A study by the American Chamber of Commerce shows that Chinese consumers can afford to splash out more on higher quality products, but also expect better value for money.
China's consumer market is forecast to become the second largest in the world after the U.S. by 2015.
The report released Wednesday, compiled with consultancy Booz & Co., says Chinese are increasingly concerned with health and quality of life. As growing numbers travel abroad, they are becoming more familiar with foreign brands and the variety and quality of goods available overseas.
Companies must adapt their marketing strategies to suit this fast changing environment, it says.