All studies published before the financial crisis showed that the number of very rich Chinese has grown dramatically over several years:
- "The Rich China List" (Hurun Report) showed a list of 50 millionaires in 1999; in 2007 it increased to 800 millionaires (with more than 100 million dollars at their disposal) and 106 billionaires.
- The Merrill Lynch "World Wealth Report" listed 415,000 High Net Worth Individuals (having more than one million dollars in "financial assets ") in China in 2007 – i.e., 20% more than in 2006.
The financial crisis was unable to make inroads into this wealth: The Hurun Report indicates that there were still 101 billionaires in 2008. All recent studies on the progress of luxury in China (Ernst&Young "China: The New Lap of Luxury" in 2005) suggest that by 2015 this country will be the second global luxury market (with 29% against 12% in 2004), thereby supplanting the United States. However, the traditional analysis of the penetration of luxury brands in the Chinese market suggests that it is the "super rich", by their wealth and tendency towards conspicuous consumption, who will form the impetus for the development of the luxury market in China. This analysis also suggests that men count for 90% of the sales of luxury goods. It seems that this pattern has proved too simplistic, is evolving very quickly, and that the consumers of luxury goods can be split into 4 distinct groups, extending well beyond the case of the simple "super elite":
- The "Old Emperors" - "Look at me, I'm Rich": these survivors of the Cultural Revolution, having made their fortune in business and having important political connections, belong to the sector of traditional consumption of ostentatious luxury. "It's expensive therefore it's the best. It shows I earn a lot of money. It shows I have power."
- The "New Masters" - "Look at me, I am discerning": These representatives of China's economic success use luxury brands to prove their discernment and the validity of their choice. "I know how to identify a counterfeit product". "It's high quality. It shows I have good taste. It shows I am well educated."
- The "Women of Power" - "I am not Rich but I Deserve it": These women, aged between 25 and 35, with above-average incomes - but who are not a part of the rich elite - do not hesitate to live on credit in order to buy luxury goods which affirm their success. Traditional in her professional life, she can become a "party girl" at night. She handles her multiple identities easily, and luxury is a form of compensation, reward for the pressure, and the stress she endures in her work.
- The "Young Emperors" - "6 people cater to my needs": In their twenties, they are the single children of the "one child per family" policy practiced by the Chinese government for several years. These children of the internet generation (mostly urban) are aware of all the finesses of the luxury brand "landscape" - and are probably its greatest connoisseurs. They have 6 sources of income to help meet their material needs: their 2 parents and 4 grandparents. Studies estimate that a half of the income of Chinese urban families is spent for the benefit of its youngest member.
Thus the consumption of luxury goods in China today stems as much from the middle class as from its elite, women and men, young and old. The rich and older man is being gradually replaced by the young woman that comes from the middle class. What makes them interesting to luxury brands is the fact that they represent more than 100 million.
Once the crisis is behind us, luxury brands will resume their development thanks to them.
