A slower economic growth and dropping stock markets is not stopping the growth of superrich, says Rupert Hoogewerf, the founder of the Hurun China Rich List, in the Korea Herald. He expects a record high of 450 Chinese dollar billionaires, up 26% from last year.
The Korea Herald:
The trend of going global among the Chinese superrich is strong even as the Chinese economy is slowing down, he noted.
“When people talk about going global, actually it means they want to buy technology to give strategic advantage to their (second-biggest) market. They want to buy (global) brands to give strategic advantage domestically,” he said.
China’s leading companies, driven by tech giants, have pushed for strategic merger and acquisition deals in many countries, including Korea, since 2010. For instance, Chinese Internet giant Tencent bought a 28 stake in CJ Games, a game unit of CJ Group, with rising demand for Korean tech and consumer brands in China.
“The strategic investments overseas give Chinese companies access and understanding of global companies,” Hoogewerf said.
At the individual level, Chinese rich people are also turning to overseas markets by purchasing properties across the world.
According to Hoogewerf, the trend is based on concerns about the Chinese yuan’s value.
“The yuan is quite strong, but maybe not so in the future. The Chinese rich try to hedge risks by diversifying their assets. This has driven a very interesting phenomenon. We’ve seen Chinese buy properties across the world. China is one of the biggest real estate buyers in the U.S. now,” he said.
The top three destinations for Chinese individuals’ real estate acquisitions in North America are Los Angeles, Vancouver and New York. In Asia, they favor Hong Kong and Singapore.
In Europe, London is the only target city for property purchases. Most of these places are English-speaking countries, but there are also emerging places like Korea’s Jejudo Island in non-English speaking countries.
According to the Ministry of Land, Infrastructure and Transport, the total area of land on Jejudo owned by Chinese investors rose to 8.34 square kilometers valued at around 233 million last year, up from 1.42 square kilometers in 2011.
“The reason why Chinese people like Jejudo is because the island is only an hour’s flight from Shanghai. Plus, it has exposure to the international market. Even then, the property price in Jejudo is still very cheap,” he said.
Despite worsening economic conditions in China, the wealth expert forecasts that Chinese rich will be able to create more wealth, backed by being one huge market.
“The number of successful Chinese has continued to grow without a big impact from worsening economic conditions and the big stock market crash. It is very strange timing. I think this is because China is one big market,” he said.
“The growth of Chinese firms comes from the expansion of their market. The reason why American companies are still doing well for more than 100 years is because they have a big enough market (to survive). China has a bigger market.”
Are you looking for more experts on luxury goods at the China Speakers Bureau? Do check out this list.