties. But Wang’s skills as an economist and a diplomat are already proven, and his current task of heading the anti corruption agency shows that he is regarded as someone who gets things done, no matter what enemies he makes.

Finally, there is Yu Zhengsheng, a man from one of the most elite family backgrounds, and with the longest and richest provincial experience, but someone who has also suffered greatly, with his sister reportedly killing herself in the Cultural Revolution. Yu is regarded as the `older brother’ on the leadership, someone very close to the family of former paramount leader Deng Xiaoping.

Beyond their biographies however, there is the key question of what precisely they believe their mission is, and what sort of world they are trying to create in China. In the final chapter, I look in detail at the words of the three who have said most about their beliefs in the last decade – Xi, Li and Liu. With these figures,  I map out from their own worlds a vision of the world and their role in it. For Xi, this is clearly restoring the moral mandate of the party after too many years of allowing it to be sullied by greed and larceny; for Li, the core issue is unleashing more spaces for growth within China and becoming less economically dependent on the world outside; and for Liu, it is conveying the core message of party ideology and belief to a sometimes unreceptive and disbelieving membership.  For all of them and their colleagues, the great mission is a simple one: to steer China towards becoming a strong, rich and powerful country in the 21^st century, and one that has its rightful status restored in the world.

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Kerry Brown is Professor of Politics and Director of the China Studies Centre at the University of Sydney, and Associate Fellow of Chatham House, London. `The New Emperors: Power and the Princelings in China’ was published by I B Tauris in June and available from Amazon here.

By Roy Graff for China Brain.

China has been the world's largest domestic tourism market since 2009, when it registered an astonishing 3.3 billion individual trips. Last year domestic tourists spent ¥2.6 trillion ($417 billion) according to the China Tourism Academy. Whilst foreign countries have been actively encouraging Chinese tourists, who tend to spend a relatively high sum of money during their time abroad, the largest market potential remains within the country. Furthermore, domestic tourism is expected to grow by 10-20% annually in the near future.

A good indication of expected growth in the sector can be seen by corporate expansion plans. French hotel giant Accor announced that about a third of its planned 100 new hotels in China are to be opened close to domestic tourist destinations as opposed to cities. Furthermore, Walt Disney & Co. will open a Disney resort near Shanghai in 2015 or 2016. But what does this burgeoning love of travel mean for the environment and is it being sustainably planned? Besides impacting cultural and natural heritage treasures directly, tourism strains water and waste management, consumes vast amounts of energy, and creates vast amounts of pollution. Will China be able to relieve these pressures and make its tourism industry more sustainable?

If you were a farmer living on the planes of Western China and dark clouds gathered over the mountains, you would know that a flood may be about to hit your land. Water is a resource you need but too much of it would wash away your newly planted seedlings and possibly your property as well. The same risk of ‘too much of a good thing’ can be applied to the domestic tourism sector in China.

The villagers in Dujiangyan, Sichuan province, have developed a sophisticated irrigation system to protect their fields from sudden water surges and ensure that all farmers have equal access to water during dry spells. This so impressed modern archaeologists and sociologists that it has been recognized as a UNESCO World Heritage Site.

Jiuzhaigou, another UNESCO World Heritage Site in Sichuan, despite its remoteness, attracts tens of thousands of tourists every day. The area is indeed very beautiful and will see its popularity increasing. However, it also contains a fragile ecosystem, in which wildlife has nearly dissappeared, due to the increasing human activity. Although visitor numbers are restricted by UNESCO, during the peak-season, the amount of tourists often exceeds the limit.

All across China, domestic tourism has been booming (so has outbound tourism) and its pattern is changing from people travelling only in tour groups to more independent self organised travel, to ever more diverse regions of China. When you consider that statistic of 3.3 billion trips each year, what environmental impact can we expect as tourism continues to expand?

It is China's diverse and until recently, isolated scenic areas and natural wonders that are the areas leading the trend for growth. One example is Guizhou, a minority-dominated and underdeveloped province in South West China, where income from tourism rose by 30%, to ¥186 billion ($29.8 billion) in 2012.

