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4.2 The Russian consumer profile

Russia's population distribution, 2009

Source: Federal State Statistics Service

Becoming one of the world’s hotspots for migration, Russia has received many migrants from Central Asia, Ukraine, Belarus, Moldova and China. On the one hand, these migrants have taken up mostly unqualified and labour-intensive jobs, while on the other hand helping to move local Russians up the social ladder and into the middle income class. Besides, riding on significant budget incentives and subventions, doctors, teachers and government employees are also now part of the middle class. In fact, Russia has seen very strong growth in purchasing power since the millennium, with average per capita money incomes surging more than six-fold from 2,300 rubles (≈US$80) in 2000 to more than 15,000 rubles (≈US$600) by the end of 2008. Moreover, if we stick to the definition put forth by Russia’s Ministry of Economy in December 2004 that only those with earnings of more than “six times greater than the minimum wage (i.e. 2,300 rubles in 2008)” counted as part of the middle class, the size of the middle-income class in Russia would have exceeded 50 million people or 35% of the total population in 2008.

Average monthly income in Russia

Source: Federal State Statistics Service

Structure of household consumption expenditure

Source: Federal State Statistics Service

In tandem with the improved standard of living and ever-rising consumerism, Russia’s per-capita consumption increased from 26,000 rubles (≈US$900) in 2000 to 177,000 rubles (≈US$5,900) in 2009. Since property prices in major Russian cities such as Moscow and St Petersburg have remained high and mortgages are still expensive and not easy to obtain, a lot of middle-class people will go on spending on consumption goods like branded garments and footwear. Such a consumption spree is expected to continue, despite slackening somewhat in the aftermath of the global economic turmoil. As a corollary, Russian consumers’ passion, especially for branded items, is considered so deeply rooted that the decade-long consumption spree will be without doubt the first thing to resume once the economy rebounds.

Taken together, the robust growth of the Russian market in recent years has created a strong demand for Hong Kong-type products. Hong Kong’s total exports to Russia more than doubled between 2005 and 2008, despite a staggering decline of 34% to US$724 million in the recession year 2009. Against this backdrop, Hong Kong’s total exports to Russia ranked as the second largest market in Central and Eastern Europe (CEE), behind only Hungary. With more than 140 million consumers, Russia, after the global crisis, will continue to provide auspicious prospects for Hong Kong companies. Products which hold particular promise include consumer electronics, fashion products, gifts and premiums, jewellery, and toys and games.

Content provided by Hong Kong Trade Development Council
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