New Data Draw a Clearer Picture

New analyses of Chinese census data give businesses more information when choosing locations for their China operations.by Susan Haynie and Shuming BaoChina’s more than 1.3 billion people—nearly one-fifth of the world’s population—are a major source of potential new consumers for multinational retailers and manufacturers. Because information about China’s rapidly changing market, particularly local data about micro markets, can be difficult and costly to obtain, business leaders must often make expansion and marketing decisions with less-than-optimal information. New sources of geo-based demographic and business data are emerging, however, providing companies with more reliable, up-to-date information.

Census data improves—but slowly

In the past, detailed Chinese census data have been difficult to study for a number of reasons: the language barrier; the method of data storage (typically as hundreds of hard-copies); and the fact that data were based on standard administrative units without spatial location information or estimation tools for custom areas. China’s data quality is improving, however. The country now conducts population censuses every 10 years and business censuses every 5 years, and its 1990 and 2000 population censuses contained much richer data than earlier censuses.

Acquiring data on China at a level needed for business applications has been difficult because

• Data are typically available only for relatively large geographic areas such as cities or counties;
• Data often lack spatial-reference or digital-boundary information;
• Internal migration is causing rapid changes in China’s population distribution, rendering relatively recent data obsolete;
• Many of the official population estimates reported since the 2000 census include residents with household registration (hukou) but not those who live outside their place of registration. This makes it difficult to estimate the actual number of residents, given China’s large migrant population;
• Changing geographic boundaries and locations, especially townships and zip codes, make comparing data at different time points difficult; and
• Data availability is inconsistent across provinces.

Recently, several new data resources for small geographic areas have become available: the 2000 Population Census at provincial, county, and township levels; the 2000 population estimates at the 1 km2 level; and the 2007 and 2010 population estimates with annual demographic updates at the township level. In addition, China’s 2004 Economic Census data measured down to the zip-code level.

Technology opens doors to new demographic and business data

2000 Population Census

China conducted population censuses in 1953, 1964, 1982, and 1990. But the 2000 Population Census data was a “first” in several ways: Population data for the township level were publicly available (previously only data for provincial, prefecture, and county levels were publicly available); and census data with township locations were available in geographic information systems (GIS) format, and more variables (about 2,000) of the census were released. The table lists the types and number of geographic units reported in China’s 2000 Population Census at each level. The availability of township-level data greatly increased the geographic detail.

Unlike the United States, China has not released official GIS boundary files corresponding to the 2000 census data. In 2007, the University of Michigan China Data Center (CDC) identified the geographic location of each township and built approximate township boundaries suitable for reference purposes. This groundbreaking work laid the necessary foundation for converting China’s township-level census data into GIS format. CDC’s provision of geographically oriented township-level data is a huge step forward in gaining a more detailed understanding of the spatial distribution of China’s population.

The extensive 2000 Population Census also included

• Total population, agricultural population, and family size;
• Age by gender;
• Births and deaths;
• Occupation and industry;
• Education and literacy rates;
• Housing characteristics, including purchase price, rent, and facilities such as running water and types of cooking fuel;
• Registered population;
• Race and ethnicity;
• Migration status; and
• Marital status.

2000 population estimates

CDC and the Chinese Academy of Sciences have developed population estimates at the 1 km2 level for 7.4 million grids throughout China for the year 2000. The estimates are modeled based on 2000 data for township population, administrative area size, elevation, and other geographic reference information. Understanding the population distribution within townships improves population estimates for custom areas such as the trade area around a prospective retail location.

2007 and 2010 population estimates

Extensive migration and urbanization have led to rapid changes in China’s population, and the 2000 census is already out-of-date for many areas of the country. Current information about the population—usually available only for select cities or large geographic areas—is limited or difficult to acquire. To address these challenges, Demographic Consulting, Inc., in collaboration with CDC and All China Marketing Research, has developed a way to track population changes in townships throughout China.