Chinese netizens often use a phrase 人山人海 (renshan renhai) “a sea of people” to describe the scene around attractions during national holidays. Beaches and mountains strewn with litter after national holidays are becoming a usual vision and unchecked building development in environmentally sensitive areas continues without EIA (environmental impact assessment) or government long term planning and supervision. Water and energy resources are often not adequately managed to ensure local communities are protected while tourists enjoy hot water, air conditioning and imported food. This isn’t exclusively a Chinese problem but the scale of tourism in China outstrips any other place on earth.

Sustainability is an oft-used and abused term that has to all intents and purposes lost its effect of changing people’s behaviour or encouraging actual government action. Peggy Liu, Chairperson of JUCCCE has said that the language of sustainability no longer serves its purpose and we must reassess how we define what is good for people and the planet, starting with simple human ambitions for quality of life and dignity. Even those that benefit in the short term from over development in tourism spots have children and relatives who may wish to enjoy these resources in future generations. This means understanding and addressing issues such as carrying capacity, resource allocation and people flow. We should ensure that local communities across China share in the rewards of tourism growth through employment, nature and tourism education and training. When people who live locally care about the resources that others pay to see, they will do a much better job of protecting these same resources.

In China, usually it is the local governments that are in charge of the majority of tourist attractions, therefore there is little transparency in management, and the only criterions used to evaluate performance is the number of sold tickets and profit, hence there is little space for environment protection and sustainability. By rewarding management in a transparent fashion and education, it can be ensured that people in charge of national parks are committed to responsibly operating them by encouraging a transparent administration, adding new benchmarks for performance and ensuring that they commit to long-term sustainable management.

Taking a national park as an example, what this means in practice is an accounting system that considers not only direct management costs but also puts value on waste cleanup, effect on surrounding areas, support of local communities through training and employment schemes, increasing the well being of people in the local community and revitalizing the eco-system through re-introduction of native animals and plants. Setting goals for all these things and rewarding management financially for them will offset their reduced income from leasing adjacent land to development and earning additional revenue from concessions and private business operating inside the park.

China has an opportunity to become a model of good, long-term planning and sustainable management of its scenic spots. There are companies already taking the initiative in planning and developing new tourist resorts and attractions, thanks to the leadership of visionaries that understand China is facing an environmental catastrophe if business continues as usual.

However, due to the top-down nature of planning and development in China, a lot of responsibilities lies with the central and local governments, which must pay a lot of attention to the problem, enforce environmental regulations and incentivize private business and park administrations not only encourage economic development, but also bolster a long–term, viable approach that protects both the nature and human heritage for future generations.

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Roy Graff is Managing Director of ChinaContact, a boutique market entry specialist for China’s tourism, luxury retail and hospitality sectors.

As a keen supporter of sustainable development and environmental protection he provides pro-bono time to causes he is passionate about. Currently Roy serves as Project Director – Eco and Heritage Tourism at JUCCCE. He has held several volunteer positions including Vice President of communications at PACE (Professional Association for China’s Environment) in China and council member of Tourism Concern in the UK. Roy cooperates with UNESCO, IUCN and other bodies to promote a sustainable and ethical tourism industry in China.

Located near the geographical center of China but culturally part of Western China, Xining is the Capital of Qinghai province and at the heart of the governments Go West policy. With a population of about 2.25 million inhabitants about half of whom live in the main four urban areas, it is a prefectural level, third tier city with a GDP per capita of ¥19,494 RMB (US$2,800) in 2008, placing it roughly in the middle of all Chinese cities. Its main industries are currently wool spinning and textiles, fur, high altitude animal husbandry, dairy products, salt extraction & processing, Traditional Tibetan medicines, and light processing industries.

Xining has a relatively high percentage of ethnic minorities, the majority being Hui with also a sizeable Tibetan population. It is home to significant religious sites for both Muslims and Buddhists. Xining has a cold, semi-arid climate due to its high altitude.

Major Economic Indicators (2012)

Source: Xining Economic and Social Development Report 2012

Xining has seen substantial economic growth over the past few years with 15% growth in GDP in 2012 from a year earlier. It’s GDP makes up nearly half of the total province (45.2% in 2012). In the same year, Xining’s value added industrial output rose 19.5% and foreign trade 14.5% year on year.

It is at the center of the so called Silk Road Economic Belt being a hub for both logistics and investment for increased economic ties with Central Asia. Key to this development plan is the currently ongoing Industrial Transfer process where manufacturing in the eastern costal cities are being actively encouraged to re-locate to the area, with a special focus on renewables.

