Changes in GDP per capita directly affect changes in consumer demand, while changes in consumer demand will accelerate industrial upgrading and innovation.

In the very beginning of the new year of 2019, changes already appeared. On February 15th, while the office workers returning to Beijing fascinated by the holiday syndrome, Didi Travel took the lead to “reduce 2,000 employees”, accounting for 15%. And the loss was 10.9 billion. The three data all indicate that the “representative sample of the sharing economy” also failed to jump out of the cycle of economic winter. As a giant company of shares travel like this, the situation of other small and medium-sized enterprises can’t be better. If you want to live or live better, industrial upgrading and innovation are undoubtedly the best way. Recently, through a large number of data analysis, the Shengshang Research Institute concluded that changes in per capita GDP directly affect changes in consumer demand, while changes in consumer demand will accelerate industrial upgrading and innovation.

GDP per capita rises year by year stimulating more consumer demand.

It is reported that during the 10 years from 2008 to 2017, China's economy has increased by 2.5 times. China has not only become the fastest growing economy country in the world, but the economic aggregate of China also has surpassed Germany and Japan，China has been the world's second-largest economy. As an important indicator reflecting the level of China's national economic development, the growth of GDP per capita has been growing during the decade. According to the latest statistics from the National Bureau of Statistics, from 2008 to 2017, GDP per capita and disposable income per capita of urban residents have increased by nearly 2.5 times. As of 2017, GDP per capita has reached 59,021 RMB (about 8763 US dollars), disposable income per capita of urban residents increased to 36,396.19 RMB (about 5,387 US dollars), which means that residents' income is growing steadily, and their spending power is constantly improving as well.

On the other hand, while GDP per capita and disposable income of residents has been increasing, the consumption structure has also been constantly changing. The most obvious is the change of the Engel coefficient. At the beginning of reform and opening, the living expenditure per capita of urban households in China was 311 RMB, the Engel coefficient was 57.5%; the living expenditure per capita of rural households was 116 RMB, and the Engel coefficient was 67.7%. However, according to the latest data, the Engel coefficient of Chinese households has been decreasing year by year and till now the data has been lower than 30%. China has completely entered the era of “2 prefixes” from the “3 prefixes” era and say goodbye to the basic "satisfaction" stage. The most important factor influencing consumption is income. As people are generous and not limited by food and clothing, in the consumption of food expenditures will continue to decline, which will also stimulate more consumer demand and the expenditures on non-food will generally rise.

Changes in consumer demand forming a new consumption concept.

In recent years, China's total consumer goods market has continued to expand, and the consumption structure has also been optimized. As shown in the following figure (the time the index is from 2013 to 2017 from left to right), the per capita expenditure of the national residents has a rapid growth in the consumption of education, culture and information. According to the statistics of the Ministry of Culture and Tourism, in 2018, the number of people watching cinemas in the mainland cities exceeded 1.7 billion, and the number of the box office in the mainland exceeded 60 billion RMB, an increase of about 9% compared with the previous year. At the beginning of 2019, "Wandering Earth" has only been released for 16 days, and the cumulative box office has been breaking through 4.1 billion RMB, it is expected to continue to maintain a high growth trend based on the higher base of the previous year. In 2018, the number of domestic tourists in China exceeded 5.5 billion, the total tourism revenue exceeded 5 trillion RMB, increasing 10.8% and 12.3% respectively; the tourism-related accommodation industry also increased by 5.5% over the previous year, among this the general hotel industry increasing 8%, maintaining rapid growth. In addition, the report released by the Internet Society of China shows that in 2018, China's information consumption increased by 11% compared with the previous year. The scale of information service consumption exceeded the consumption of information products for the first time, and the information consumption market appeared structural changes. A series of changes in the per capita expenditure data of residents has been sufficient to show that China's current consumer demand is changing subtly, and it is rapidly changing from survival consumption to development consumption, commodity consumption to service consumption, traditional consumption to new consumption. In particular, the consumption of service-oriented expenditures has increased significantly.

