While attending the Christie’s Global Leadership meeting in London I had the good fortune to speak with Rupert Hoogewerf, a renowned expert on the economic status of China’s elite and publisher of the Hurun Report, best known for its “China Rich List.” In 1992 Hoogewerf was named China’s “Man of the Year” for identifying where and with whom the majority of the wealth resides.
The United States reports 400 billionaires, a great many of whom have inherited their wealth. Not only is China known to have an astounding one million millionaires, but there are currently 271 known billionaires in China, although it is believed on high authority that there are actually closer to 600 billionaires. Each of these individuals except one, an heiress, is self-made. The wealth has been acquired within the last 30 years. The average Chinese billionaire is 51 years old, with a 48 year old wife and a 21 year old child. And with the recent boom, many are beginning to divest out of their companies and it is expected that in 20 years they will hand the companies over to their highly educated – and often educated abroad – children.
Culturally, it is found that these billionaires feel a great need to make their “new money” into “old money” in an effort to dispel the perceived crass spending of the nouveau riche to that of the more refined spending of an aristocrat. How do these spending habits translate? Money is spent and donated to gain political position and philanthropic recognition. Various executive MBA programs are attended in an effort to gain knowledge and respect. More and more is spent on health, food and fitness. The Chinese ultra-wealthy also buy the best in everything; from companies (think Volvo) to art, antiques, wine, and watches – as evidenced in the Christie’s auction house results from Hong Kong. In addition, amongst all of this, is the strong desire to own the best in real estate locations and brands.
Real estate is the number one contributor leading to wealth with one third of China’s billionaires being large owners and/or developers. Energy is the fastest growing industry leading to wealth, followed by technology and retail. One of the more interesting statistics is that 95% of the sum of the Chinese billionaires’ wealth is created on domestic consumption as opposed to exports. This wealth is currently insular and not dependent on US policy or anyone else.
What does this mean to us? The purchase of Volvo by Chinese billionaire, Li Shufu, is just the beginning. The wealthy are starting to spend outside of China and strong prediction states the real wave of money will come in 2015.
Beyond the American Dream
Pacific Union International professionals John Lee and Eva Hom share thoughts on the Asian Communities stateside living the American Dream and promoting homeownership.
Beyond the American Dream! from John Lee on Vimeo.