3 Million Chinese Wealthy with Over 1.9 Billion Won in Assets: "Focus on Luxury Goods Consumption"

Korea International Trade Association '2022 China Wealthy Class Luxury Consumption Trends and Implications'

[Asia Economy Reporter Park Sun-mi] As the wealthy population in China rapidly increases, there is a call for Korean companies to pay attention to their luxury consumption.

According to the "2022 China Wealthy Luxury Consumption Trends and Implications" report released on the 1st by the Korea Trade Association Shanghai Branch, the wealthy population in China with investable assets exceeding 10 million yuan (approximately 1.9 billion KRW) has grown at an average annual rate of 14.5% since 2018, reaching an estimated 2.96 million people in 2021.

The top spending categories for these wealthy individuals were "travel" (19%), "children's education" (18%), and "luxury goods" (16%). In particular, for the ultra-wealthy (those with investable assets over 100 million yuan), "luxury goods" (19%) ranked first, followed by "children's education" (18%) and "travel" (15%).

In a survey conducted by the Hurun Research Institute targeting 750 wealthy individuals in China, 59% of respondents (multiple answers allowed) stated that their motivation for purchasing luxury goods was "for everyday use." Additionally, the most important criterion for selecting luxury goods was "high quality" at 72%, indicating a purchasing behavior that prioritizes practicality such as quality and design over promotions by celebrities or influencers. Furthermore, 42% of respondents had experience purchasing second-hand luxury goods.

The report stated, "Due to difficulties in purchasing luxury goods overseas caused by COVID-19, luxury consumption within China has significantly increased," and forecasted that the proportion of domestic purchases in Chinese consumers' luxury spending would sharply rise from around 75% in 2020 to about 95% in 2021.

The report further suggested targeting the emerging wealthy class formed by the recent activation of startups and the increase in high-income occupations in China with reasonably priced masstige products (a blend of 'Mass' and 'Prestige'). It also advised that original designs, viral marketing through social networking services (SNS), and the second-hand luxury market would be promising. Additionally, it emphasized the need to prepare high-end tourism services and products in anticipation of travel consumption by Chinese billionaires after the pandemic.

Shin Sun-young, head of the Korea Trade Association Shanghai Branch, stated, "If our companies differentiate themselves from traditional European high-end luxury brands in terms of practicality, quality, and design, and appeal to the younger wealthy class through SNS marketing, it could be a great opportunity," adding, "It is necessary to closely monitor the consumption trends of Chinese billionaires to open their wallets."

This content was produced with the assistance of AI translation services.