The wealthy elite in China have long since been a source of awe and fascination for many. Often viewed as a closed society, it remains broadly inaccessible to those operating outside its invisible boundaries.
The ‘super-rich,’ or ultra high net worth individuals (UHNWIs) have net assets valued at least $30 million. According to World Ultra Wealth Report 2017, China has 16,040 UHNWIs (net worth of $1,950 billion). This overwhelming financial power, that also extends to their families and extended family networks, has given rise to a belief that the ultra-affluent belong to a singular global elite that transcends geographical, cultural and social boundaries.
In our book, Luxury Brands in China and India (Palgrave Macmillan), we argue that the ultra-affluent in Beijing or Shanghai share similar and even common traits with their counterparts in London or New York, but they also embody both a distinctive, evolving socio-cultural and psychographic imprint, which can be understood using 6 broad idiosyncrasies…
Old vs. New Money. The ultra-affluent in China belong predominantly to the first generation of wealth creation. The Forbes list of China’s Richest 100 people showcase entrepreneurs or so-called ‘technopreneurs’ who have for example benefited from the boom in new technologies. These self-made entrepreneurs are generally younger than their western counterparts and intertwined with a higher tolerance for risk. A broader perspective indeed profiles the new affluent in China as belonging to a younger demographic compared to other geographies. The average age of a Maserati or Ferrari buyer in China is typically in his or her 30s.
1st vs. 2nd Generation. We are also observing the emergence of the second generation of the rich, known in China as ‘fu-er-dai’, who is expected to succeed first-generation entrepreneurs. The so-called ‘2Rich’ in China is renowned for a more visible and care-free attitude that is often associated with a lavish or bling spending lifestyle culture. Beyond the critical scrutiny of the media, the emergence of the second generation rich will not only represent a shift on lifestyle attitudes but also on wealth creation. Many have been educated in North America and have adopted a more aggressive approach to investing.
Family Cohesion and Division. The collective strength and protection of the family bond has been viewed as an important if not critical feature of Asian culture. This is of particular relevance given that family companies in Asia are more prevalent than in the US and Europe. Chinese families tend to follow the values and rituals of respecting family loyalties and the extended family hierarchy that is rarely exposed to the outside world. However, the often inseparable business and family interests can also be a potential source of conflict, particularly amongst family members belonging to different generations. The complexities of managing family ownership issues and competing interests of wealth preservation or creation are typical of family disputes.
Social Networks. Networks remains a distinctive facet of Asian society, particularly in East Asian cultures. The phenomenon of social networking is even more pronounced for the ultra-wealthy who seek sanction, support, solidarity, and protection amongst their closest peer group. Although there are signs that the social influence of guanxi, i.e. the formation and consolidating of relationships, is weakening due to the Chinese government efforts to curtail corruption, the ultra-affluent remain well-connected. As a result, the personal recommendations among these close-knit communities carry weighted importance. It also implies that group norms within these networks are firmly anchored as the notion of “saving face” is still very much apparent.
Cultural Identity: National vs. International. Despite Western influences, national pride is strongly ingrained amongst the super-rich in China. For example, philanthropy in China has strong local relevance and many wealthy Chinese collectors are inclined to acquire traditional art. Popular acquisitions are classical works with an emphasis on the reign of the Qianlong Emperor. Although the second generation rich are more exposed to the global milieu compared to their parents, they remain inclined to embrace local customs and rituals. The younger generation is undeniably seeking new and exotic experiences such as foreign travel, fine wines and fine dining, but they are also very much aware of their own national and cultural identity. An interesting observation within this context is the demand for watches that are related to zodiac signs. The Year of the Rooster has given rise to designs that are able to connect emotionally and culturally with affluent Chinese clients. For example, Juvenia, Jaquet Droz, Bovet 1822 and Vacheron Constantin launched limited editions.
The Super Rich – Markets of ‘One’. Luxury companies need to identify and target the super-rich beyond simply the criterion of wealth. Luxury companies need to therefore see each extremely wealthy individual as a ‘market of one.’ Let us consider the example of Johnnie Walker House in Beijing. Here, patrons can work with the Johnnie Walker Master Blender to create a personalised blend and share in the act of creation. Moreover, a total of only 200 patrons have access to so-called relationship managers who know the preferences of each member in order to ensure the whisky experience is as personal as possible.
Understanding the personal needs of the ultra-wealthy in China will also address cultural issues that are central to consumer behaviour. For example, superyachts are seen less for recreational use as in Western markets, but as a second home for the Chinese ultra-wealthy. Marketing to the super-rich is a complex, multi-faceted process. However, the opportunities should not be underestimated given that a new billionaire is created almost every week in China.
If you want to reach China’s UHNWIs you’re going to need to build relationships with the travel advisors that represent them. To find out how you can get accreditation to attend ILTM China, click here.