Increasing Incomes Bring Out Consumers in China : Retail: A new breed of buyer is flooding into department stores looking for top-quality goods.

A young Chinese man cranks out strands of pink pasta at one counter while, at another, a woman squirts, washes and wipes a window with a three-in-one window wiper.

A second man twists a plastic juice maker three times and pours out a cup of orange juice. “Look,” he says, pulling out a hammer and hitting the juice maker as a curious crowd gathers. “It’s very strong. I can hit it with a hammer and it won’t break.”

No apathetic salesclerks or drab counters at the Nanfang Department Store, which looks more Western than communist.

A surge in income in the prosperous southern city of Canton is spawning a new class of brand-conscious consumers with spare cash to spend.

Domestic and foreign manufacturers are eager for a piece of China’s potentially vast consumer market.

At the five-story Nanfang store on the banks of the Pearl River, shelves are crammed with French beauty creams costing 714 yuan ($130), Japanese speaker systems for 14,800 yuan ($2,691) and children’s toys for 300 yuan ($55).

“A lot of people come from the north, husbands buying for wives and men buying for girlfriends,” said cosmetics salesclerk Li Biling with a red-lipstick smile.

“A lot of them do business and earn a lot of money. Even workers come. They save a lot of money, come to Canton once and buy the best products. They don’t understand makeup but they like brand names and nice packaging,” she said.

Nanfang’s sales are expected to surge to 600 million yuan ($109 million) this year from 400 million ($73 million) in 1991, a store spokesman said.

“China’s living standard has gone up in the last two years, and people have more money to spend on stylish clothes, good food, furniture and electronics for their homes,” he said.

The official average annual wage is 2,400 yuan ($436), but officials believe the actual figure is much higher, especially in the south.

Foreign retailers are poised to join the competition as Beijing plans to open wider its retail market to overseas and local joint-venture producers.

Under current regulations, joint ventures can sell only 30% of their products in the Chinese market.

The government is considering raising the quota to 50% in the near future, said Mary Wong, senior manager of operations at the Hong Kong Trade Development Council.

Japanese department store chain Yaohan International opened a store in the Shenzhen special economic zone last year, the first foreign firm allowed to invest in China’s retail market.

It hopes to obtain a license for a second $12.8-million store in Shanghai’s Pudong zone as early as next month, and is considering others in Beijing and Canton, said Chairman Kazuo Wada.

Hong Kong’s Sun Hung Kai Properties has signed a letter of intent with Nanfang to redevelop it into what Managing Director Raymond Kwok described as a “Canton landmark.”

“This is the right time to build a good shopping center in Canton as income levels have gone up to such a level that there is a real demand for quality,” Kwok said.

Rather than importing products, he hopes to stock the new Nanfang with clothing and other goods produced in the joint ventures that dot China’s southern coast.

“Chinese-made products are now comparable to international standards because Hong Kong manufacturers have expanded to the Pearl River delta,” he said. “My gut feeling is that whatever Hong Kong people want, the Chinese will want too.”

At Nanfang’s Goldlion counter, part of a promotion of Hong Kong products by the trade development council, 40-year-old Sun Zhouyin pored over shirts costing 200 to 298 yuan ($36-$54).

“I prefer shopping here because you know the brand name is real and the quality is good,” said Sun.

“See, this suitcase of mine is an American brand. It cost 698 yuan ($127),” the Guangdong construction company owner said proudly as he pulled out a large wad of 50 yuan bills.

For China’s new breed of consumers, product origin is not so important as price and brand name, Wong said.

Eighty percent of Nanfang’s goods are made by Chinese or joint venture enterprises, the store spokesman said.

The magic price bracket now appears to be 200-300 yuan ($36-55), with handbags, clothes and jewelry selling best. Giftware and home electrical appliances also do well.

“Chinese consumers are also brand-conscious. If they wear sunglasses, they don’t want to take the label off. But it’s not necessarily an outside brand. A lot of Chinese brand names are more famous than Dior or (Yves) Saint Laurent,” Wong said.