What happened
Hong Kong, Shanghai, and Beijing are among China's — and the world’s — richest cities. The three clocked near the top of Henley & Partners’ ranking of the top 50 global cities with the highest number of high-net-worth individuals (HNWI).
Beijing came in at fifth place, Shanghai at sixth, and Hong Kong at eighth. Other cities in China to make this year’s list include technology and innovation hub Shenzhen (23), e-commerce hub and home to Alibaba Group Hangzhou (32), and trade center Guangzhou (44).
The London-based investment migration consultancy's Centi-Millionaire Report 2023, published on October 10, reveals that the world is now home to an estimated 28,420 centi-millionaires (individuals with investable assets of at least 100 million) and 2,350 billionaires, a population that grew 12 percent from last year.
The projected growth of the number of ultra-wealthy individuals located in Chinese cities will far outstrip the average global growth rate of 38 percent over the next decade, the report forecasts. Henley & Partners predicts a growth rate of 66 percent for Beijing, 60 percent for Shanghai, 88 percent for Shenzhen, and 95 percent for Hangzhou from 2023 to 2033.
That compares favorably with New York’s expected growth rate of 22 percent and London’s 12 percent.
The Jing Take
Despite recent economic challenges, including a weaker-than-anticipated post-pandemic recovery, the longer-term outlook for luxury consumption in China is positive, the report indicates.
Though luxury sales in China declined 10 percent year on year in 2022 due to Covid-19 mitigation policies, breaking a five-year streak of consecutive growth, growth is expected to resume in 2023, according to a Bain & Company report published in February.
As well as a burgeoning ultra-wealthy population, the number of middle- and high-income consumers in China, which already eclipses that in any other emerging market, is projected to double by 2030, the report forecasts.
The number of middle- and high-income consumers in China, which already eclipses that in any other emerging market, is projected to double by 2030, states Bain & Co.
Luxury brands have been deploying new strategies to expand in China. Hermès plans to expand the size of its stores and open a boutique store in a new Chinese city every year, while Chanel is upgrading its stores in Shanghai and establishing exclusive VIP salons called "Les Salons Privés" in Guangzhou and Shenzhen. Additionally, Chanel plans to host its Cruise 2024 collection in Shenzhen on November 2, which will be the brand's largest event in China since 2019.
Other brands like Coach, Michael Kors, and Kate Spade are also strategically expanding into lower-tier cities to target affluent consumers who were previously underserved in these regions.
Tapestry, Coach’s parent company, has outlined an ambitious plan to open 30 new stores across China in 2023, and revealed it is interested in penetrating lower-tier cities where other brands haven’t reached yet. In 2022, Coach’s first store was established in Baoji, a fourth-tier industrial city located in northwest China with a population of 3 million residents.
Given the projected growth of HWNIs and middle-class consumers in China, luxury brands that strengthen their VIC (very important customer) management strategies will be best placed to engage the country's newly affluent shoppers.
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.