Luxury brands have likely memorized by heart the fact that China has more than 1 million millionaires, but the country’s number of wealthy individuals below the seven-figure benchmark is where the truly massive growth is located. According to a new Chinese-language Forbes study, the country’s “mass affluent,” or upper-middle class demographic, is rising at a growth rate that far exceeds that of traditional dollar millionaires and will reach more than 14 million people by the end of this year.
From the research conducted for the report released yesterday, which is titled the “White Paper on Chinese Mass Affluent Wealth for 2014,” (2014中国大众富裕阶层财富白皮书) China’s “mass affluent” are categorized as individuals with investable assets in the range of RMB600,000 to 6 million (US$96,000 to $960,000). With an estimated population of 11.97 million, their numbers are expected to skyrocket by more than 2 million—a number that is double that of the total number of millionaires—to an estimated 14.01 million people by the end of the year.
In order to gain some more details on the demographics and desires of this upwardly mobile middle-class group, Forbes conducted a survey in China’s key geographic areas of economic growth, including the Yangtze River Delta, the Pearl River Delta, Beijing, and Tianjin. With assets in the form of cash, deposits, stocks, funds, bonds, insurance, wealth management products, real estate, and other holdings, this group is fairly young: 60 percent of its members are between the ages of 30 and 50 years old. They’re also (mostly) well educated: 53.8 percent have a bachelor’s degree, while 10 percent have a master’s. Many are clearly saving their money and investing to get rich: for annual incomes, 51.9 percent earn RMB100,000 to 500,000, while only 21.2 percent earn RMB500,000 to 1 million. Just above half work for a privately run company, while one-fourth work for a state-run enterprise and an additional fourth work in the category simply referred to as “other.”
Delving deeper into the mind of mass affluent Chinese individuals, Forbes found that money doesn’t necessarily buy happiness for them. While they’re not overly discontent—45.1 percent said they felt “happy” while only 1.7 percent said they were “unhappy”—family and health were the two most important factors listed for happiness. Wealth is still important though: it came in third place, ahead of business, living quality, and social circle, respectively. They’re also working hard to gain and/or keep this wealth: 74.7 said they feel stressed out.
With a comfortable income and aspirational, upwardly mobile mindset, this demographic group should be a key area of focus for luxury retailers—especially those set at price points readily available to the upper-middle class, such as Tory Burch, Kate Spade, Coach, Longchamp, and Michael Kors.
According to the report, the growth in this population will contribute to China’s total private investable assets, which amounted to RMB94.1 trillion (US$15.1 trillion) and saw 13.3 percent annual growth in 2013.