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Economic Report

Economic reports, briefs issued by Samsung Economic Research Institute

Premium Strategy of China’s Domestic Demand-driven Companies

Premium Strategy of China’s Domestic Demand-driven Companies

YOO Jin-Seok, LEE Dong-Hun, OM Jung-Myung, CHOI Myeong-Hae
KWON Hyuk-Jae, HAN Na-La

Sept. 30, 2013

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China's corporations are rising in the world economy. Eighty-nine (including Hong Kong companies) are among this year's Fortune Global 500, up from 37 in 2009 and 16 in 2005.

In addition, China's domestic demand-oriented companies are rising fast on the back of government support. Under the drive to beef up "independent innovation," the Chinese government is trying to build a corporate ecosystem to support sustainable growth. China's investment in research and development (R&D) reached US$165 billion in 2012 to become the world's second-biggest R&D spender, and ranked No. 1 worldwide in the number of R&D workers at 3.27 million.

A growing middle class is also buttressing the growth of domestic companies. China's middle class -- those whose annual disposable income in purchasing power parity terms is 60,000 to 229,000 yuan (US$9,000 to $34,000) -- is projected to account for 76% of China's urban households in 2022, up from 68% in 2012. The upper end of the middle class is expected to expand significantly, with their share of urban households surging to 54% from 14% over the 10-year period. China's domestic companies are responding to the expanding middle class and a solid wealthy population with high-end products and services.

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