On a foggy winter evening, young Chinese flood by the dozen through the revolving doors leading to Raffles City, an eight-story shopping mecca on Hankow Road in central Shanghai. Inside, they can sit and chat with their friends while sipping a Starbucks coffee, head to one of the growing number of fitness clubs, snap up designer accessories at scores of boutiques or camp out at the Papa John's pizzeria on the sprawling mall's lower level. Video: See Raffles City mall

"That's why we have those velvet ropes over there, ready to use to manage the line of people that will start waiting for tables soon," explains Myles Felt, vice president, Asia Pacific, for Papa John's International, the overseas division of the pizza chain. "This mall is one of the places to see and be seen in Shanghai."

It's also a telling sign of just how far the Chinese consumer has come in the nearly three decades since the then-Communist Party leader Deng Xiaoping proclaimed that "to get rich is glorious."

Back then, high fashion was People's Army uniforms or Mao suits in industrial blue; cosmetics were nonexistent and consumer choice meant two flavors of ice cream -- you could stick with the red bean or splurge on the vanilla. Now China's urban residents buy cosmetics from Sephora outlets, snap up designer clothing for their pet dogs and hunt down the latest high-tech gizmos in malls like Raffles City, trendy

shopping districts like Xintiandi or entire streets given over to retail outlets, like Shanghai's Nanjing Road. Timeline: History of China's economy

"I think what is happening in China today has never happened before, and I don't think it's ever going to happen again," says Song Wai, a real-estate investor who works out of offices in the gleaming Raffles City office tower that adjoins the new mall. "What I see here is an industrial revolution, an urbanization revolution and an information revolution, all happening at the same time. These three events happened in sequence in the Western world; in China they are all happening at once and in a short period." Video: 'America is too boring'

Yet all that may prove a mere prelude to the rise of the Chinese consumer.

Today, the real muscle of the Chinese economy remains focused on exports -- a trend that is producing tense trade relationships and stirring fears of over investment. Meanwhile, according to data from consulting firm McKinsey, private consumption is actually declining as a percentage of China's gross national product. In reaction, China's political leaders have put the creation of a robust consumer economy at the heart of their 11th five-year plan, adopted last year.

It's not just trading partners like the U.S. that Chinese leaders are thinking of, but their own citizens. While economic reforms have eradicated starvation and nearly banished extreme poverty, there are new problems: Extreme wealth is becoming concentrated in the hands of a few, and the contrast between this wealth and the relative deprivation of millions holds the potential for political tension.

But shifting to a consumer-driven economy hasn't been easy. Since the collapse of the "iron rice bowl" -- with a guaranteed job, company-provided home and pension -- many Chinese citizens actually feel less secure than a decade ago, meaning they are more reluctant to spend.

"There is no such thing as a comprehensive social security network in China," says Fang Xiaoguang, vice chairman of Gallup China. Many observers agree that the government will need to take steps to address these fears.

And while every year brings more urban workers into the bottom tier of the middle class, with discretionary income to spend on books, toys or even an iPod Shuffle, China still has 900 million peasants in its rural areas. "They lag behind in almost every aspect; many of them still don't have what urban Chinese now consider basic necessities," such as a television, says

Fang, who has studied the evolution of Chinese consumers from 1994 to 2004.

"They can feed and clothe themselves, but they don't have cash to spend." Map: China's population

The benefits of a decade of red-hot economic growth are slowly spilling over from the big cities along China's eastern seaboard into parts of the vast inland territory, particularly "second-tier" cities such as Wuhan, Chongqing and Sian.

The village of Longjing, in prosperous Zhejiang province, is an example of what China hopes can be achieved nationwide. Longjing enters the era of consumerism with an advantage: It is famous nationwide for its Dragon's Well tea, grown and harvested on the hillsides around it for nearly a thousand years.

"This was a famous brand 300 years ago," says Lu Xin Fu, the village's party secretary. He explains that today's top-quality spring-harvest crop can fetch 2,000 yuan a kilogram locally (roughly $118 a pound), and three times that price in Beijing. Three years ago, a one-kilo lot of extremely high-quality Longjing tea sold at auction for an astonishing 720,000 yuan -- nearly $100,000.

