There's a wonderful report out recently by McKinsey on China's rich. Let me go through a few of the factoids, which paint, I think, a telling picture of what it's like to be a yuppie in the People's Republic.
In 2008, the report said China had 1.6 million wealthy households. By 2015, it will have more than 4 million, making it the world's fourth-largest country in terms of its number of wealthy households after the United States, Japan, and the United Kingdom. (McKinsey defines the number of wealthy households as urban households that make more than 250,000 RMB -- about $36,500. We can definitely debate whether McKinsey set the bar too low.)
The most interesting thing about the report is the argument that China's rich are different. First, they're younger. A lot younger. Eighty percent are under 45 compared with 30 percent in the United States and 19 percent in Japan.
Second, they are getting rich quicker. About one-half of today's wealthy consumers were not wealthy four years ago, and more than half of those who will be classified as wealthy in five to six years are not wealthy today. Whoa! Talk about nouveau riche.
Their spending habits are also distinctive and changing rapidly. Only a few years ago, Chinese consumers made most of their luxury goods purchases abroad. Today, 60 percent are made in mainland China, the report said -- which definitely explains the presence of those high-end (almost always empty) upscale boutiques in many of China's malls. Somebody must be shopping.
The report notes that because China's rich are so young, firms have changed the way they market. Lancome, for example, has won the top spot in cosmetics by emphasizing the need to take early action to fight aging. Because there is less brand-awareness, firms emphasize their workmanship. When Zegna opens up a new store, for example, it gives demos on how its ties are made.
The Chinese, however, are brand-aware enough to be insulted by special "made for the Chinese market." That was Longines' mistake. In the 1980s it launched a brash line of watches for Chinese only. It bombed. Longines switched tactics and now China is its biggest market.