Consumer spending in China and India to reach $64 trillion by 2020

Chinese and Indian consumers are expected to spend a combined total of $64 trillion on goods and services between 2010 and 2020, propelling a new wave of growth in the global economy, say the authors of The $10 Trillion Prize: Captivating the Newly Affluent in China and India, a new book by the Boston Consulting Group (BCG). By 2020, these consumers will be spending a total of nearly $10 trillion annually, three times the amount they spent in 2010.  

To capture a slice of this prize, business leaders and politicians alike need to take urgent action to build for the long term. They should not postpone their efforts because of the current troubles facing the two emerging economies—something the authors ascribe to the inevitable volatility of emerging markets by drawing parallels with the fast-growing U.S. economy from the 1870s onward.  

“We are at a turning point in history where relative wealth will shift from the West to China and India, but absolute wealth, including in the West, should increase,” said Michael J. Silverstein, a co-author of the book and a senior partner at BCG. “It is not a zero-sum game. But Western businesses and individuals wishing to gain their share need to act now. They must choose to be contenders, and remake their dreams for a new world in which China and India play a much larger role—but where the West can still prosper.”  

The authors present a detailed analysis of the future spending habits of China's and India’s consumers. They say that to succeed, business leaders need to embrace the two countries and get to know the people: who they are, what they buy and why, how they think and shop, and how their needs and tastes are changing.  

The middle class in the two countries is expected to reach 1 billion by 2020, with Chinese consumers born in 2009 predicted to spend 38 times more than those born in 1960. In India, the proportion of middle-class people is expected to grow from 28 percent in 2010 to 45 percent in 2020.  

The authors highlight a number of strategies that have been successfully deployed by companies such as Kraft, Yum! Brands, PepsiCo, Gucci, LVMH, BMW, and Pernod Ricard.