On March 27, 2012, Industrial Bank (IB) and Hurun Report jointly published The Chinese Luxury Consumer White Paper 2012. This white paper describes the macroeconomic development environment and consumption upgrading trend in China, estimates the quantity and distribution of Chinese high net worth individuals (HNWIs), analyzes their consumption features and behaviors, and forecasts the future development of their consumption demands.
The “HNWIs” mentioned in the report refer to those individuals with personal assets exceeding RMB 6 million. At present, there are 2.7 million HNWIs across China, who are 39 years old on average. Specifically, the number of HNWIs with personal assets over RMB 100 million reaches around 63,500, 41 years old on average.
From October 2011 to January 2012, IB and Hurun Report interviewed dozens of private banking customers face to face, and carried out a questionnaire investigation over the HNWIs with personal assets exceeding RMB 6 million across 29 cities around China, receiving 878 valid ones in total. Their average wealth reach above RMB 49 million, and they consume RMB 1.45 million a year on average, accounting for 3% of the average wealth. On average, they are 39 years old.
Zhang Changgong, IB's Vice President of Retail Management Headquarters and General Manager of Private Banking Department, said: “consumption is the inborn power for a country to achieve sustainable economic development, and it is of great practical significance to research the consumption demands of HNWIs so as to expand domestic demand. Based on the close cooperation between IB and Hurun Report, especially the professional capabilities of Hurun Report, this report truly reflects the demand characteristics and changing tendency of Chinese HNWIs, and readers may understand the consumption demands of HNWIs in a pertinent way. IB may also borrow ideas from the report in developing the private banking business.”
Rupert Hoogewerf, the founder and chief investigator of Hurun Report indicated:“We are very happy to publish the white paper of great significance in cooperation with IB, the Chinese bank with the greatest innovative vitality. Though Chinese millionaires have great consumption power, currently, in my view, the millionaires are still on the way to become new aristocrats.”
Travel, health care, and education of children are the value-added services most expected by HNWIs from the private banking recently
What HNWIs expect the most to make consumption of in financial services is to travel, and 60% of them indicate that they would choose traveling to receive financial services. In addition, half of them favor the services regarding health care, and over 1/3 of them choose the services regarding the education of children.
70% HNWIs are willing to participate in advanced training programs and society connections mean a lot to them;
Young people need more recognition with academic credentials
Above 70% of HNWIs participating in such training programs as EMBA/CEO are willing to join such programs again. Above 3/4 of HNWIs believe that the greatest help to them is to extend their society connections. In the next place, 60% of them believe that it is helpful to extend their horizon and improve their professional knowledge, and 35% of them think that it is helpful to elevate their education level. As for the HNWIs below 30 years old, both society connection (87%) and education background (45%) are of great importance to them, so these two factors boast higher percentages among this age group when compared with others.
Nearly 60% of HNWIs improve themselves through reading books, over 1/3 of them attend various forums or lectures, nearly 30% participate in EMBA/CEO classes for further study, and more HNWIs (42%) below 30 improve themselves through participating in training courses.
Buddhism is the most popular religion among HNWIs with believers accounting for 30%, followed by Christianism and Moslemism, with 7% and 3% believe r s respectively;
Half of them have no religious belief
Half of the HNWIs believe in religion, and Buddhists claim the biggest proportion, reaching 30%; followed next are Christians, reaching 7%; and Muslims rank the third, reaching 3%. Based on the relevant data provided in the Blue Paper of Religion: Report on Religions in China (2011), the Chinese people believing in Buddhism account for 18% of the total population. However, a greater proportion of HNWIs believe in Buddhism. It is interesting that the proportion of HNWIs below 30 believing in Christianism (11%) is obviously higher than that of HNWIs above 30 (5% of those at the age of 31-45; 3% of those above 45), while the proportion of female Buddhists (37%) is obviously higher than that of male Buddhists (25%).
The expenses on gifts account for 10% of the average annual consumption, and 80% of gifts are used for business purpose;
Watch is the most common gift to gentlemen while red wine is the gift that is seen at the highest frequency among billionaires.
A HNWI spends approximately RMB 150,000 on gifts each year, accounting for 10% of the average annual consumption, while a billionaire spends over RMB 260,000 a year. HNWIs present nearly 80% of gifts for business purposes. In addition, over 40% of them need to give gifts on occasions of wedding ceremonies and festivals and holidays. Most HNWIs will choose gifts of the value RMB 5,000-20,000, and the gifts chosen by males are of higher values when compared with those chosen by females. Watch is the most common gift to gentlemen among HNWIs while red wine is the gift that is seen at the highest frequency among billionaires.
