Forbes reports on the rising affluence of young Chinese:
“People under age 32 are driving sales. It’s shocking to me how few companies actually understand that,” said Shaun Rein, head of China Market Research Group. A McKinsey report released earlier this month found that wealthy consumers in China are 20 years younger than their peers in the U.S. and Japan. A whopping 80% of them are under age 45, compared with 30% in the U.S. and 19% in Japan. McKinsey defined “wealthy” as urban households earning over 250,000 yuan, or about $37,000, a year.
That means a company like Lancome, which is the largest luxury cosmetics and skin care brand in China, had to tailor its anti-aging product line by convincing young people that they needed to take action earlier on such skin care, McKinsey notes. Gucci and Louis Vuitton have understood that “their bread and butter in mainland China will actually be 22 to 32 year olds,” so they’ve promoted 500 yuan ($73) to 1,000 yuan ($146) bags for that segment, Rein said.
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.