This Getting to Know You blog was written by Lindy Ung, a member of the MultiConnexions team, who gives us some insight into the lives, preferences, and habits of super rich Chinese.
Happy May 20 – Chinese Valentine’s Day, a day characterised by increased spending on items including flowers, chocolates, and other romantic gifts. It is a day celebrated by young Chinese, especially the wealthy.
There are now more than 100 million Chinese in the world’s richest 10 per cent of people, surpassing the number of Americans in this category (at 99 million). As China has transitioned from a developing economy to a prospering one in recent decades, the number of wealthy people has also grown. Now, there are more than 4.4 million millionaires in China, which has increased by 158,000 since 2018. If this trend continues after the current global situation improves, we can almost certainly expect many more wealthy Chinese in the future.
So, what does this mean for Australia, and Australian brands?
Chinese millionaires in Australia
Australia’s millionaires only SIV (Significant Investor Visa) program has attracted many millionaires from China and Hong Kong. As of June 2018, more than 2,000 SIVs have been granted since the program’s launch in 2012, translating to AUD $10 billion worth of investment. Close to 90 per cent of Australia’s total SIVs have been granted to Chinese nationals. The visa’s code, 888, is an auspicious number designed to attract high net worth Chinese individuals. It allows those who invest AUD $5 million to make ‘complying investments’ in Australia.
Chinese millionaires in Australia rank among the country’s most prolific buyers of real estate, especially in Sydney and Melbourne. Australia offers safe and secure investments for high net worth Chinese migrants. Australia is also seen as an ideal destination for leisure and university education for their children among the Chinese upper class. According to ANZ Bank, many want to become ‘global citizens’ by obtaining second residency or citizenship in Australia to diversify their wealth and assets outside of China.
Young and entrepreneurial
Out of its high millionaire population, young, Chinese, self-made individuals are a growing demographic. Around 27.5 per cent of China’s ultra-high net worth individuals (who have more than $1 billion in personal wealth) are under 50 years old. This is higher than the global average of 13 per cent. The Hurun Research Institute’s China Rich List found that as many as 156 people under the age of 40 are part of the 1,800 top-earning individuals.
Young Chinese value entrepreneurship to add value to the economy. According to JWT Intelligence, 74 per cent of Chinese millennials would start their own business if they had trouble finding a job. More than 200,000 started their own business in 2017.
A taste for luxury
According to McKinsey 2019, Chinese consumers at home and overseas spent RMB 770 billion (AUD 168 billion) on luxury items in 2018, equal to a third of the global spend. This is set to almost double to RMB 1.2 trillion by 2025, when Chinese consumers are set to account for 40 per cent of the world’s spending.
China’s economic prosperity and aspirational society has led to many seeking an affluent lifestyle at home and abroad. Not only do they purchase name-brand luxury goods, they are active spenders on art, at auctions and in the automotive markets.
According to the Hurun Report Chinese Luxury Consumer Survey 2014, Chinese millionaires prefer to wear Cartier jewellery, Patek Philippe watches and Hermès accessories. Men also like to sport Armani outfits while women are big fans of Chanel clothing. Meanwhile, brands which are most coveted by the ultra-wealthy include Rolls Royce and Mercedes-Benz cars, Ferretti yachts, and Royal Salute and Hennessey spirits.
China’s Singles Day (November 11), the biggest shopping holiday in the world, is one example of China’s incredible spending power, led by the wealthy. In 2019, spending reached an all-time record of $38.4 billion within 24 hours as Chinese shoppers flocked to e-commerce sites like Alibaba, Tmall.com and Taobao.com to buy discounted luxury items.
An appetite for travel
Combined with their love of luxury, Chinese millionaires also love to travel widely. Four in five Chinese millionaires said they would likely travel abroad for holiday. An estimated 22 per cent of a typical millionaire’s non-essential purchases are also spent on travel, including airline tickets, hotels, cruises and travel experiences.
There is also an increasing trend among Chinese millionaires to pursue health, fitness and active lifestyles, and they incorporate this into their travel experiences. More than 85 per cent of respondents of a survey of 111 Chinese millionaires stated that staying physically active was important in their life, while 72 per cent said they followed a specific diet. Activities like diving classes, yoga retreats, sporting events, spas and road trips are popular among Chinese millionaires for their health benefits, promise of adventure and getting to know the local culture.
What the ultra-wealthy mean for your business
High net worth Chinese nationals represent a niche but lucrative target market for small, medium and large businesses alike. Advertising to this affluent demographic will allow you to tap into their enormous spending potential and financial resources.
Spending patterns and brand favourites differ widely among Chinese millionaires, depending on age, marital status, gender, level of wealth, consumer behaviour and values. That is why a one-on-one marketing strategy, rather than a one-size-fits-all approach, is needed to target their specific interests and lifestyles. Big data, online communication and intelligent targeted lead generation is the solution to understanding and reaching the sophisticated ultra-wealthy customer. This includes understanding their online behaviour, where and how they are searching for information and which Chinese platforms to target them most effectively. By tailoring your strategy to their needs, marketers can create a connection with them that speaks personally to their desires.
For further information on targeting wealthy Chinese in Australia with your next marketing campaign, contact MultiConnexions today.