China now represents 3.8% of global household consumption spending and remains on track to become the world’s second largest consumer market by 2014, according to new research from Credit Suisse.

The results of a Credit Suisse survey conducted in China in December 2005 confirm that the US dollar value of Chinese consumption spending will likely represent approximately 11% of global consumption spending in 2014 or US$3,700 billion in value, vs 3.8% in 2005 (up from an estimate of 2.9% in 2004). By 2014, the Chinese consumer’s incremental additional US dollar spend will likely be larger than the US consumer.

China remains the seventh largest household consumer marketplace but looks poised to overtake Italy in 2006, France in 2007 and Japan by 2014.

“The new survey increases our confidence in our original base case that China is set to become the world’s second largest consumer spend market within 10 years. However, it also points to the challenges of tapping into this growth with only a handful of companies achieving dominance within their individual sectors,” said Jonathan Garner, head of emerging equity market strategy and global co-ordinator of China research at Credit Suisse.

The study provides conclusions from a proprietary consumer survey based on interviews with 2,700 people in eight major Chinese cities. The survey finds that mean after-tax disposal income for Chinese urban households in the 2005 survey rose by 13% to US$633 per month in nominal terms from September 2004, when the first survey was conducted. The 2005 survey also finds that 12.3% residents now have a disposable income of over US$1,240 per month, up from 8.5% in the previous survey.

The December 2005 survey is the second major survey on this topic by Credit Suisse, with the first one released in September 2004. The 2005 survey shows continued major divergence in pricing power and brand strength in 11 different sectors, ranging from financial services & property, autos, beverage, electronic goods, internet, luxury goods, to transport.