Consumption patterns of entrepreneurs in the People's Republic of China

Since the implementation of economic reforms in 1978 in the People's Republ ic of China, entrepreneurs have emerged as a new consumer group. With risin g income and high consumption power, entrepreneurs have become major consum ers for expensive goods and services. However, little research has been car ried out to understand their consumption decisions. In this article, we stu dy the consumption patterns of small business owners, getihu, in China by u sing a set of large-scale, nationwide sun;ey data. Their consumption is pos tulated to be affected by (1) risk factors which include failure risk and f inancial (leverage) risk, (2) household variables such as the household siz e, financial and labor resources in the family, (3) the future plans of the ir business, and (4) home ownership. The effects of these factors on consum ption patterns are evaluated. Our empirical results, based on regression an d Tobit analysis, showed that all these factors are important in the consum ption decisions of the entrepreneurs' households. In particular, risk and h ousehold factors are statistically significant in accounting for the variat ions in their consumption patterns. The marketing implications are also dis cussed. (C) 2001 Elsevier Science Inc. All rights reserved.