CHINA:GETTING RICH IS GLORIOUS

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CHINA:GETTING RICH IS GLORIOUS

 user 2006-02-02 at 11:26:00 am Views: 53
  • #14297

    In China, To Get Rich Is Glorious
    More Chinese are becoming millionaires — and driving a fast-growing market for luxury goods
    Wang
    Zhongjun is loaded and happy to flaunt it. He wears Prada shoes,
    Versace jackets, and a Piaget watch. He smokes Cohiba cigars from Cuba.
    He drives a white Mercedes-Benz  SL600, a silver BMW Z8, and a red
    Ferrari  360. His art collection includes hundreds of sculptures and
    paintings. Value: $30 million or so. Home sweet home is a 22,000
    square-foot mansion north of Beijing with antique British and French
    furniture, a billiard room with bar, and an indoor pool. When he tires
    of swimming, Wang can head to his stable (annual upkeep: $500,000) of
    60 horses from Ireland, France, and Kentucky. “Entrepreneurs in China
    today feel much safer than before,” says Wang, a 45-year-old movie
    producer who served in the Chinese army, studied in the U.S., and
    learned painting before backing internationally acclaimed films such as
    Kung Fu Hustle. “We are more accepted by the media, government, and
    society today.”
    That’s for sure. Even though Deng Xiaoping declared
    that getting rich is glorious nearly three decades ago, just a few
    years back China’s millionaires were running scared. When a Forbes
    Magazine survey of China’s richest appeared in 1999, wags called it the
    “death list” after a tax crackdown targeted many who made the cut and
    landed some in jail.
    Now China is embracing them. More than 300,000
    Chinese have a net worth over $1 million, excluding property, according
    to Merrill Lynch & Co. . And mainland millionaires control some
    $530 billion in assets, Boston Consulting Group estimates. “There has
    been a revolution in attitudes toward wealth,” says Rupert Hoogewerf,
    who authored the 1999 list. He now runs Hurun Report, a Shanghai-based
    company specializing in information about China’s rich, which just
    released a survey on millionaires’ buying habits. “People don’t
    appreciate how much cash there is running around in China today,” he
    says.
    “DIZZY” OVER SHOES
    Many people might not appreciate it,
    but luxury retailers sure do. Just five years ago mainland buyers
    accounted for 1% of global sales of luxury handbags, shoes, jewelry,
    perfume, and the like. Today the Chinese are the third-biggest high-end
    buyers on earth, with more than 12% of world sales, Goldman, Sachs
    & Co.  reckons. Within a decade, China will likely leapfrog Japan
    and the U.S. to become the top luxury market, predicts Goldman analyst
    Jacques-Franck Dossin. “China is experiencing huge wealth creation, and
    there is lots of conspicuous consumption related to that,” Dossin says.
    “People want to show they are successful.”
    How? By buying custom
    clothes, diamond-encrusted watches, pricey cars, gourmet meals, and
    fine wine. Zhao Hui, a chain-smoking 38-year-old restaurateur, real
    estate developer, and Ferrari owner from Shanghai, says he speaks no
    English, but he manages to pronounce “shopping” and “Tiffany”as he
    shows off his $50,000 Franck Muller watch. Richard Hung, a 43-year-old
    manager of a pharmaceutical company, has a closet filled with dozens of
    Armani, Gucci, and Canali suits and more than 100 pairs of Italian
    shoes. “I get dizzy when I look at shoes,” he says. Where to wear those
    duds? Try Beijing’s exclusive Chang An Club, where few blink at the
    $18,000 initiation fee. “Our members can afford it,” says General
    Manager Antonius van Gevelt, adding that Chang An aims to keep its fees
    higher than rival gathering spots. The rich “want to join the most
    expensive club in China,” he says.
    Luxury marketers are happy to
    serve up plenty of flash and bling to keep sales rolling. Louis
    Vuitton, which has a dozen boutiques across the mainland, in November
    served up 1,500 bottles of Veuve Clicquot and platters of pâté de foie
    gras at the celebrity-packed launch of a new Beijing store. And
    fashionistas still marvel at Miuccia Prada’s “skirt show” last spring,
    when she took over seven stories of Shanghai’s art deco Peace Hotel.
    CADILLAC CAFE
    Pricey
    wheels do pretty well, too. The Rolls-Royce outlet in Beijing is one of
    the brand’s top-selling dealerships. And Bentley Beijing has sold a
    half-dozen 728 stretch limos — at $1.2 million each, the world’s most
    expensive car — more than any other dealership in the world. For
    thriftier millionaires without an extra million to drop on
    transportation, Cadillac, Mercedes, or BMW are eager to help. Shoppers
    at any of a dozen “Cadillac Experience Centers” in the mainland, for
    instance, can relax on a black leather sofa and enjoy a glass of
    Rosemount Cabernet in the “Cadillac Cafe” while browsing through
    photo-rich brochures that describe the brand’s 102-year history. “Our
    whole showroom supports our brand: It’s modern, sophisticated, and not
    your traditional luxury vehicle,” says Stuart J. Pierce, who oversees
    the Cadillac brand at Shanghai General Motors Co. .
    Now the luxury
    goods marketers are looking far beyond Beijing and Shanghai to find
    China’s millionaires. Cadillac plans to have 40 showrooms in China by
    the end of 2007, and last year dispatched a 1959 El Dorado convertible
    on a seven-city “heritage tour” to drum up interest nationwide. At this
    month’s ice festival in the frigid northern city of Harbin, watchmaker
    Cartier has created a massive ice replica of its flagship Paris store.
    “Our aim is to have the second- and third-tier cities become a more
    important part of our business,” says Daniel Chang, who oversees
    Cartier’s sales in northern China.
    Lately China’s new moneyed class
    has gotten interested in more than fast cars, flashy threads, and
    extravagant timepieces. Growing numbers of mainlanders are snapping up
    everything from ancient scrolls and traditional ink paintings to French
    Impressionists. Christie’s International says mainland buyers account
    for 20% of purchases at its Hong Kong auctions, compared with virtually
    none five years ago. And while most collectors prefer Chinese art,
    mainlanders now bid on Renoirs, Monets, and Van Goghs in New York and
    London, and a Shanghai businessman paid $1 million for a Picasso in a
    private sale. “There’s tremendous potential,” says Ken Yeh, deputy
    chairman of Christie’s Asia .
    en as the likes of Cartier,
    Christie’s, and Cadillac try to separate China’s millionaires from
    their wealth, others aim to help them preserve it. Although foreign
    banks are barred from marketing their offshore services inside China,
    they are discretely wooing mainland clients via their Hong Kong
    offices, figuring those who have made money abroad are fair game. And
    soon, banking regulations in the mainland are to be relaxed. “In the
    long term, China can surpass Japan as a major market for wealth
    management,” says Kaven Leung, who oversees Citigroup’s private banking
    efforts in China.
    Diamond watches. Armani suits. Silver Bentleys.
    Private banks. Getting rich in today’s China is indeed glorious, and
    spending is even better
    .