China Luxury Living Index 2007
(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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