One of the largest development projects in recent years was the Xining Economic and Technological Development Zone, completed in 2010. XETDZ lies in the east of Xining and is the first of its kind at the national level on the Qinghai-Tibet plateau as part of the country’s attempt to further develop the western region. XETDZ focuses on export-oriented industrial projects. It has an area of 12.8 square kilometers with a GDP over 18 billion in 2010.

Ferrosilicon, machine tools, bearings and cotton yarn are major exports of Xining. Japan, South Korea and the U.S. are the most important trading partners of the city.

The province is rich in natural resources, and current has an economy based on mineral extraction, hydropower, and Highland agro-husbandry. Oil and natural gas from the Chaidamu Basin have also been important contributors to the economy. Underdeveloped infrastructure however has thus far prohibited it from fully capitalizing on these advantages. For the future however, the focus will be very much on “Inclusive and Sustainable’ development revolving around solar, wind, and low-carbon energy projects.

Major Companies:

Qinghai Salt Lake Industry Group is a leading producer and distributor of potassium fertilizers. Headquartered in Xining, it posted RMB 5.9 billion in revenues and RMB 1.5 billion in net profits for 2010.

West Mining Co is a private company headquartered in Xining. It is engaged in the mining, smelting and trade of zinc, lead, copper and aluminum. It is China’s second-largest producer of lead concentrate. It posted RMB 18.51 billion in revenues and RMB 989.43 million in net profits for 2010. West Mining Co listed its A shares on the Shanghai Stock Exchange in 2007.

Xining Special Steel (Group) Co., Ltd. is the largest special steel enterprise in Northwest China with annual output of 400,000 tons. It produces steel bars and reinforced bars and machinery. It posted RMB 7.05 billion in revenues and RMB 233.12 million in net profits for 2010.

Qinghai Jinrui Mineral Development Co., Ltd. is principally engaged in the research, development, production, processing and sale of strontium products and castings. It was listed on the Shanghai Stock Exchange in 1996 and has total assets worth over 1.3 billion as of 2012.

Xining New Energy Development Co., Ltd. is a high-tech and joint stocking enterprises and engages in solar energy power generation. It is the largest production base of household solar energy power generation system in China.

      Golmud 200 MW PV solar plant

Qinghai Supower Titanium Co., Ltd. is the only company in Qinghai which produces and processes titanium and titanium alloy. Located in XETDZ, the company employs about 200 people with an annual output of 8,000 tons of titanium. It was founded in 2008 and has a registered fund of RMB 240 million.

Qinghai Huanghe Hydropower Development Co. Ltd. is a comprehensive energy enterprise focused on the development and construction of power stations as well as the production and sale of silicon products and solar power generating equipment. It was established in 1999 under China Power Investment Corporation and now has total assets worth over 57 billion RMB.

Resources

Xining is rich in mineral resources. Its reserves of potassium, magnesium, lithium, iodine, natural sulfur, silica and asbestos rank the first in China.

Education

As a provincial capital, Xining is the center of education of the province. As of the end of 2012, the city had 9 colleges and universities with a total of 61,858 students. The major universities include Qinghai University, Qinghai Normal University, and Qinghai University for Nationalities.

Transportation

Xining's main station is the first stop on the Qinghai-Tibet train line. This line, completed in 2006, is the world’s highest railway. As a result, Xining has considerable tourism from travelers passing through on their way to Tibet, especially as this is considered the best place to start the journey in order to acclimate to the altitude. Xining is also the connecting point for trains heading the opposite way on the Lanzhou-Qinghai Railway.

The main station has almost been completed for the high-speed rail link to Lanzhou and Urumqi, with construction due to finish in August.

Xining Airport (IATA: XNN) is located about 30km east of downtown Xining. It has 13 airlines operating out of it heading to more than 20 domestic destinations and Hong Kong.

There are long distance buses out of Xining to about ten surrounding cities ranging from 4-20 hours away. These buses run on China National Highway 214 out of Xining.

Within the city there is a low-cost bus system (flat-rate 1 RMB) that runs until about 9 p.m., sometimes ending earlier in the winter.

Tourism

Xining is a popular tourist destination in the summer, especially as it is an important religious location with the Ta’er Monastery(one of six famous monasteries in the Gelugpa Sect of Tibetan Buddhism) and the Dongguan Mosque (one of the most famous mosques in the northwest region of China).

