China is the land of promise for luxury brands. A recent HSBC survey, the latest survey to support this now popular thesis, reported that demographics is working in China’s favor. Mainland Chinese are getting richer at a younger age compared to other Asian countries, at an average age of 36 versus an average age of 48 in Hong Kong. The survey of 2,000 investors across seven markets defined rich as those who have at least 500,000 yuan ($73,840) in liquid assets.
Wealthy mainland Chinese had higher liquid assets, an average of $126,537 compared to other emerging Asia economies, $87,769 in India and $56,891 in Malaysia, but lower than Hong Kong and Singapore, which averaged $301,289 and $183,145, respectively. “We have several friends that made hundreds of thousands of yuan in their 30s it’s not difficult to become well-off riding on the booming economy creating plenty of chances to earn money,” said Liu Xiaoyan, a 32-year-old financial-software entrepreneur in Shanghai who along with her husband have bought two houses in Shanghai worth 10 million yuan.
The wealthy Chinese are more adept at wealth management and investment. According to the HSBC survey, 59% of them put their assets in banks with the remainder in investments in stocks or funds. An example is Zhang Sa, a 35-year-old property developer in Shanghai, who has invested 2 million yuan in stocks said, “We only deposit 10 percent of our assets into banks in case of any emergency, given lenders’ low interest rates. We’d rather put spare cash into equities and the property market.”
An astounding 71% of respondents indicated that they have invested in stocks, although only 18% of them indicated they will increase their stock investment given current market conditions.
Also, there is greater tendency for wealthy mainland Chinese to have children and now you have another layer of consumption.
This growing class of young, rich Chinese have a taste for luxury labels.
Demographics suggests there is longevity for luxury brand sales in China.