Luxury good producers like Louis Vuitton and Porsche do not have to panic after Robert Frank’s WSJ article suggesting China’s wealthy stop spending. Frank looked at the lower middle class, argues business analyst Shaun Rein in CNBC. According to his research, the real wealthy Chinese spend more than ever.
The results show the ultra rich, people worth more than $10 million, are actually getting richer and remain very confident about their earning ability and those worth more than one million dollars also reported being very confident. The vast majority reported that they planned to spend at the same or higher level in 2012. One businessman in the services sector in Shanghai told me, “The economic problems are serious but we expect profits to rise by 30 percent next year. Even if profits don’t go up, I plan on spending at the same levels or more.”
What do these wealthy Chinese want? Our research suggests that they are continuing to go for ultra-high end products and are looking to buy luxury cars like Mercedes and BMW. Restrictions on the number of houses one can buy and a weak stock market is also making the wealthy spend more and invest less.
The result is that exclusive brands, like watch and jewelry brand Van Cleef & Arpels for instance, will continue to do well in 2012 as the wealthy start to differentiate themselves from others. Many wealthy Chinese told us they are tiring of the more popular luxury brands like Louis Vuitton because they are becoming too common.
- Only Europe can save Europe, not China – Shaun Rein (chinaspeakersbureau.info)
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- Poor health care and education cause rich to emigrate – Shaun Rein (chinaspeakersbureau.info)
- Bullish on consumer demand, retail – Shaun Rein (chinaherald.net)
- Why Louis Vuitton cannot afford to be too popular – Shaun Rein (chinaherald.net)