China Luxury Living Index 2007

Source:胡润百富 Author: IssueTime:2007-08-15

(Shanghai, August 15, 2007) Hurun Report China Luxury Living Index rose by 8.74% over the past year, more than double the consumer price index.


COST OF LUXURY PRODUCTS RISE BY 8.7%, TWICE AS FAST AS CPI

 

US$5 MILLION REQUIRED FOR MEMBERSHIP TO NEW ‘UPPER CLASS’.

150,000 INDIVIDUALS CAN AFFORD THAT.

 

Hurun Report China Luxury Living Index

(Shanghai, August 15, 2007) Hurun Report China Luxury Living Index rose by 8.74% over the past year, more than double the consumer price index. Tracking the rise in costs of a basket of luxury products in China, the price hike of the China Luxury Living Index was led by increases in luxury residential, golf memberships and executive education.

 

Whilst the overall consumer price index climbed 3.5% since the beginning of the year, Hurun Report's index of 32 luxury goods climbed on average 8.74%, showing that price inflation for luxury products in China is considerably stronger than that of everyday products.

 

Rupert Hoogewerf, CEO of Hurun Report, a leading luxury business magazine in China which also publishes the annual China Rich List, says the hike in the cost of luxury items in China is driven by the growing number of wealthy individuals, a gift-giving culture and the important matter of ‘face’.  Whilst part of the increase may be associated with last April’s luxury tax of between 10% and 20% levied on certain luxury imports, it also reflects the desire of luxury brands to keep their products differentiated. The hike comes despite the 4.5% rise in the value of the renminbi, making imported goods cheaper.

 

What went up? A 372sqm villa in Shanghai rose by 18.6% to RMB 19m, a golf membership at the premium Sheshan Golf Resort by 25% to RMB 1.6m, an Executive MBA at Tsinghua University by 16% to RMB 290,000, a Patek Philippe Nautilus by 6.5% to RMB 234,700 and a Rolex Oyster by 4.37% to RMB 79,960.

 

Drinks and smokes remained largely unchanged. A bottle of Swellfun ‘baijiu’ maintained its price of RMB 2,080 whilst a packet of Panda cigarettes was still RMB 180, although a bottle of Louis XIII cognac rose by 12%.

 

Several items in Hurun Report China Luxury Living Index declined in price, mainly on the back of the renminbi rise. For example, the average cost of a luxury trip overseas was down by 4.5% compared with the previous year.

 

Hurun Report China Luxury Living Index is calculated using a basket of 32 products and services typically reserved for China’s wealthiest individuals, including golf memberships, Rolls-Royces and luxury watches. This is the first year for Hurun Report to produce the China Luxury Living Index. For a full breakdown on the latest prices of our basket of luxury goods go to www.hurun.net.

 

APPENDIX 1 – Hurun Report China Luxury Living Index



Price Change *

Market price **


Automobiles and Yachts



1

Rolls-Royce Phantom EWB

9.55%

6,880,000

2

Mercedes-Benz S500L

1.03%

1,768,000

3

BMW Z4 3.0si

8.33%

650,000

4

Ferretti Yachts 630

4.55%

34,500,000






Watches, Jewelry & Writing Instruments



5

Patek Philippe Nautilus 5712/1A

6.49%

234,700

6

Rolex Oyster Perpetual Datejust 116233

4.37%

79,960

7

Buben & Zōrweg Time Mover ® Evolution 4

16.47%

39,600

8

Cartier Love Bracelet

1.95%

31,400

9

Montblanc Meisterstueck 149 Fountain Pen

3.40%

6,090






Accessories & Skin Care



10

Louis Vuitton Speedy Bag

5.56%

5,700

11

Chanel A01112 Bag

8.43%

19,300

12

Hermes 90cm Scarf

1.05%

2,880

13

Vertu Signature Series

31.58%

250,000

14

Lancôme Secret de la Vie 50ml

\

2,980






Luxury residential & Interiors



15

Shanghai Shimao Sheshan Villa (700)

12.50%

31,500,000

16

Shanghai Tomson Golf Villa (372)

18.60%

18,972,000

17

Beijing Cathay View Courtyard Residences (228)

24.44%

6,384,000

18

Da Vinci Leather Double Sofa

10.29%

300,000

19

Steinway Concert Grand D

3.70%

1,400,000






Drinks & Smokes



20

Louis XIII bottle

12.24%

11,000

21

Swellfun bottle

\

2,080

22

Pu'er Tea aged for 30 years

33.33%

20,000

23

Davidoff Cigar No.2

\

3,500

24

Panda Cigarettes

\

180






Business Jets & Clubs



25

Private Jet 800XP Rental fee per hour

\

25,000

26

Mission Hills Golf Club Diamond Membership

4.63%

1,130,000

27

Sheshan Golf Club Membership

25.00%

1,600,000

28

Chang'an Club Membership

\

166,000






Education



29

Tsinghua University EMBA

16.00%

290,000

30

Harvard University's tuition fee of Master degree for kids

24.28%

388,561






Luxury Travel



31

Lijiang Banyan Tree (Deluxe Pool Villa) 3 nights

-3.74%

27,867

32

Peninsula Hong Kong (Superior Harbour View Suite) 3 nights

-4.41%

26,695

* Percentage price increase from 28 Feb 2006 to 28 Feb 2007

** Market price at 28 Feb 2007

 

 

US$5 million required to join new Chinese ‘Upper Class’

150,000 Chinese individuals now have private wealth of US$5 million, forming a new ‘upper class’ of Chinese society. The price of membership?  US$5 million.

