LUXURY/China: Survey by Hurun report out today shows overall spending by wealthy Chinese fell 15% y/y in 2013. It is set to deteriorate further. The survey shows 25% fewer people plan to give a luxury gift at Chinese New Year in two weeks time
FT Article : Austerity drive crimps gift-giving by China’s rich
China’s richest people have sharply cut gift-giving in the past year, as Beijing seeks to quash government officials’ lavish lifestyles underwritten by Chinese businessmen.
The Hurun Report, chronicle of all things wealthy in China, said in its 2014 Luxury Consumers Survey that 25 per cent fewer people plan to give a gift over Rmb5,000 ($826) at Chinese New Year – in two weeks’ time – than last year. Overall, their average luxury spending fell by 15 per cent, from Rmb1.77m last year to Rmb1.5m this year, “possibly due to the impact of anti-corruption initiatives and a slowdown in the economy”, Hurun said.
The Hurun Report surveyed 393 mainland Chinese with personal wealth of Rmb10m or more.
President Xi Jinping has made it a top priority to crack down on government ostentation and corruption, and that has created an atmosphere where many businesspeople do not dare give flashy gifts to curry favour with government officials – and the officials do not dare accept them.
“Chinese officials are looking for more discreet gifts, something that can be consumed in the home, like medicine or a massage chair,” says Shaun Rein, of China Market Research in Shanghai. “People are telling us, they used to give an expensive gift because they expected something in return, but now the officials are in lockdown so they give something less valuable just to maintain the relationship.”
In the first 11 months of last year, for example, Chinese imports of Swiss watches fell 15 per cent year on year, largely because of the crackdown on gifting.
Hurun found that the rich are also not such fans of collecting watches for their own use any more either: this has been overtaken, for the first time in five years, by collecting traditional Chinese ink paintings.
The report said Chinese millionaires’ confidence in the local economy has risen for the first time in five years, with 3 out of 10 now feeling “extremely confident” in its prospects – but that apparently is not stopping them from wanting to leave China altogether.
“The number of wealthy individuals who have emigrated, or are planning to do so, rose from 60 to 64 per cent”, but only 15 per cent want to give up Chinese nationality to move. Most seem to want to have it both ways, by acquiring permanent residency overseas – the US is the most popular destination – while maintaining ties to China, Hurun says.
Those who want to send their children overseas for pre-university education prefer the UK, Hurun notes, while the US is still preferred for undergraduate study.
And China’s rich are healthier now, too – or at least they say they are: 61 per cent say they do not smoke and 40 per cent say they are teetotal (up 12 percentage points from last year).