Tourism is also an important pillar in Xining. In 2012, it hosted 11.28 million tourists, with a tourist income of RMB 7.52 billion, up 33.9% year on year.

History and Culture

There are about 37 nationalities living in Xining, though only a few groups are numerically significant. According to the 2010 Census, Han Chinese make up 74.04 percent of the total population of Xining, while Hui (16.26 percent), Tibetan (5.51 percent) and Tu (2.6 percent) are the main minority groups in the city.

Xining has a history of over 2,100 years and was part of the Northern Silk Road. It was also significant as a western stronghold against foreign attacks in the Han, Sui, Tang, and Song dynasties.

The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration. At present, China is the largest trading partner of ASEAN while ASEAN is China's third largest trading partner. From 2002 to 2012, China-ASEAN bilateral trade climbed 23.6 percent annually to its current 400 billion U.S. dollars. Mutual investment added up to over 100 billion dollars by the end 2012. Currently member countries and China are working to upgrade and deepend the China-ASEAN Free Trade Area (CAFTA) that was established in 2010.

Source: General Administration of Customs of China

Source: Ministry of Commerce of China

Beijing based Hanergy is China`s largest, privately owned, producer of renewable energy. The group operates in the hydropower, wind power and the solar power fields, whilst it`s focus has now shifted towards the latter, the company has become the largest thin film solar panel producer in the world and has a presence in Europe, North America and Asia-Pacific. The company was recently featured in the MIT Technology Review’s “50 Smartest Companies of 2014” ranking, probably due to its almost 1000 patents, mostly related to photovoltaic innovation.

Currently Hanergy’s installed capacity for hydropower exceeds 6 GW, whilst the same figure for wind power stands at 131 MW according to the company’s reports. The company also has the world’s largest, privately built, power station, Jin’anqiao. Its Wind power plants are in Jiangsu and Ningxia provinces.

However, today, the core business and focus of the company is the development and production of photovoltaic panels. Hanergy has made striking progress in becoming a global leader in the field, considering it only started the development of its photovoltaic arm 5 years ago. Local media in Guangdong, province where Hanergy launched its solar panel operations, coined new term – “Hanergy speed”. The company claims its annual capacity for producing PV panels is now over 3 GW, which would translate to 4 billions kWh of electricity annually. The group has signed construction agreements for solar power plants with a 4 GW total capacity in Inner Mongolia, Ningxia, Jiangsu, Hainan, Shandong, Hebei and other provinces, as well as in several European countries.

Hanergy focuses on thin film photovoltaic solar panels. Production line start-up costs are relatively high whilst efficiency is lower than traditional silicon panels, but the lower production costs and consistently improving transformation rate should increase thin film panels commercial attractiveness. Over supply in the solar industry forced numerous companies out of business, some of which were rescued by Hanergy Solar Group (HNS), in which Hanergy Group acquired a controlling stake in February this year.

Hanergy Group and Hanergy Solar Group have been aggressively expanding in both the domestic and international markets. It recently signed a partnership with IKEA, where it will furbish its retail stores with solar panels in the UK and China. Furthermore, by acquiring MiaSole and Global Solar Energy in the US and Solibro in Germany it has significantly strengthened its R&D capacity The latter has been working on improving conversion efficiency of Copper Indium Gallium and Selenium (CIGS) panels since the acquisition, with highest efficiency rate of patented panels being 15.5% conversion, while the latest lab tests are reaching 19.6% conversion: meaning about a fifth of sun’s radiation is being converted into electricity. Moreover, Hanergy has signed an agreement with Aston Martin Racing, and will explore possibilities of solar technology application in motorsports.

However, despite all positive news, Hanergy’s future plans seem to be both risky and reliant on Governmental patronage. The group’s investments into wind and solar farms are only 30% - 40% funded by the Hanergy itself, the rest of the capital usually coming from local governments. If Hanergy fulfills its expansion plans, it will have a solar panel production capacity of around 6.6 GW, while globally added capacity was just less than 40 GW last year, with a quarter of it coming from China. It believes that its markets success is dependent on it`s development and delivery to customers of its latest CIGS panels and considering Hanergy does not currently figure among the top sellers globally, all will indeed depend upon the volume of its CIGS panels shipped to end users.

The full paper is available here.