Hong Kong is the absolute most preferred place for purchase of luxury articles and 28% of HNWIs would buy luxury articles in large cities at home
Hong Kong has become the absolute most preferred place for HNWIs to purchase luxury articles or high-end consumables, and 73% of them choose Hong Kong; next, 28% choose Europe; and those choosing large cities at home also account for 28%.
In choosing the shopping places, HNWIs do not think much of price. The most important factor is the variety of commodities/brands, and next, service and shopping environment.
What are purchased most frequently include watch, clothing adornment, leather products, jewellery and cosmetics.
Internet, instead of TV, becomes the leading channel to obtain shopping information
Over 60% of HNWIs will get shopping information via internet, next TV, magazine, and introduction of relatives/friends. News and finance are the TV programs that over 70% of HNWIs prefer to watch frequently. Females are inclined to watch entrainment programs (43%) and films/TV series (39%) while males prefer sports programs (31%) more. The ones older in age watch news programs (85%) more frequently while the younger ones prefer entertainment (42%) and documentary programs (28%).
1/3 HNWIs are inclined to the low-carbon, environment-friendly, and green consumption philosophy
Over 1/3 of HNWIs are inclined to the low-carbon, environment-friendly, and green consumption philosophy. Nearly half of them are inclined to the concept of moderate consumption, keeping expenditures within the limits of income.
HNWIs go on business trips for 6.9 days each month on average, and billionaires are busier, 9 days a month
HNWIs go on business trips for 6.9 days each month on average. Among them, those HNWIs with over hundreds of millions of personal assets are on business trips for as many as 9 days. For HNWIs with over hundreds of millions of personal assets, they go on business trips more for business purpose, which is followed by travel.
HNWIs do sports 2.3 times a week on average, and billionaires do sports more frequently, 2.7 times a week
3/4 of HNWIs keep the frequency of doing sports at least once a week, 60% once a week at least, and 10% each day. On average, they do sports 2.3 times a week. Among them, those HNWIs with over hundreds of millions of personal assets do sports more frequently, which is 2.7 times a week on average.
To do sports, they mainly intend to keep healthy, and next to keep vitality and maintain physical shape. Only 15% of them regard doing sports as habit s and customs.
Golf and swimming are the sports events that HNWIs love the most, but increasing number s of them are choos ing other activities. In particular, yoga becomes a favorite of HNWIs in the recent two years. Males love golf more than females do while the latter prefer yoga more. And mountaineering and badminton also grow fast with increasing supporters.
Besides sports, over 30% of HNWIs would choose eating organic food and nourishments and participating in health care activities such as SPA and massage. Males prefer doing sports while females are inclined to choose dietary health care, SPA and massage.
60% of HNWIs have cultivated a habit of collection since 2008 while billionaires started collection as early as 2006
20% of them do not have any confidence in their collection knowledge, and a greater proportion of billionaires (27%) do not have such confidence. 11% of them entrust collection to agencies
Over 60% of HNWIs have the habit of collection, and each of them has a collection history of four years on average, i.e. they have begun to collect since about 2008. Among them, over 70% of HNWIs with hundreds of millions of personal assets have the habit of collection, and each of them has a collection history of 5.6 years on average, i.e. billionaires have begun to collect since about 2006.
The collections of HNWIs cover a large variety. They are keen on collecting watch es for the most, and some of them choose to collect artworks, such as ancient calligraphy and painting works, miscellaneous ceramics and modern artworks.
Although the collections witness great increase in value in recent years, most HNWIs, accounting for 72%, still collect according to their own preferences, whereas those collecting for investment account for less than 40%.
In general, 8% of HNWIs are very confident in their own knowledge about collections, but some 20% totally have no confidence. The proportion of billionaires without confidence is higher, reaching 27%, and only 3% are very confident.
Nearly half of them learn the knowledge about collections from friends around.
In terms of collecting channels, 11% of them choose to entrust agencies, but the majority make purchase themselves, which accounts for 60%.
85% of HNWIs plan to send their children to study abroad while 90% of billionaires plan to do so. Those considering sending their children abroad at the stages of primary school and middle school account for 66%.
In terms of education for children, to study abroad is the most common choice. 85% of HNWIs plan to send their children to study abroad while 90% of those with hundreds of millions of personal assets plan to do so. Those considering sending their children abroad at the stages of primary school and middle school account for 66%.
46% of HNWIs hold the education concept to develop their children in an all-round way while 41% stress on education oriented toward quality and competence, 23% on creative education, 17% on open education, and 14% on individualized education.
The consumption on education of children ranks among the top three in terms of consumption areas of HNWIs.
