Chinese households may be richer than government data suggests. Following the release of the third edition of Wang Xiaolu’s Chinese Grey Income study, experts conclude that the income of China’s top earners has been significantly underestimated, The Financial Post reported.
Wang’s study found that noted per capita income should be 3.2 times higher than the National Bureau of Statistics suggests for the top 10 percent of households. “With official statistics significantly under-estimating the spending power of the target clientele of luxury goods brands in China, the high level of Chinese luxury consumption looks likely sustainable given the ‘subsidy’ from grey income,” said Rogerio Fijimori, a Credit Suisse analyst.
The 2013 Global Wealth Report from Credit Suisse found that China accounted for 9 percent of global wealth that year (approximately $22 trillion) and 4 percent of the world’s millionaires (more than one million of them). Additionally, the firm reported that Chinese spending, both domestic and abroad, accounts for as much as 30 percent of sales for global luxury brands.
Fijimori called out Swatch Group, Prada, Tiffany, and Chow Tai Fook as the best-positioned brands in China, but he had especially high praise for Burberry. He believes Burberry outperforms its peers in China because of its “continued evolution of its store portfolio, brand elevation, and digital innovation.” He also saw how brand popularity in China could have global repercussions.“The strong brand momentum in China is driving demand in other key markets such as Europe, Japan, and the U.S. So rising brand equity in greater China is critical to the long-term brand value,” he said.
image credit: chow tai fook