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People's Daily Online>>China Society

Rising wealth boosts luxury consumption

By Liang Fei (Global Times)

14:16, March 05, 2012

China has the biggest number of rags-to-riches millionaires in the world, and their growing purchasing power has formed a solid base for the growth of the world's biggest luxury market, experts told a forum in Shanghai over the weekend.

Some 8,000 Chinese millionaires with assets of more than 100 million yuan ($15.88 million) have started their businesses from scratch, news portal website 163.com reported yesterday, citing Rupert Hoogewerf, founder of Hurun Rich List. In addition, there are 960,000 millionaires who own more than 10 million yuan in assets in the country, Hoogewerf said.

The burgeoning rich population has catapulted China into the world's biggest luxury market last year, despite the fact that many people in the country still can not afford basic medical care. In 2011, the haves in China spent 270 billion yuan on luxury goods, with an annual growth rate of 25 to 30 percent, a survey by consulting firm Bain & Co showed over the weekend.

"China has demonstrated big potential in terms of luxury consumption," Cai Sujian, head of the China Luxury Institute, told the Global Times yesterday. "Only 5 percent of the Chinese are regular buyers of luxury brands, but in 10 years, the number will grow to 30 percent, similar to that in the US," he predicted.

Experts said that Asia, especially China, has become a new growth engine for the world's luxury market. Compared with the 25 percent growth in China last year, luxury consumption grew by 8 percent in North and South America, 7 percent in Europe and 2 percent in Japan, according to Bain & Co's report.

As their wealth grows, the taste of the affluent Chinese is also becoming more sophisticated. Besides leather bags and Swiss watches, "luxury services like exclusive club experiences have become new favorites," Cai noted.

Other than the rich, an increasing number of white-collar workers in big cities will join the army of luxury buyers, and "they will account for the majority of luxury buyers in China," Yu Guo, a senior consultant at Adfaith Management Consulting, told the Global Times.

Highlighting China's luxury consumption is also part of the marketing strategy of the luxury brands, because they want to boost demand among the Chinese consumers, Cai said.

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