Embed Size (px)
DESCRIPTION
Citation preview
THE CHINESECONSUMER
REVOLUTIONFacts & Trivia
FIL Investment Management (Singapore) Limited.1 Raffles Place, #14-00 One Raffles Place
Singapore 048616.Tel: (65) 6511 2200 Fax: (65) 6536 1960
THE CHINESECONSUMER
REVOLUTIONFacts & Trivia
FIL Investment Management (Singapore) Limited.1 Raffles Place, #14-00 One Raffles Place
Singapore 048616.Tel: (65) 6511 2200 Fax: (65) 6536 1960
Contents
1. UNITE AND CONSUME ...................... 1
2. RISE OF THE WORKING CLASS ........ 5
3. NETIZEN UPRISING ............................ 9
4. FROM MARX TO LUXE ....................... 13
5. THE GREAT MARCH
TO URBANISATION ............................. 17
6. FIDELITY FUNDS –
CHINA CONSUMER FUND .................. 21
2
UNITEAND CONSUME
Times have changed; it is no longer a case
of China produces and the world consumes.
The Chinese government has implemented a
series of policies to further stimulate domestic
consumption, ensuring that consumer spending
grows by leaps and bounds.
Largest economies by GDP in PPP terms
US$22.6 trillion US$28.1 trillion
Largest economies by GDP in PPP terms
US$22.6 trillion US$28.1 trillion
Source: Euromonitor International from IMF, International Financial
Statistics and World Economic Outlook/UN/national statistics,
July 2010
US$14.8 trillion US$9.7 trillion
Did you know?China will overtake United States to
become the world’s largest economy by
2017. And by 2020, it will account for more
than 20% of world GDP in Purchasing Power
Parity terms, up from the current 13%.
Source: Euromonitor International, “Top 10 largest economies in
2020”, July 2010
Tap into China’sconsumption power!The consumption boom is expected to
continue for the next 5 to 10 years as
government policies shift towards
addressing income inequality and
promoting wage growth.
China Retail Sales – Consumer Goods
43
1,600
1,400
1,200
1,000
800
600
400
Nov 05Nov 06
Nov 07Nov 08
Nov 09Nov 10
CN
Y, b
illio
n
2010
2020
Source: National Bureau of Statistics, China, 30 November 2010
RISEOF THEWORKINGCLASS
The per capita disposable income of urban
residents was 19,109 yuan (US$2,911) in
2010, up 82% from 2005*. The Ministry of
Human Resources and Social Security also
reported that 30 Chinese provinces had
raised the minimum wage in 2010 by an
average of 23%^ from the year before.
*Source: chinadaily.com.cn, March 2011
^Source: People’s Daily, 26 January 2011
6
2005 2010
US$2,911
82.1%
$
year
2013US$20 billion
2008US$9.8 billion
2002US$3.3 billion
20052005 20102010
US$2,911
82.1%
$
yearyear
2013US$20 billion
2008US$9.8 billion
2002US$3.3 billionUS$3.3 billion
87
Did you know?China’s middle class is already larger than
the entire population of the United States
and is expected to reach 800 million* in
15 years.
*Source: Helen Wang, Forbes columnist, “The Chinese Dream”
Get ready for the new ageof consumption!Increase in wages has boosted sales of
mid-priced consumer discretionary goods
like sportswear. Home-grown companies
have sprung up to tap into this market and
are expected to continue growing given the
anticipated income rise.
Size of China’s sportswear market
Per capita disposable income of urban residents
Source: chinadaily.com.cn, March 2011
Source: KGI, 21 July 2010; Citigroup, 29 November 2010
NETIZENUPRISING
China has the world’s largest internet market.
The current 457 million internet users are
expected to grow to more than 700 million by
2013 – however, that would still only represent
a little more than 50% of China’s population.
Source: China Internet Network Information Center, 2010
10
1211
Did you know?The Chinese use the internet more for
entertainment – playing online games,
messaging, downloading music and movies,
and shopping – than for work. People in the 60
largest cities in China spend around 70% of
their leisure time on the Internet. The PC has
replaced the TV set as an entertainment hub.
Source: McKinsey Quarterly March 2010, “China’s internet obsession”
Plug into China’sfastest-growing companies!In 2009, the internet penetration rate in China
was 29%*. Given the low penetration rate
and the Chinese’s obsession with the
internet, the telecommunications sector
presents tremendous growth opportunities.
*Source: CSLA Asia-Pacific Markets, January 2011
70%
% of leisure time spent Internet penetration rate
80%
60%
40%
20%
0%
19992000
20012002
20032004
20052006
20072008
20092010
31.8
77.3
UKChina Korea US Japan HK
77
UU JC
Source: CNNIC, ITU, MII, NSD, OECD and FIL, November 2010
FROMMARXTO LUXE
Sale of luxury goods in China will hit US$27
billion by 2015. This will represent 20% of the
total global luxury sales, with China eclipsing
Japan as the world’s number one consumer
of luxury goods.