 

Of the US$5 million required, half of that goes on the villa tucked into a prestigious compound. Next comes decorating and here a Wu Guanzhong, one of the best-known Chinese contemporary painters, on the wall seems to be a must-have and costs RMB 2.9 million. We added in a UBS private bank account, on the grounds of the fast expansion of private banking in China, and also for that undeniable status effect. Your business car is likely to be a Mercedes-Benz S600 at RMB 1.8 million. Your golf membership is probably at Mission Hills in Shenzhen which comes at the cost of RMB 1.1 million.  Your annual spend, which only accounts for 4.4% of the US$5 million.

 

Table: Size of Market – Number of Wealthy Individuals in China

Personal   wealth

# of

individuals

US$1m

500,000

US$5m (new aristocracy)

150,000

US$10m

35,000

US$100m

2,000

US$1 billion

50

Source: 2007 Hurun Report research

 

APPENDIX 2 – List of Items Required for Membership to New ‘Upper Class’

Category

Product/Service

Cost RMB

Percentage of total spend

Luxury Residential

Shanghai Tomson Golf Villa (372)

18,972,000

49.59%

Painting

Wu Guanzhong Painting

2,900,000

7.58%

Home Theatre

Bose home theatre system

48,800

0.13%

Furniture

Da Vinci Leather Double Sofa

300,000

0.78%

Piano

Steinway Concert Grand D

1,400,000

3.66%

Automobile

Business Car Mercedes-Benz S500L

1,768,000

4.62%

Automobile

Self-drive Car BMW Z4 3.0si

650,000

1.70%

Watch

Patek Philippe Nautilus 5712/1A

234,700

0.61%

Jewelry

Cartier Love Bracelet

31,400

0.08%

Education

Tsinghua University Executive MBA

290,000

0.76%

Education

Harvard University Masters Degree

388,561

1.02%

Golf Club

Mission Hills Golf Club Diamond Membership

1,130,000

2.95%

Private Club

Chang'an Club Membership

166,000

0.43%

Private Club

Yongfoo Elite Membership

20,000

0.05%

Financial Services

UBS Private Bank minimum deposit required

7,740,900

20.23%

Financial Services

CMB Personal Financial Services minimum deposit required

500,000

1.31%

Writing Instrument

Montblanc Meisterstueck 149 Fountain Pen

6,090

0.02%





Annual Spend



4.40%

Fashion

Giorgio Armani - 2 suits a year

38,000


Fashion

Chanel - 2 suits a year

90,000


Fashion

Hermes - 2 scarves a year

5,760


Fashion

Louis Vuitton Speedy Bag

5,700


Fashion

Chanel A01112 Bag

19,300


Skin Care

LA MER (Cream 60ml) - 3 bottles a year

6,900


Skin Care

Lancôme (Secret de la Vie 50ml) - 2 bottles a year

5,960


KTV

The Rainbow Room (Shanghai) - 5 times a year

50,000


Laptop

Thinkpad Laptop T43p 2668Q2C

33,500


Mobile Phone

Vertu Signature Series

250,000


PDA

Dopod PDA 858

6,680


Educating kids

Cost of educating kid in US. for one year

480,000


Luxury Travel

Air France business class return with 7 nights at the Ritz Paris

79,168


Luxury Travel

Private Jet 800XP 3 hours rental

75,000


Luxury Travel

Yalong Bay Villas & Spa Resort (Golf / Lake View Villa) 3 nights

31,800


Luxury Travel

Lijiang Banyan Tree (Deluxe Pool Villa) 3 nights

27,867


Luxury Travel

Peninsula Hong Kong (Superior Harbour View Suite) 3 nights

26,695


Luxury Travel

Pudong Shangri-la Hotel (Executive Room River View) 2 nights

9,085


Drinks

Cognac, Chinese ‘Baijiu’ & Champagne (Louis XIII, Chivas, Moutai,   Swellfun, Wuliangye & Veuve Clicquot)

110,970


Tea

Pu'er Tea aged for 30 years - 1000g a year

20,000


Cigarette

Panda Cigarettes - 280 packages a year

50,400


Cigar

Davidoff Cigar (No.2 ) - 2 boxes a year

7,000


Dining

Shanghai South Beauty – dining 10 times a year

15,000


Dining

Shanghai Tanfu Cuisine (Treat ) – dining 10 times a year

120,000


Dining

Shanghai Sens & Bund – dining 20 times one year

32,320


Dining

Beijing First Star – dining 15 times a year 

7,500


Pets

Tibetan Mastiff Dog

80,000


TOTAL


38,257,856

100%

 

About Hurun Report Inc.

 

Nobody Knows China’s Rich Better!

 

Established as a research unit in 1999 by British accountant Rupert Hoogewerf, Hurun Report Inc. has grown into a leading research house, media and lifestyle investments business based in Shanghai, China, best-known for its rankings of the richest people in China, India and the rest of the world.

 

Hurun Report Inc. has four divisions: Hurun Research Institute; Hurun Media; Hurun Conferences and Training, an active events division targeting entrepreneurs and high net worth individuals; and Hurun Lifestyle and Investments, with investments in education, interior design, horses, bespoke tailoring, media and retail.

 

 

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