CHINA FRANCHISING MARKET
Consumption in China’s lower-tier cities will drive stronger demand for U.S. franchise companies.
As the second largest economy in the world with more than 1.4 billion people, China represents an enormous opportunity for U.S franchise companies. With over 6,000 active franchises, China is one of the largest franchise markets in the world.
For new-to-market U.S. franchises, it is necessary to carefully consider the best gateway cities to introduce the franchise. Historically, first-tier cities, including Beijing and Shanghai, were always targeted first. But now, these markets are becoming very saturated and expensive in terms of operational costs, and this includes labor. The consumers in these cities are also very demanding and can be very selective.
However, China’s lower-tier cities demonstrate considerable room for growth. They boast advantages such as lower labor costs, reasonably priced real estate, and untapped consumer spending. By 2030, Chinese consumption in third- and fourth-tier cities is expected to hit $6.73 trillion, while a few leading second-tier cities such as Chengdu, Xian, Chongqing, and Suzhou will present strong opportunities for U.S. franchises.
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