True Influence of China’s Millionaires

on January 24 2011 | in Lifestyle Trends | by | with No Comments

Shanghai Tang, wealthy Chinese

The emergence of rising millionaires in China is significant– fueling key luxury categories and propelling the luxury sector to stellar growth — but what is their true influence?

“Their true influence is how they inspire a broad-based cultural obsession with luxury consumption, particularly among China’s urban salaried workers,” according to author Karl Gerth in As China Goes, So Goes the World.

This is consequential and ultra-lucrative considering this is a country with 1.3 billion people.

China’s affluent generally emulate their HK, Taiwanese, Japanese and international counterparts and their in-country followers emulate them but with less expensive status goods.

Their followers — some relatively wealthy and others less so — essentially represent a new generation of sophisticated Chinese retail consumers that is growing at an unprecedented rate.

They are getting richer faster, with more freedom and choices.

Chinese households with more than RMB 78,000 annual income now account for 200 million consumers in mainland China, according to Chris Jackson, assistant executive director Hong Kong Trade Development Council. “That’s a lot of disposable income there – and it’s growing fast.”

This consumer is “likely to work in healthcare, IT, or retailing, among the fastest growing areas of the economy. She has a smart phone, preferably the Apple iPhone, connects to Renren – China’s alternative to Facebook, a sophisticated and brand savvy shopper, thanks to the internet. She can rattle off the names of 72 brands with little effort. And she’ll happily splash out on any new product that sets her apart from the crowd. She reads blogs, is aware of the social credibility of brands and cares about sustainability – you won’t be able to pull the wool over her eyes on either,” reports Inside Retailing.

Shopping is a sport, but she has brand loyalty provided that she gets consistent quality, service and style.

“The top two reasons Chinese consumers splurge in shops are to reward themselves, and pamper themselves. We see the rise of a sophisticated Chinese consumer. I see that every day of the week I am traveling across the cities of China, not just in Shanghai and Beijing, but other cities like Nanjing and Chendhu,” said Anson Bailey, principal with KPMG’s China consumer division.

“She’s decidedly ‘middle class’ with an income that is a fraction of a 25 year old Sydney graduate. But it wouldn’t be uncharacteristic for her to blow 80 percent of her monthly salary on a watch or a brand name handbag.”

“People in Asia want to be seen to be wealthy and successful,” explains Andrew Brien, CEO of Suria KLCC, “That’s why it is not unusual to see someone with a $200,000 home and $400,000 worth of motor vehicles parked outside.”

This consumer saves enough for an overseas shopping trip, either to Hong Kong or further abroad. And she has a credit card.

photo credit: shanghai tang

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