The microblog of Lee Kaifu is the most preferred, followed by Wang Shi, Pan Shiyi, Ren Zhiqiang and Shi Yuzhu
The following entrepreneurs' microblogs are the most popular among HNWIs: Lee Kaifu, Wang Shi, Pan Shiyi, Ren Zhiqiang and Shi Yuzhu. As a start-up advisor, Lee Kaifu ranks No.1. With over 10 million followers, his microblog is mainly to share his everyday experience, and meanwhile, it also serves as a marketing platform for the Innovation Works that he has established. Although Wang Shi does not have a large number of followers among famous entrepreneurs, his microblog focuses more on culture and arts. Pan Shiyi and Ren Zhiqiang are intimate friends, and their microblogs rank No.3 and No.4 respectively. They tend to share their daily life and interact with friends via microblog.
13% of billionaires intend to buy business aircrafts
Business aircrafts are of great appeal to HNWIs. The number of HNWIs with hundreds of millions of personal assets intending to buy business aircrafts reach es 13%.
35% of HNWIs raise pets
35% of HNWIs raise pets. Specifically, the younger ones are more inclined to raise pets. 44% of those below 30 years old raise pets while for those above 45 years old, the proportion is only 30%. Dog is the most commonpet. About half of the HNWIs raising pets choose dog, and 20% fish; there's a higher proportion among the HNWIs above 45 years old to choose fish when compared with other age groups, reaching 24%. In addition, some choose cat, bird, turtle, galesaur and horse.
10% of HNWIs have private family doctors
HNWIs are paying increasing attention to health. At present, 10% of them have their own family doctors. Specifically, 15% of the HNWIs with hundreds of millions of personal assets have private family doctors.
Three stages of wealth: creating wealth, maintaining wealth and enjoying wealth
The life style of HNWIs can mainly be divided into three stages: creating wealth, maintaining wealth and enjoying wealth. After passing the wealth-creating stage when they highlight their social position with luxury brands, Chinese HNWIs have stepped into the wealth-maintaining stage mainly characterized by low-profile and moderate life style and is graduallytransiting to the wealth-enjoying stage featuring commitment to public benefit and charity cause. Specifically, the main characteristics of the wealth-maintaining stage include: moderate consumption, starting to focus on the quality of life, self cult ivation of body and mind and children's disposition education.
In this wealth-maintaining stage, HNWIs often join various private clubs, try high-end sports activities like golf and horsemanship, and actively participate in CEO training program and other courses. In spare time, they tend to take part in wine and tea appreciation activities or communicate with personnel with similar collection hobbies. And this makes consumption a link for HNWIs to contact with each other and a platform for them to communicate with each other. Through consumption, HNWIs extend their own society connections, communicate with friends, and form a “social circle” based on wealth.
The trend of changes in the consumption demands of Chinese citizens: spiritual, social, circle-oriented and individualized
Spiritual: People hope to take part in more charity consumptions and charity activities, gain more education and training opportunities, and cultivate more personal interests in collection and other areas. People hope to see outstanding film and TV works and literature works, as well as wonderful drama and folk art works, to watch athletic competitions full of glamour such as car racing and horse racing, and hope to go closer to nature through such as self-help traveling, enjoying refined countryside life, and tasting green and organic food.
Social: Consumption gradually becomes a link for people to contact with each other and a platform to communicate with each other. Car friends club and yacht club are established by buyers of luxury cars and yachts, alumni associations by participants of training programs such as EMBA and traditional Chinese culture, backpackers club by outdoor self-help travelers, and famous wine and artwork salons by collectors of wines and artworks. In these places, people can communicate with each other about information, improve personal accomplishment and broaden horizon.
Circle-oriented: Circles are associations established by some people with similar interests due to certain environment, such as regional circle, industry cycle, hobby circle, and schoolmate circle, and personal friendship is the core for the existence and development of circles. Those outside a circle can hardly join it while the group inside it will often organize collective activity such as investigation, gathering and travel. Upon project planning, circle is also the fastest and most effective communication channels. No one wants to leave the circle, but everyone desires to join one.
Individualized: Popular and universal commodities are not loved by people any more. What is most obvious is that people often put those clothes with monotonous styles away unheeded but those with leisure, individualized and unique styles are often preferred by people. As for decoration of houses, people keep away from the monotonous and unified modes, and begin to pursue individuality, taste and comfort. In addition, individualized consumption is also manifested by the value of consumables. Some individualized consumption has reached the level of million, such as off-road vehicle, racing car, luxury watch and famous dog.
About IB
As an A-share listed company, IB is one from the first batch of joint-stock commercial banks approved by the State Council and the People's Bank of China. On October 31, 2008, IB became the first Chinese “Equator Bank”. This signifie s that IB has a leading position in introducing advanced international mode, strengthening the control of environmental and social risks, and promoting scientific and sustainable development.
