What Happened: China’s millionaires are on the move.
According to the Henley Private Wealth Migration Report 2023, 10,800 high-net-worth individuals (HNWIs) migrated from China in 2022, the biggest net outflow since 2013. This trend is set to accelerate with a net outflow of 13,500 HNWIs forecast for 2023.
So, where’s everyone going? Singapore, Canada, the US, Australia, the UK, the UAE, and Europe are popular relocation destinations.
The Jing Take: This exodus may only represent a fraction of the millionaire population, but Andrew Amoils, Head of Research at New World Wealth, notes, “The luxury sector will be negatively affected, especially high value sectors such as luxury hotels, top-end restaurants, prime property, private banking, family offices, hedge funds, private equity and wealth management.”
Many sectors are indeed visibly changing. The divestment of big-league investment banks like UBS and Wall Street giants like Goldman Sachs, JPMorgan Chase, and Morgan Stanley in the Asia Pacific region could be an early indicator of a shift in financial activity, according to press reports.
Conversely, countries that are reporting HNWI inflows will be an increasingly attractive destination for luxury market activity. For example, Henley & Partners forecasts that the net HNWI inflow to the UAE will reach 5,200 this year (vs. 1,500 to the US), which probably explains why real estate company Savills reported this month that “the hottest of hotspots for branded residences is Dubai.”
What’s sparking this wealth migration? It could be lifestyle upgrades, fresh business landscapes, government crackdowns, or just plain old financial jitters. But whatever the reason, it’s clear that China’s wealthy are reassessing both their personal and financial priorities.
If the exodus of Chinese HNWIs continues, luxury players need to plan for the future. According to Kelcie Sellers, associate at Savills World Research, the global distribution of branded residences continues to expand. “Brands are very aware of where their buyer bases are and where they are growing in the near term, and will follow them to these locations, whether that is to sunny, snowy, or city destinations,” she says.
The “Chinese dream” may be turning into a “Chinese daydream,” one where the wealthy wake up somewhere else, or at least have the option to. This will mean that brands will need to invest more in engaging the Chinese HNW diaspora around the world to learn and connect off home turf with this growing, and very wealthy, consumer demographic.
Glyn Atwal is an associate professor at Burgundy School of Business. He is co-author of ‘Luxury Brands in China and India’ (Palgrave Macmillan).
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.