if expressed as Purchasing Power Parity [PPP]) (Cheng 1). Notably, there is a significant income gap between urban and rural residents. According to the National Bureau of Statistics, the 2002 per-capita disposable income of ChinaÆs urban residents was RMB 7,703 (USD 930.31), which was less than 8 percent of the wealthy group earning RMB 100,000 (USD 12,077). Moreover, 64 percent of ChinaÆs 1.3 billion population (830 million) are considered to be low-income residents (Cheng 1). In 2002 the annual average income of rural residents was RMB 2,476 (USD 299.03) and urban residents who received government poverty assistance earned approximately RMB 2,400 (USD 289.86) (Cheng 1).
The low average per capita income and income disparity between rural and urban residents has implications for foreign investment decisions in China, particularly for foreign cosmetics companies whose products might be considered unaffordable luxuries in some cases. Nonetheless, ChinaÆs cosmetics and toiletries market registered value growth of approximately 8 percent in 2003 with sales of almost RMB 50 billion (Euromonitor 1). This rate of growth largely matches that of the Chinese economy, which is estimated to have grown by 8.5 percent in 2003 despite the SARS outbreak. Analysts contend that the economic growth that has fueled a rise in living standard has also resulted in higher levels of disposable income, which makes it possible for consumers to afford items such as cosmetics products (Euromonitor 1).
In addition, analysts also note that the opening of ChinaÆs markets has made both Chinese women and men are becoming increasingly appearance and image-conscious. In major cities, women (known as ôoffice ladiesö) who work for multinationals tend to favor premium or luxury products, and sales of such products grew by 6.5 percent in 2003 (Euromonitor 1). On the other hand, in more rural areas, where incomes are lower, sales of mass market products nonethe...