Post date: May 07, 2013 1:17:20 PM
Reuters Business Video Report - The phenomenal pace of growth of China's economy may be slowing down, but its millionaire factory continues to churn out new well-healed inductees.
A just-released study by Bain and China Merchants Bank predicts the country's tally of high net worth individuals, those with at least 1.6 million U.S. dollars in investable assets, will grow another 18% this year.
The total now roughly equal to the entire population of South Dakota.Known for lavish spending on cars, homes and fine wines, there are signs China's nouveau-riche may finally be coming of age.
REUTERS REPORTER, JON GORDON,
"For more analysis let's get to one of the study's authors, Jennifer Zeng, partner at Bain and Co in Beijing. Jennifer, your study highlights the changing priorities among China's rich - from wealth creation over to preservation - so what do you think has brought that change about?"
PARTNER, BAIN AND COMPANY, JENNIFER ZENG,
"As in China, with individuals invested in different investment products going through the uppers and downs of the market, they started to become more 'risk return' aware and understanding that there's a risk in investment - associated with a certain investment. And secondly they are still thinking about how do I preserve my wealth and then transfer into the next generation."
REUTERS REPORTER, JON GORDON,
"And I guess part of that diversification is into overseas asset. We see an increased focus on investment immigration, so can you tell us why China's wealthy are so keen to invest and, for some of them, to leave China?"
PARTNER, BAIN AND COMPANY, JENNIFER ZENG,
"First, they think for convenience of the children's education, convenience of traveling with investment immigration status. And also thinking about the investment opportunities overseas as well as risk diversification, which links back to what we mentioned about the wealth preservation becoming more of a priority - wealth objective."
REUTERS REPORTER, JON GORDON,:
"Right, and then these same people are increasingly tuned into domestic politics when they consider their own wealth preservation. So what does that tell you?"
PARTNER, BAIN AND COMPANY, JENNIFER ZENG,
"Sure. I think as high net-worth individuals accumulate their assets they are increasingly becoming interested in over political situation as well as the economic environment development as well as the policy which might have impact on how they continue their business. Or, how do they thinking about wealth preservation."
REUTERS REPORTER, JON GORDON,
"Jennifer, your study doesn't actually look at capital controls and how the mechanism works for actually getting the money overseas, but does paint a picture of that trend increasing. What can you tell us about that? Is the money going to continue to pour out of China?"
PARTNER, BAIN AND COMPANY, JENNIFER ZENG,
"So what we have found is, since 2009, the percentage of asset allocated overseas has doubled. Secondly, the percentage of high net-worth individuals that have assets overseas also doubled. And for ultra high net-worth individuals the number is 50% of them already have asset overseas, for those we surveyed. And finally, 60% of those who already have assets overseas mention that they are interest to increase their shares in asset allocation going forward."
REUTERS REPORTER, JON GORDON,
"Right, so if you want to manage money in China maybe the best place to do it is out of China for these high net-worth individuals. Jennifer Zeng, we'll leave it right there. Jennifer Zeng of Bain and Company in Beijing. This is Reuters. I'm Jon Gordon."