The population-estimating approach supplements official data, such as the 2000 Population Census and the 2005 Population Sample, with remote-sensing data and analysis. This method uses satellite imagery analysis and measures of nighttime light intensity (provided by the US National Oceanographic and Atmospheric Administration) to update a population’s geographic distribution and identify changes in urbanization levels. For example, on three maps of townships in Nanchang, Jiangxi, the average nighttime light intensity increased between 2000 and 2007 in some townships (see Figure 1). This increase tends to indicate denser population or new urbanization. To date, Demographic Consulting has used 2000 census data, 2007 official regional population estimates, remote-sensing data, and analysis to update selected census data, including total population, total households, and age by gender in China’s townships. The resulting population estimates can help identify areas of population growth and new markets.

2004 Economic Census

China’s first economic census, conducted in 2004, collected and tabulated data for more than 5.1 million businesses (defined as economic units with legal status). The aim of the census was to track developments of manufacturing and services industries in terms of size, structure, and profitability and to provide broader information for policymaking and economic planning. Available data from this census included

• Industry classification (863 classifications);
• Number of employees (10 categories);
• Revenue range (in renminbi, 15 categories); and
• Ownership status (23 categories).

CDC compiled the economic census data at various geographic levels, from province to postal code. (Nearly 32,000 postal codes were included in the census.) CDC also facilitated the acquisition of spatial reference data for the postal codes, allowing for display in GIS format (see Figure 2).

Business data from the economic census can provide valuable insight into

• Level of competition: How many competitors exist in a trade area?
• Availability of services: Is there convenient access to an office supply store or shipping and transportation services?
• Total employment in an area: Because people sometimes shop where they work rather than where they live, daytime population in a store’s trade area can be an important source of customers.
• Local availability of employees with specific experience.

Geospatial analysis: Changing the way businesses use data

Geodemography, the linkage of geographic and demographic information, is a powerful and useful tool for many applications. Businesses can use information about people and local economic activity to learn where their high-potential customers are, understand the characteristics of their best operating sites, find locations for new facilities, and help formulate effective advertising strategies. Geospatial analysis can also be used to assess the environmental impacts of the population and the human and economic costs of natural disasters, determine educational and health-facility locations that best meet the needs of the population, and evaluate needs for housing, transportation, and other services.

Official census reports are typically limited to standard administrative units such as cities or counties, but combining China’s geodemographic information with geospatial analysis can create new, diverse data for specific locations. For instance, geospatial analysis can retrieve data for custom geographic areas such as a 2 km radius around a store or a buffer along a transportation corridor. In this era of electronic data, geospatial tools have removed the limitations of printed reports and standard administrative boundaries. The result is a fundamental change in how China’s census and other geographic data can be used.

For instance, businesses can use geospatial analysis to choose a site for a facility. Choosing a good location is pivotal for the success of nearly every business—whether manufacturing, restaurant, retail, or services. Geodemographic analysis can increase understanding of the people residing near established and proposed business sites (see Figure 3). Linking demographic characteristics of a store’s trade area to sales performance can help predict sales for future stores in that area. Using the micro-market information compiled for China, researchers can now perform site location analysis throughout the country—similar to analyses widely conducted in the United States, Canada, and Europe.

Site location analysis can also summarize the characteristics of a total trade area, allowing for more objective comparisons among multiple sites. Now that available data sources for China are packaged with efficient geodemographic technology, companies can quickly and cost-effectively screen multiple potential sites to identify those that warrant further investigation (see Figure 4).

Until recently, information on China’s smaller areas has been relatively inaccessible, but new geodemographic and spatial analyses have produced information at an unprecedented micro-geographic level. Businesses can use these new, nationwide data sources to better analyze China’s market and choose locations for their China operations.

[author]Susan Haynie is president of Demographic Consulting, Inc. and is based in Santa Ana, California. Shuming Bao is senior research coordinator for China Initiatives at the University of Michigan China Data Center and is based in Ann Arbor, Michigan.[/author]