Oct 6, 2008

Chinese Feeling Pinch at Pump

It is a refrain that is all too familiar: Gasoline prices go up and people suffer. Well, Americans aren’t the only ones paying their pounds of flesh. As you no doubt heard, the Chinese government recently altered its fuel subsidy, resulting in higher gasoline prices, so it is no surprise that more Chinese car owners are feeling the pinch from prices at the pump. The subsidy change, coupled with a fast-growing auto market, means gas prices have increased for the third quarter in a row, and as you might expect, it is having its effects on consumer spending.

According to an analysis by BIGresearch, young Chinese car owners, who are most affected by the hike in prices, note two major impacts: Some 33.9 percent of survey respondents said they had delayed a major purchase, while a whopping 52.9 percent said they would be driving less. Interesting, more than one-fifth of car owners (21.8 percent) said the increase in fuel prices would have no major impact.

“Rising gas prices are likely to cause 18- to 34-year-old Chinese consumers to turn to the Internet for comparison shopping and product research,” said Gary Drenik, president of BIGresearch. “Given that China is already well on its way to becoming one of the largest online shopping markets in the world, global marketers would be smart to allocate more budget dollars to improving their online presence in China.”