Source: McKinsey Insights China, 2011 Luxury Consumer Report,
March 201114
20,000
30,000
40,000
50,000
60,000
HK$m
10,000
02002 2003 2004 2005 2006 2007 2008 2009
1615
Did you know?Whereas the market for luxury goods in
other countries is typically dominated by
women, in China the men fill the tills with
nearly equal abandon. They buy both for
themselves and for others, since gifts
lubricate business in China.
Source: The Economist, February 2011
Arise and embrace China’snew wealth!Chinese shoppers prefer high-end luxury
goods and this has been the key driver of
the Hong Kong retail market. Their total
spending rose from HK$15.5 billion in 2002
to HK$48.8 billion in 2009.
Source: Company information; Credit Suisse, 11 November 2010
Shopping spending by Chinese visitors
THE GREATMARCH TO URBANISATION
18
China is on an accelerated urbanisation
drive. By 2015, China’s urban population is
expected to exceed 700 million, marking
the first time China’s urban residents
exceed its rural neighbours*.
*Source: China’s National Population and Family Planning Commission, July 2010
40
60
80
100
120
140
200
Air conditioner Refrigerator Washing mashine
Urban households Rural households
40
60
80
100
120
140
200
Air conditioner Refrigerator Washing mashine
Urban households Rural households
2019
Did you know?Cities have been the major drivers of China’s
GDP growth over the past two decades.
By 2025, the proportion of China’s GDP
generated by cities will rise from 75% today
to 95%.
Source: McKinsey & Co. report, “Preparing for China’s urban
billion”, March 2009
Ride on the wave ofChina’s growth!The home appliance sector will grow with the
increased pace of urbanisation in China. The
growth in the sector will benefit manufacturers
and retailers of such appliances.
Home appliance penetration rates in urbanand rural areas (units per 100 household)
Source: CEIC, JP Morgan, 16 July 2010
China’s GDP as generated by cities
%
20
40
60
80
100
0
Now75%
By 202595%
2221
Investment ObjectiveThe fund aims to achieve
long-term capital growth through
investing primarily in equity
securities of companies having
their head office or exercising a
predominant part of their
activities in China or Hong Kong.
These companies are involved in
the development, manufacture or
sales of goods or services to
consumers in China.
Fidelity Funds – China Consumer FundFidelity Funds – China Consumer
Fund offers investors the
opportunity to benefit from
the Chinese consumption
mega-trend. This equity fund uses
Fidelity’s dedicated China-based
research team, as well as its
global resources, to invest in
companies that will benefit from
the coming golden age of
Chinese consumption growth.
*or the equivalent of the amount shown above in any major freely convertible currency.
2423
DisclaimerThis document is prepared by Fidelity International. All views expressed cannot be construed as an offer or recommendation.FIL Investment Management (Singapore) Limited [“FIMSL”] (Co. Reg. No.: 199006300E) is a responsible entity for the fund(s) offered in Singapore. Prospectus for the fund(s) is available from FIMSL or its distributors upon request. Potential investors should read the prospectus before deciding whether to invest in the fund(s). Reference to specific securities or fund(s) is included for illustration only, and should not be construed as a recommendation to buy or sell the same. This document is for information only and does not have regard to the specific investment objectives, financial situation and particular needs of any specific person who may receive it. Potential investors should seek advice from a financial adviser before deciding to invest in the fund(s). If that potential investor chooses not to seek advice from a fund(s) in question is suitable for him.
Fund Details
Benchmark
Fund Launch Date
Share Class
MinimumInvestment Amount
SubsequentInvestment Amount
MSCI China Index NR
USD - 23 February 2011SGD - 1 August 2011
Class A - USDClass A - SGD
USD 1,000*
USD 500*
Investment Mode
ApplicableCharge / Fee
Risk andInvestor Profile
Cash
Up to 5.25 % initial sales charge. 1.5% annual management fee.
Very high risk (equity). May suit a growth investment strategy and most likely to be appropriate for investors who are investing for long-term capital growth who are willing to accept very high risk. Sucha fund should form a small part of one’s overall portfolio.
25
Past performance of the manager and the fund(s), and any forecasts on the economy, stock or bond market, or economic trends of the markets that are targeted by the fund(s), are not indicative of the future performance. Prices can go up and down. The value of the shares of the fund(s) and the income accruing to the shares, if any, may fall or rise. Investors investing in fund(s) denominated in a non-local currency should be aware of the risk of exchange rate fluctuation that may cause a loss of principal when foreign currency is converted back to the investors’ home currency. Exchange controls may be applicable from time to time to certain foreign currencies. Fidelity / Fidelity International means FIL Limited, which is established in Bermuda, and its subsidiary companies. Fidelity, Fidelity International, and the Pyramid Logo are trademarks of FIL Limited. SG11/267
