Wealthy refine the way they live it up

Source: Hurun Report [Guillermo Munro / China Daily]

Survey looks at where rich put their money

The number of Chinese billionaires and millionaires is continuing to rise, and the things they are splashing their cash on is changing, research has found.

The Chinese Luxury Consumer White Paper 2012, issued on March 27, suggests there are 2.7 million high net worth individuals in China with personal assets of more than 6 million yuan ($950,000, 714,000 euros). Six in 10 are male, with an average age of 39.

The number of ultra-high net worth individuals with assets of more than 100 million yuan is put at 63,5000, an increase of 10 percent on last year. Eight in 10 are male, with an average age of 41.

The report, focusing on private banking and the evolving lifestyle of luxury consumers, was issued by Industrial Bank Co Ltd and the Hurun Report Research Institute.

Real estate and stocks remain the two most popular investment choices for the wealthy, but they are also investing more in art and unlisted companies, the report said.

"Most brands recognize the spending power of the Chinese luxury consumer, but we are attempting to ask who these people are and what makes them tick," said Rupert Hoogewerf, Hurun Report's chairman and chief researcher.

As part of the research, 878 Industrial Bank private banking customers were interviewed face-to-face in 29 cities around the country between October and January.

The average personal wealth of respondents was 49 million yuan. The personal wealth they said they spend annually amounted to 3 percent of that wealth.

Respondents own an average of three cars and four watches and take 20 days' holiday a year, the report found. Their preferred sporting activities are golf and swimming,

However, spending on luxury travel emerged as the biggest growth area in spending, accounting for 19 percent of high net worth individuals' annual spend. More than half of the respondents said they expected their spending on travel to rise.

Thirteen percent indicated a willingness to buy business jets, offering them more private, personal and secure travel.

The same day that the report was issued, Asian Sky Group, a business aviation consulting group, was opened, looking to tap into the growing demand for private aviation throughout China.

Fifteen years ago there was just one Hawker 700 in China, but last year 70 new business aircraft with a total value of $2.45 billion (1.84 billion euros) were delivered, said Jeff Lowe, general manager of Asian Sky Group.

In 10 years China's business jet market will be worth about $11.68 billion annually, eclipsing that of the US, where there are more than 200,000 business jets, he said.

Also on March 27, the US aircraft maker Hawker Beechcraft Corp said it was continuing to see strong long-term growth prospects for business aviation in China and has identified it as a key growth market.

A day earlier, Zhai Jiahua, chairman of China Stem Cell Health Group of Beijing, signed an agreement with China Business Aviation Group to buy three business aircraft.

Zhai said he regarded it as a wise investment for the company's development. "With high-end private jets I can provide my wealthy customers with better service because they have high expectations regarding travel and health."

Xu Xin, president of Deer Jet, a subsidiary of Hainan Airlines Group, said the growing number of rich people in China and their propensity to spend on business jets made him optimistic about business aviation.

High net worth individuals are also showing interest in value-added services provided by private banking, with 60 percent of the white paper respondents saying they want their private bank to provide luxury travel advice, half wanting health-related services and more than one-third favoring services related to their children's education.

"Analyzing the demands of luxury consumers has practical significance to expanding domestic demand," said Zhang Chonggong, Industrial Bank's vice-president of retail banking and general manager of private banking.

The bank set up its private banking department last year, and the value of private banking products it sold totaled 11.76 billion yuan over the year.

The private bank also offers tailor-made products targeting customers with a minimum spend of 10 million yuan, and sales in this section totaled 2.23 billion yuan.

It is cooperating with Beijing Capital Airlines Co Ltd to promote the preferential business aviation reservation service.

Spending on daily luxuries and children's education also figured prominently in the white paper. High net worth individuals seem to be paying ever more attention to their health, 73 percent of them saying they have regular health checks and 10 percent saying they have a personal doctor.

Children's education is wealthy people's third-largest area of spending, 85 percent saying they plan to send their children abroad to study.

Among ultra-high net worth individuals, the figure is 90 percent.

Furthermore, almost half of the high net worth individuals intend to take part in training programs over the next three years.

More than one-third of high net worth individuals like to attend conferences and lectures, while almost 30 percent have taken part in executive MBA programs or further education classes for CEOs.

More than three-fourths of them feel that the biggest benefit they get from this sort of activity is in helping expand their social networks.

Having passed through the first phase where luxury goods are used as tools to confirm one's social status, the rich have now entered the stage of wealth preservation with a lower-key way of life.

yaojing@chinadaily.com.cn