Inside Asian Gaming

March 2015 inside asian gaming 9 Cover Story class, by 2022 more than 75% of China’s urban consumers will be earning US$9,000 to $34,000 a year, which, in purchasing- power-parity terms, ranges between the average income of Brazil and Italy. In 2012, some 68% of urban Chinese households were already within that range, compared to just 4% in 2000, reveals the study. “The evolution of the middle class means that sophisticated and seasoned shoppers—those able and willing to pay a premium for quality and to consider discretionary goods and not just basic necessities—will soon emerge as the dominant force,” states an article in the McKinsey Quarterly titled “Mapping China’s middle class.” The article outlines the division of China’s middle class into different generations, “the most striking of which we call Generation 2 (G2). It comprised nearly 200 million consumers in 2012 and accounted for 15% of urban consumption. In ten years’ time, their share of urban consumer demand should more than double, to 35%. By then, G2 consumers will be almost three times as numerous as the baby-boomer population that has been shaping US consumption for years.” The article goes on to describe this fast-growing consumer group: “These G2 consumers today are typically teenagers and people in their early 20s, born after the mid-1980s and 54,688 57,711 57,911 57,633 64,689 64,917 54,458 46,746 45,959 3% 10% 11% 13% 18% 12% -6% -19% -29% 68% 68% 67% 65% 65% 64% 60% 56% 61% 20,297 24,011 24,772 28,004 31,680 33,352 32,816 32,373 26,491 31% 30% 31% 37% 40% 39% 32% 16% -16% 28% 28% 29% 31% 32% 33% 36% 39% 35% 3,591 3,562 3,480 3,547 3,747 3,930 3,613 3,736 3,128 16% 6% 6% 13% 7% 10% 4% 5% -17% 4% 4% 4% 4% 4% 4% 4% 5% 4% 80,827 85,284 86,163 89,185 100,116 102,199 90,887 82,855 75,579 14% 15% 16% 20% 24% 20% 5% -7% -25% 4Q ‘12 1Q ‘13 2Q ‘13 3Q ‘13 4Q ‘13 1Q ‘14 2Q ‘14 3Q ‘14 4Q ‘14 Mass Market’s Unbroken Run Ends | Macau Gaming Revenue by Segment China’s Middle Class Emerges 250 225 200 175 150 125 100 75 50 25 0 Chinese households with income greater than US$10,000 Source: Economist Intelligence Unit, A.T. Kearney analysis 2000 2010 2020 3 60 230 +1,900% +283% Millions of households