Wal-Mart, the global retail giant, announced on April 4 that it plans to open over 50 new stores in the U.S. over the next two years, targeting areas with relatively lower living standards. This strategy echoes its early days when Sam Walton opened a small store with just $5,000 in a remote town in the western U.S. Today, Walmart stands as one of the world's largest retailers, with annual sales exceeding $263 billion. Its success was built on a simple yet effective rule: going where others didn’t. The "rural route" strategy, once dismissed by competitors, eventually became known as the "Walmart effect," showcasing how focusing on underserved markets can lead to extraordinary growth.
Similarly, domestic automakers in China are now turning their attention to secondary and tertiary markets, recognizing that ignoring these regions could mean missing out on future growth. The "Walmart effect" is beginning to take shape in the Chinese automotive industry. While there isn't a strict definition of market levels, secondary markets typically include smaller cities within key economic zones like the Yangtze River Delta, Pearl River Delta, and Beijing-Tianjin-Tangshan region, along with surrounding counties and suburbs. Tertiary markets, on the other hand, encompass small towns and rural areas.
In recent years, these markets were seen only as potential opportunities, but now they are being viewed as real "blue chip" investments. According to data from the National Information Center, last year’s secondary markets in provinces such as Jiangsu, Zhejiang, Shandong, and Guangdong saw a 40% increase in car sales—far outpacing the national average of less than 15%. Surveys also show that the top 10 cities for household car ownership are mostly second- or third-tier cities, indicating a shift in consumer demand.
An economist once said, “Don’t forget that American family cars are more rural.†This insight is even more relevant in China, where over 900 million people live in rural areas. In 2004, farmers in Zhejiang earned an average of 6,096 yuan per year, while those in Jiangsu and Guangdong earned 4,840 and 4,350 yuan respectively. As the private sector and township enterprises grow, more rural residents are becoming car buyers. Vehicles like micro-cars, light SUVs, and pickup trucks have become popular due to their affordability and practicality. The trend of economic cars entering small and medium-sized cities is unstoppable.
As a result, major car brands are shifting their focus to suburban areas and second- and third-tier cities. A new wave of competition is emerging, moving from urban centers to rural markets. These secondary and tertiary markets are now a key driver of the Chinese auto industry and will shape the future strategies of automakers. With a growing demand for low-cost, energy-efficient vehicles, micro-cars and economical models are finding a strong foothold in these regions.
Cars priced around 50,000 yuan, with low maintenance costs, are becoming the most accessible option for consumers in these areas. Economic vehicles under 100,000 yuan are also making their way into these markets, appealing to budget-conscious buyers. Fuel efficiency remains a top priority, making small-displacement vehicles ideal for these regions.
Many manufacturers are accelerating their expansion into these markets. Dongfeng Xiaokang, Chongqing Changfa’s low-cost express train model, and SAIC-GM-Wuling’s mini-vehicle strategy are all examples of this shift. Even Tianjin Xiali, which has struggled in big cities, is finding success in smaller markets due to its affordability and strong service network.
From increased production of mini-vehicles to the launch of new models, automakers are clearly showing their growing interest in these regions. Companies like Chery, Geely, BYD, and FAW-Volkswagen are all ramping up their efforts to meet the rising demand. It's clear that the future of the Chinese auto market lies in these untapped markets.
China’s second- and third-tier markets are not just a place for growth—they're a stage for commercial miracles. Those who understand the needs of these consumers and deliver products that match will be the ones leading the next wave of market expansion.
Screw and Barrel For Plastic Machine ,Single Screw Barrel,Extruder Barrel Material,Screw And Barrel For Injection Molding Machine
RECTO MACHINERY CO., LTD RICO (NINGBO) IMP & EXP CO., LTD , https://www.recto-rico.com