That translates into a level of affluence that even urban dwellers in nearby Shanghai and Hangzhou might envy. The tea farmers' homes are modern, and they offer a degree of luxury most Chinese can't even aspire to. Chart: Cell phone ownership growth

Wang Wei Na, the daughter of the town's richest family (with a Mercedes-Benz to show for it), has a large television and a Sony Vaio laptop in her spacious bedroom at home, even though she spends much of her time at college in Hangzhou. The home also boasts modern showers as well as a deluxe jumbo washer, a dryer, a refrigerator and a freezer. The family not only grows tea but acts as wholesaler for the community and runs a teahouse for tourists, explains Wang's mother, Miao Yan Qin. Video: See Longjing village

While China's leaders wrestle with the policy changes required to bring even a fraction of this prosperity to other rural areas, businesses in China and around the world are eagerly preparing for the day when consumer spending will really take off. Today, China is already a $709 billion consumer market, according to McKinsey -- larger than Italy but not quite as large as France. By 2014, Credit Suisse predicts, China will account for 11% of global consumption and will have become the world's second-largest consumer market, after the United States. Chart: GDP in China and U.S.

The result? Chinese consumers may be the most studied people on Earth, surveyed, probed and prodded for insight into everything from their attitudes toward imported cosmetics (they like them) to their preferred brand of massage chair.

"If you want to succeed in reaching this market, you can't make any assumptions," says Robbie Blinkoff, principal anthropologist for Context-Based Research Group, a Baltimore firm that advises consumer-products companies on marketing and product strategies.

For instance, when Papa John's first ventured into China, in 2003, people warned Myles Felt that the Chinese don't like dairy products: a big problem for pizza. "Wrong!" says Felt. He says Chinese seem to love trying new flavors, including dairy products ranging from cheese to yogurt drinks. (He has also introduced a garlic-sauce base and made the BBQ wings spicier to cater to Chinese tastes.). Video: A taste of lobster pizza

But don't assume that selling to the nascent Chinese consumer market is simple. While the Chinese consumer may not know the difference between wrinkle-repair and anti-aging creams, they are savvy consumers. Anyone who arrives in China with the century-old dream of selling just one item to every

Chinese citizen "won't make it past customs," warns Tom Doctoroff, head of greater China for advertising giant JWT. "That myth exploded a long time ago." Video: Mistakes of the past

True, the prospect of selling to even a narrow slice of the market is a dazzling prospect, but Doctoroff warns that it's still a minefield. While he no longer sees Western companies making the classic mistake of assuming that the Chinese will pay anything for an international brand, not all recognize the degree to which the Chinese market has been segmented.

"Olay now sells both a 10-yuan body wash and a 200-yuan anti-aging cream; they have taken the brand and stretched it" to cover different demographic segments, he says, citing one success story.

And the complexity of the market goes beyond varying wealth levels, says Jessica Liu, vice general manager of Sinomonitor International, a Beijing market advisory firm. She splits affluent Chinese consumers into no fewer than five groups, including the "Modern Butterfly," the "Peacock" and the "Laboring Bee." Some consumers are more influenced by traditional ideas, willing to forgo their own satisfaction to help their children or even the country; others are more U.S.-style consumers, chasing the new and exciting. "Companies have to know which group they are

approaching," she says.

One big mistake is to underestimate Chinese pride in national heritage. While Chinese consumers may embrace the arrival of new global brands as an acknowledgement of their country's growing superpower status, it could be a fatal error to mistake that for an eagerness to mimic the West. After Blinkoff asked his researchers to have Chinese subjects cut out magazine pictures that appealed to them, he noted how much of that imagery related to the growing strength of Chinese companies.

"Over and over, they expressed tremendous pride in how their companies are competing globally," he says. "The attitude was, our money is just as good as anyone else's; why should we be patronized just because we are new consumers, when we have this tremendous heritage and incredibly promising future?" Chart: Chinese stocks to watch