The newly released MasterCard Worldwide Index of China's Affluent shows that the demographic is strikingly young and evolving quickly. Their spending potential is massive, with all owning several private properties and putting money towards recreation, primarily travel.
The index, recently released by MasterCard International, offers a profile of families on the Chinese mainland who subsist on more than US$25,000 a year. Of the total, 76% are male; 64% are between the ages of 31 and 46; 67% are married, and 83% have at least one university degree.
This half-yearly publication provides insight into the consumption behavior, attitude, and lifestyle of the Chinese affluent, as well as their preference on the products and services provided by ten top brand names.
MasterCard interviewed 300 individuals from Beijing, Shanghai, and Guangzhou whose household annual income is between US$16,000 and US$50,000, or above. Results show that 25% of the interviewees fit into the wealthy category with an annual income of more than US$50,000.
Dr. Yuwa Hedrick-Wong, economic adviser to MasterCard Worldwide in the Asia-Pacific points out, "Chinese mainland affluent is astonishingly young. There 70% of the affluent are over the age of 45 in Japan, 95% in the Philippines, but only 14% in China." He also indicates that there are three reasons leading to the emergence of China's young affluent: first, the surge of foreign direct investment in China has brought about a large number of white-collar workers in the transnational corporations; second, after the reform to the state-owned enterprises, the professional technicians and senior managers are better paid; third, China's booming private economy has turned out many successful entrepreneurs.
Private Property: The Single Most Important Investment
The survey shows that all the affluent in China own more than one private condominium. In 2004, 26% of them owned 3 properties, and 8% owned 4. Their first properties averaged at 129 square meters, and 49% of them had already made their final payment. In terms of those who can afford to own a fourth one, 76% of them have no mortgage on the property. Their fourth properties averaged at 208 square meters. Wong believes that the affluent have viewed property ownership as a preferred way to invest their funds, but the housing prices won't be influenced much by this. As much as the affluent may like property ownership, they know that they need to diversify and as the housing boom moderates in the future, they will seek other venues to channel their investments.
Enormous Recreation Expenditure
In 2006, 92.6% of affluent families spent up to US$10,000 on recreation, in which traveling was the primary expenditure, followed by body building, theme parks, sports, and social life. During the past year, 43.3% of them have traveled domestically at least 3 times, and around 30% have gone overseas for more than three trips.
Hong Kong remains their most favored destination outside the mainland. Other attractions include: Macao (51.7%), Thailand (34.8%), Singapore (30.5%), and Japan (18.7%). Less than 10% of the segment visited France, Germany, or Italy in 2006. "These countries will develop into tourist destinations as popular as the US and Australia," said Wong.
Hong Kong tops the list of the most frequent business trip destinations for mainland affluent, thanks to its strong economic links with the mainland. Ranking second and third are the US and Singapore among those from Beijing, Singapore and Japan among those from Shanghai, and Macao and Thailand among those from Guangzhou.
In addition, almost half of the affluent prefer sightseeing on domestic travels, while less than a quarter favor historical sites. More interesting, the travel patterns of the three developed cities differ greatly: Seaside resorts are the favorite of nearly one third of Beijing's affluent, but not with Shanghai and Guangzhou's.
Watching foreign movies is the most popular recreation among this segment. Statistics show that it is favored by 81.5% of the affluent in Beijing, 86% of those in Shanghai, and 63.8% of those in Guangzhou, usually by young and well-educated females.
About 79% of the segment believes work is as equally important as recreation, working 8 to 10 hours a day on average.
Value Family Life and Support Public Welfare
The affluent class values family life. They believe that a happy family is the most precious thing in one's life, and spending time with family is a priority. However, they are also ready to sacrifice family time for work.
The affluent are also keen on the public welfare. About 73.6% of them support public welfare, and 38.9% are in favor of environmental protection. The ratios of their other public welfare activities are: blood donation (29.6%), volunteer work (21.8%), and cultural heritage protection (8.2%). About 39.5% of them said that they would continue to engage in public welfare and environmental protection, but there were still many of them who have yet to get involved.
(China.org.cn by Lu Lu August 15, 2007)