As time goes, the new generation of consumer groups have gradually emerged, and the only child class represented by the 80s and 90s have become the main force of Chinese consumers. This kind of consumer group is affected by many factors such as life stage, hobbies, lifestyles, consumption levels, etc., combined with the advancement of information, technology and society, under the combined effect of various influencing factors, the new consumer groups have formed a unique new consumption concept - quality life, interactive experience, green &healthy, convenient and efficient, personalized customization.

The new consumption concept promotes industrial upgrading and innovation.

Fashion, popular, avant-garde, and personality are guiding the consumption behaviour of new consumer groups. Demand brings about supply, so new demand changes will drive a new supply of consumer goods, and even when in the buyer's market, demand can directly determine supply, which means that the industrial structure will be adjusted due to changes in consumer demand. The elements of the market are being in the same dynamic system. A small change can drive the long-term huge chain reaction of the system and form a "butterfly effect". Moreover, this change is not small, it is a mainstream and macroscopic consensus, and therefore, has the power to directly force industrial upgrading and innovation. Even the "Government Work Report" also stated: "Encourage enterprises to carry out personalized customization, flexible production, cultivate the spirit of craftsmanship, increase varieties, improve quality, and create brands." Under such a market background, enterprises must learn to discover the needs from the details, pursue the quality in the best, and constantly innovate, optimize and upgrade to win the favour of consumers.

Take the consumption concept of “personality customization” as an example. At present, China's per capita GDP has reached 9,000 US dollars, and income is no longer a constraint of consumption. More and more consumers are no longer looking for "possession", but through "existence" to pursue their own consumption. According to the survey, nearly 95% of the respondents are interested in personalized customization. Although personalized customization can highlight personality and fashion, it also puts new and higher requirements on the technology of goods and services. As Nike, in order to meet the individual needs of consumers, Nike not only provides rich and designed shoe styles on the official website but also supports consumers to design a pair of their own shoes through the latest AR technology in the Nike AR technology custom store. when customers put a pair of solid white shoes into the corresponding equipment, they can use the tablet in the store to design the upper colour. The colour matching effect will be a real-time projection of the hologram on the white shoes through AR technology. It also supplies 3D personalized customization through mobile phone, customers not only can replace the colour of shoe upper, tongue label, shoelace, rear trim, but also can arbitrarily select the material, customers participate in the whole process of design and manufacture, experience the fun, the Nike official will create a unique and exclusive style according to the design of the consumer, and in this process also meet the consumer's demand for “interactive experience”.

I have to say that Nike's personalized customization is really deliberate decision, but the back of this deliberate decision is inseparable from the upgrading and innovation of the industry, as well as the support of strong science and technology. Just these forces that can be nurtured to form a new supply and new power, to grasp the market's right to speak with comparative advantage, to adapt to changes in market demand, to ensure the best efficiency of the industrial structure, and to meet more and more "choosy" consumers.

Suggestions on industrial upgrading and innovation

"Suicide to rebirth, homicide to die." For truly powerful, visionary and courageous SMEs, whatever market demand changes, and however complex market competition environment, they can rush to find new growth space. These enterprises take the initiative to go out of the confusing period, and go to transforming, upgrading and innovating is just like “suicide-style rebirth”. Although it is difficult and painful, it is expected to change from traditional industry to “new-type industry”; and those enterprises that passively wait to be eliminated by the market will eventually be drowned in the storm of the market. Nirvana can be born again. Based on the past experience, Shengshang Research Institute has summarized several suggestions for the industry in the process of upgrading and innovation:

Recommendation 1: Increase investment in innovation。

As the soul of enterprise survival and development, the power of innovation is endless. For enterprises, increasing investment in innovation can not only replace or save limited resources but also provide strong intellectual support for the industrial system construction and market competitiveness of enterprises. Of course, the investment here is not only the investment of funds but also the introduction and cultivation of innovative talents. It should also be noted that innovation investment may do not see results in the short term, but once breakthroughs are made, the economic benefits of innovation will bring huge growth.

