Rich People in China Favor Hermès, Stocks, and Gold; They Are Losing Interest in Real Estate Investment
Image source: Tuchong
The data once again proves the purchasing power of high-end consumers in China.
"In recent years, although consumption growth has been faster in the US, Japan, and the Middle East, the absolute biggest contribution to the global luxury market still comes from Chinese consumers. In 2022, high-end consumers made a significant contribution to China's economy, with the scale of the high-end consumer market reaching 165 billion yuan, a decrease of 5% compared to the previous year." said Hu Ruinong, chairman and chief researcher of Hurun Rich List.
According to the report "2023 Hurun Best Wealth Report" released by Hu Ruinong Research Institute, among the high-net-worth individuals surveyed in China, 56% plan to increase their consumption of luxury goods over the next three years, a higher proportion than those who plan to increase education expenses for children, travel expenses, or maintenance expenses.
In terms of luxury goods, 73% plan to increase purchases of jewelry, 67% plan to increase purchases of watches, 64% plan to increase purchases of clothing, and 40% plan to increase purchases of cars.
"Many of these luxury goods are not only valuable but also increase in value. Many classic styles are rising in price. Rich people seem to be consuming, but they are actually investing." said a person familiar with luxury consumption.
Hermès is the most loved by themselves and Chanel is the most liked for gifts
In the TV series "Thirty Something", the "Hermès Luxury Women's Group" photo shoot went viral. The television work reflects reality. According to the report, regardless of whether it's men or women, the most favored high-end fashion brand is Hermès, followed by Louis Vuitton.
"Since the fourth quarter last year, we have seen a strong demand in China." said Axel Dumas, executive director of Hermès.
Hermès' financial report showed that the company's sales revenue reached 29.91 billion euros (approximately 218 billion yuan) in the fourth quarter of 2022, an increase of 23% compared to the previous year, exceeding analysts' expectations of 17%.
The entire Asian market contributed approximately 15.93 billion euros (approximately 116 billion yuan) to Hermès' sales revenue. The financial report did not separately disclose China's performance, only describing it as "stable".
LVMH Group, which owns 75 brands, achieved record-high performance in 2022, with group sales income reaching 792 billion euros and operating profit reaching 211 billion euros, both increasing by 23%.
Jean-Jacques Guiony, chief financial officer of LVMH, said that the performance of China's market in the fourth quarter last year "was severely down", but has since recovered significantly as of early 2023.
According to the Forbes rich list, Bernard Arnault, CEO of LVMH, once ranked as the world's richest person in December 2022 and held the position until January 26, 2023.
Chaumet and international top brands keep pace
For the wealthy, jewelry and watches are not only consumer goods but also investment products. Analysts point out that for high-end brands such as precious metals, gemstones, or customized luxury products with original materials of high value and scarcity, there may be potential for appreciation.
According to the report, Chaumet has been the most favored jewelry brand among high-net-worth individuals for five consecutive years. Cartier and Van Cleef & Arpels have ranked second and third respectively. Tiffany & Co. maintained its fourth position, while Chow Tai Fook rose to fifth place.
In the first half of 2023, Chow Tai Fook's revenue reached 465 billion Hong Kong dollars, a year-on-year increase of 5.3%. This performance growth is related to the strong sales of gold jewelry and products.
Chow Tai Fook has rapidly expanded its retail network in the mainland, with an increase of 933 stores in the first half of this year. It is expected that the number of retail points in the mainland will reach 7,000 by the end of 2023.
In terms of watches, Rolex has been the most favored brand among high-net-worth individuals for two consecutive years, followed by Patek Philippe and Audemars Piguet.
High-net-worth individuals also attach great importance to image management. The report points out that 60%, 50%, and 40% of high-net-worth individuals plan to try skin care, oral beauty, and light medical beauty over the next three years. The top three most favored skincare brands are Estee Lauder, Laneige, and SK-II.
Add stocks and gold, reduce real estate investment
"This year's high-net-worth individuals' economic confidence is much higher than I expected, reaching its highest level in ten years." said Hu Ruinong.