Business / Industries

Super rich continue to cut back on gifting

By SHI JING (China Daily) Updated: 2015-01-30 05:34

Super rich continue to cut back on gifting

China's super rich continued being thriftier in their gift giving last year, in line with the government's national frugality campaign, according to the latest Hurun Report published by the Shanghai-based magazine that documents the lives of the wealthy.

Polling 376 people with an average personal wealth of 41.7 million yuan ($6.67 million), the survey found that respondents' spending on gifts fell a further 5 percent in 2014, bringing their total cutbacks over the past two years to 30 percent.

Apple overtook Hermes to become their most-favored gift brand, followed by Louis Vuitton, with 2013's No 1 dropping to seventh on the latest list.

Prada, Burberry and Giorgio Amarni dropped out of the top 10 men's gifts altogether, while among women recipients, Apple remained top followed by a previous longtime favorite Chanel. Prada and Bulgari no longer featured in their top 10.

Elsewhere, the report revealed that the popularity of giving wine as a gift fell by a third, and while healthcare products still remained the most popular gifts for people to give to the elderly, its overall share of total giving dropped to 29 percent.

But despite the falls in popularity of some global brands as gifts, Rupert Hoogewerf, the founder and chief researcher of Hurun Report, still called 2014 "a banner year for the globalization of Chinese consumers", given the continued popularity of international brand buying.

According to the study, nearly 70 percent of the luxury products bought by the Chinese super rich were bought from overseas last year, the combined result of a growing popularity of overseas department stores such as Neiman Marcus in the United States, the higher frequency of Chinese people traveling abroad, and the strength of the yuan.

The report also showed that collectively the Chinese billionaires said they had become more confident about how the domestic economy would perform over the next two years. About 90 percent said that continued faith was based largely on a strong economic performance, especially, toward the end of the year.

"The year witnessed the biggest fluctuations in the Chinese luxury industry in a decade," said Hoogewerf.

Andrew Wu, president of LVMH greater China, which offers a host of luxury names including wines and spirits, fashion, leather goods and watches, said that the last two years had served as a turning point for the Chinese retailing industry, as the government's crackdown on extravagance put a halt on what had previously been often-rampant, government-paid consumption.

"As the country has entered a 'new normal' in terms of economic development, so has the luxury market, with most luxury consumption now coming from more 'normal' individuals," he said.

"This is also consistent with the intention of the reforms, and looking back much earlier, when the opening-up process started 36 years ago.

"Over time, we have seen some interesting changes in China: for example the emergence of the so-called second-rich generation. But more importantly, we have seen the emergence of the Chinese middle class. As a result, the prospects for the Chinese luxury market are really positive," said Wu.

Michael Hobson, chief executive officer of the Mandarin Hotel Group, is equally optimistic.

Last year the Chinese mainland became the luxury hotel group's second-largest market, with visitors from the mainland also becoming the group's largest group of guests in Hong Kong.

As a result, Mandarin is planning to open a new site in Beijing at the end of this year, said Hobson, with three more hotels expected in Chengdu, Chongqing and Wangfujing again in Beijing.

"I expect China to become our largest market within the next three years," he said.

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