Founder Of Hurun Report Says Ultra-Rich Typically Own Three Houses, Art Collection, Spend Upwards Of 7 Million RMB Per Year On Luxury
China’s luxury industry is clearly on the upswing, with sales of luxury goods amounting to US$9.4 billion in 2009 — second only to Japan — and major brands scrambling to open new locations and flagship stores not only in top-tier cities like Shanghai but also in second- and third-tier cities like Nanjing. Everyone seems to agree that wealthy individuals in China are “mad for luxury,” and that they’re spending millions per year on it, but what exactly are they buying?
Rupert Hoogewerf, founder of the luxury publishing and events group Hurun Report, seems to have the answer. Last week in an interview, Hoogewerf said that he likes to refer to China’s ultra-rich as the country’s “new nobility” — they’ve got the money, now they want to spend it, but unlike China’s notorious bao fa hu (nouveau riche), the “new nobility” values sophistication above all else. From the Global Times:
In [Hoogewerf’s] eyes, a billionaire in Beijing should usually own three houses, a villa in the suburbs, a condominium in the city and a courtyard house, as well as an art collection of some kind.
A survey from the Hurun report showed that a billionaire in Beijing consumes 6.88 million yuan (US$1 million) worth of goods per year.
The article goes on to quote Pierre Xiao Lu — author of “Luxury China” (Jing Daily book review) — on why China’s super-rich are “so crazy about luxury goods.” According to Lu, luxury goods are a vehicle for displaying self-worth and, when given as gifts, can do a lot for business and personal ties.
Lu Xiao, marketing professor of the School of Management of Fudan University, said that apart from the improvement of quality of life, the purchase of luxury goods by these wealthy people is a way to prove their abilities to the outside world.
In addition, using luxurious goods as gifts can help a lot in social and business ties, he added.
For the rich, the channels for the public to see their contributions to the society are not much and they are anxious to show some images to distinguish themselves, Lu explained.
Will we see the same behavior in 2010 from the ultra-rich? From buying villas in the suburbs, which lie idle, to splashing out on luxury goods for the sole purpose of handing them out to potential business acquaintances, will the “new nobility” be known more for decadence than for anything else?
These things are difficult to predict, but there is a hint of what may come buried in Professor Lu’s remarks. If, as Lu says, “the channels for the [Chinese] public to see their contribution to society are not much,” and if this is actually important to the ultra-rich, then we might see a significant increase in charity and philanthropy among the wealthiest Chinese in the years ahead. As LifeStyle magazine Editor-in-Chief Nels Frye told Jing Daily in our “10 for ’10” feature last month,
In every part of life, charity and giving will become rapidly more obvious. Events, brands, and all spending will increasingly have to have charity focus. Charity will become one of the main subjects of conversation and it will start to be a loss of face for anyone with any money not to be giving. A concern – and excuse for not giving – will remain the uncertainty with respect to how said money is used [by the charities].