The most famous case is Huawei. As we all know, Huawei's annual investment in innovation research is very large, accounting for 10% to 15% of total revenue. The report released in the "2018 EU Industrial R&D Investment Ranking" recently showed that Huawei ranked fifth in the world with a total investment of 11.3 billion EUR (about 89.1 billion RMB), surpassing Apple and becoming the only Chinese company to enter the top 50. Especially in the 5G achievements, Huawei can be described as "a decade of grinding a sword", with eight key technologies including soft air interface architecture, polarization code, uplink and downlink decoupling, etc., and ranked number 1 in 5G standard technology contribution. The benefits brought about by the 5G era can be imagined.

Recommendation 2: Carrying Internet thinking and model innovation

The innovation of the model is very important for the enterprise. It is no exaggeration to say that the life and death of a company depend on its business model. In the Internet age, only with the Internet thinking, can we get rid of the shortcomings of the old system, provide all-around reference and enlightenment for the enterprise model innovation, and thus achieve value creation, value marketing and value provision to maximize the value of the enterprise. At present, many extensive and labour-intensive industries have been unable to keep up with the development of the times. Industrial transformation and upgrading are imminent. To this end, the country has put forward the "Internet +" strategy in a timely manner, providing a high-speed train that can be used for the transformation of enterprises. . Changes will occur, and if they do not change, they will die. Enterprises should have the courage and courage to make in-depth changes and dare to be the first one to change.

Taking Shengshang Education as an example, as one of the leaders of business training in China's sub-sectors, Shengshang Education is remarkable in the use of Internet thinking. It takes people who participate in education and training as a flow entrance, plugging in the wings of capital, this way not only alleviating the expenditure pressure caused by the soaring traffic, but also connecting the two major industries of education and finance, blurring the boundaries of the industry, boldly innovating, giving education more value energy. They play the flow of thinking and cross-border thinking very well, and successfully earned profits.

Recommendation 3: With the help of the policy to accelerate transformation and upgrading

The development of China's market economy usually has a pair of "visible hands" to intervene and adjust to ensure the sustained, rapid, coordinated and healthy development of the national economy. The hands are the state's macro-control. In the industrial transformation and upgrading of enterprises, the power of national macro-control cannot be ignored. Under the guidance of market-oriented “invisible hand”, combined with the positive role of the policy “visible hand”, it can provide direction guidance and intellectual support for enterprise transformation and upgrading.

Last year, the Ministry of Industry and Information Technology issued the "Guidelines for Promoting Enterprise Cloud Implementation (2018-2020)", which provided strong guidance for promoting enterprises on the cloud from the implementation of the cloud path, strengthening policy support, and improving support services. Many enterprises or entrepreneurs are based on cloud computing platforms, using new technologies such as big data, the Internet of Things, artificial intelligence, and blockchain to actively cultivate new formats and new models for their own development. We can see that if enterprises want to achieve rapid transformation and upgrading, they must grasp the advantages of the policy.

Recommendation 4: Product Innovation

Product innovation is the key to all kinds of innovations in the enterprise, and the business operations and customer needs are ultimately reflected in the products and services of the company. Amazon CEO Jeff Bezos once said: The secret of Amazon's success is to create a better customer experience and achieve product innovation. From this view, customer experience has become a breakthrough in product innovation.

For this purpose, companies may pay more attention to user research, to understand the real needs of users by understanding the users’ thinking and behaviour patterns when using products; at the same time, a good and harmonious product innovation team is also essential; last but not least, excellent customer service will leave a good impression on the users, thereby enhancing the product's reputation and intangible value. The Nike "personalization" case we mentioned above is an embodiment of product innovation.

Of course, the forms, developments and market conditions of the enterprises cannot be generalized, but they are similar. In the process of industrial innovation and upgrading, to prepare and control all aspects, optimize resource allocation, make bold exploration with the most convenient way, you will always find the path that suits you best.

The growth of per capita GDP, the adjustment of consumer demand and structure, people are no longer limited by food and clothing, and new consumer way has already begun. All enterprise production will eventually be transformed into consumer goods. In other words, the trend of the demand side will be seized to match in real-time on the supply side. Therefore, enterprises must keep up with the times and complete the innovation and upgrading of the industry in a timely manner. Especially under the context of the current global economic deepening adjustment and China’s development into a new normal mode, if you want to live or even live better, you must change. And make full use of the company's own advantages, combined with industry understanding and insight to become better.