Since its establishment in August 1988, IB has been advocating the philosophy of "Sincere Service, Growing Together" and endeavored to offer comprehensive, top-quality, and high-efficient financial service s for customers. According to the ranking of Top 1,000 Banks in 2011 released by the British Magazine, The Banker, IB ranked No.83 in terms of Tier 1 capital, up by 14 over the previous year and No.75 in terms of total assets, up by 18 over the last year. In the ranking of 2011 Top 500 Chinese Enterprises released by the US magazine, Fortune, IB ranked No.84. Among the “40 Chinese Companies with the Highest Profit Margins”, it came in the 11th place. Among the“40 most Profitable Chinese Companies”, the Bank came in the 15th place. In various appraisals organized by authoritative institutions, IB has won a number of important prizes with extensive influence in succession, including “Annual Best Joint-stock Bank”,“Annual Board of Directors Award of Shanghai Stock Exchange”, “Gold Tripod Prize”,“Best Corporate Citizen Prize”, etc.
At present, IB has opened 647 branches in Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Hangzhou, Tianjin, and other major cities around China. The Bank has a wholly-owned subsidiary, Industrial Bank Financial Leasing Co., Ltd., and has acquired a controlling stake in the subsidiary, China Industrial International Trust Limited. Headquarters-level operating institutions such as Capital Operations Center, Credit Card Center, Retail Banking Management Headquarters, Assets Custody Department, Banking Cooperation Services Center, Investment Banking Department, Futures Finance Department, Funds Finance Department, Private Banking Department, Trade Finance Center and Sustainable Finance Center have been set up in Shanghai and Beijing. And IB has established an online banking platform “Online IB”(www.cib.com.cn), a telephone banking platform “95561” and a mobile banking system “Wireless IB” (wap.cib.com.cn), and has formed correspondent banking relationships with over 1,000 banks worldwide.
About private banking of IB
The Private Banking Department of IB was established in April 2011. With headquarters located in Shanghai, it is a headquarters-level department of IB. This department aims at accelerating the development of private banking service, adapting to the demands of high-end customers, and expanding the group of high-end customers, and it strives to form distinctive features and comparative advantages in the field of private banking business at home. The Private Banking Department of IB is committed to providing more professional, superior and efficient financial services to customers and meeting their multi-level demands.
About Hurun Report: We Know Chinese Billionaires Better!
In September 2010, Hurun Report was conferred the “Contribution Award for Support to the Development of Women” by All-China Women's Federation. Madam Chen Zhili, Vice Chairwoman of the Standing Committee of the National People's Congress and President of All-China Women's Federation, presented the award to Rupert Hoogewerf, and gave high comments on the contribution of Hurun Report to promote the development of Chinese female entrepreneurs at home for years and introduce them to foreign countries.
In September 2009, Rupert Hoogewerf was conferred the “Magnolia Commemorative Award” of Shanghai Municipality, which showed Shanghai Municipal People's Government's recognition of the contribution of Hurun Report to the city for ten years. Magnolia Award is set up for those foreign experts and friends that make active contribution for the development of friendly communication and cooperation between Shanghai and foreign cities and to the economic construction and social development of the city. Li Mingjun, Director of Shanghai Foreign Affairs Office, presented the award to Rupert Hoogewerf and gave high comments on the outstanding contribution of Hurun Report to the international cultural exchange of the city for over 10 years.
In March 2011, Rupert Hoogewerf was praised as one of the “Top 10 Wealth Management Figures with Greatest Influence in China” by Money Weekly. The magazine commented: his behaviors pose a challenge to the traditional concepts of Chinese people while he believes that his operation can help Chinese billionaires to become more self-disciplined in the process of wealth accumulation. The rich list prepared by him each year reveals more wealth of billionaires to the public and make people look at wealth and billionaires in a more active and positive attitude.
Hurun Report has the monthly magazine Hurun Report, The Schools Guide, Hurun Horse & Polo, Wings & Water, and Hurun Research Institute as well as a special department to plan business activities for Chinese entrepreneurs and high-income earners. The magazine Hurun Report targets at the rich Chinese elites. With profound influence, the magazine is recognized as the authority to trace and record the consumption habits and trends of Chinese rich people.
Hurun Report was initiated in 1999, and now Hurun Rich List becomes the most authoritative ranking of the richest individuals in China and it is also regarded as the list of celebrities in the business field of China. Following Hurun Rich List, Hurun Report releases Hurun Philanthropy List in every May, in which the most generous Chinese rich men and women are listed. Hurun Art List released in each March shows the top 50 alive Chinese artists whose works witnessed the highest sales volume through public auction. Best of the Best released in each January ranks the top luxury brands in China, and the Hurun Wealth Report released in each April announces the number of millionaires distributed in each region across China.
For more information, please visit the website of Hurun Report(www.hurun.net).
Official microblog of Hurun Report: http://weibo.com/hurunreport