ASIA’S ERA OF YOUNG MILLIONAIRES- THE RISE OF THE WEALTHY CONTINUES!

ASIA’S ERA OF YOUNG MILLIONAIRES- THE RISE OF THE WEALTHY CONTINUES!

To produce this report, we spoke to 415 millionaires in China, Hong Kong, Singapore and the US as part Agility Affluent Insights™ study conducted by Agility Research & Strategy. The findings shared in this newsletter are from our freshly published HNWI Report (www.affluential.com/report/hni-report-2015), which was referred to on BBC on the 21st of September on Asia Business Report. Some key findings form the report include:

  • Unlike Asians, majority of HNWIs in the US are past mid-life. In fact, most of those in China have yet to hit 40
  • For all HNWIs in the US, Singapore, and Hong Kong, luxury is defined by the quality of their experience, but Chinese also require it to drive their status
  • China’s HNWIs demand exclusivity much more than those in the USA, Singapore, or Hong Kong
  • Chinese HNWIs are most likely going to drive the luxury market in the years to come

In 2015, the High Net-Worth Individual (HNWI) population of the Asia Pacific region surpassed that of North America. With Mainland China growing in wealth, and the US still dominating HNWI populations at a country level, these two markets will be an important target for premium brands and services over the coming years. However, while HNWIs are different from their mass affluent fellow citizens, they also display unique characteristics when compared to their wealthy counterparts from across the Pacific. These differences play a significant role in the development of marketing plans for premium goods and services. This is why winning brands value the importance of identifying key differences across HNWIs from the US and key markets in Asia.

OUTLOOK FOR THE FUTURE

Despite holding a minimum of USD$1,000,000 in investable assets, not all HNWIs are confident about their spending habits. HNWIs in the US are more cautious than Asians in their view of the future. Less than half see an improvement in their family life and are split on luxury spending (See Figure 1).

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Image-4However, both Asian and American HNWIs look forward to a positive economy over the next year, as the majority agree on seeing a stronger performance from their investments*. (figure 2). *survey was conducted before the Yuan devaluation, but recent indicators show that this has not yet affected the HNWI Chinese as they have taken measures to ensure their investments remain stable (http://www.cnbc.com/2015/08/14/chinas-rich-seek-safe-havens-offshore-as-yuan-devalues.html )

 Figure 2 – Looking ahead to the next 12 months

Image-5This indicates that Americans are a bit more cautious with their wealth compared to Asians, and especially the Chinese, HNWIs. Part of this behavioural difference can be attributed to the wide average age gap between a HNWI in China versus one in the US (figure 3). We can see that the HNWI population in China is predominantly below 40 years old, while it is quite the opposite in the US.

Image-6LUXURY MOTIVATIONS

Needs around luxury goods are to a certain extent similar for HNWIs in the US and China, making design and craftsmanship hygiene factors for a luxury brand to succeed in this market. However, Chinese HNIs are more demanding in that they also require their products to deliver exclusivity and provide personalization options (figure 4).

Image-7In a nutshell, American HNWIs are product focused and will mostly opt for a luxury brand that delivers in a superior fashion in design and craftsmanship. On the other side are Chinese HNWIs who not only require a product of high quality, but have emotional requirements that can be addressed by providing personalization service, and exclusivity. This can be achieved by offering product lines at high price points, limiting the number of people who can purchase, or providing limited edition models available only to the most loyal customers.

This becomes more evident when we delve into their luxury purchases influences where Chinese HNWIs need their luxury products to be not just unique, but also be recognized by others (figure 5). In contrast, while most American HNWI consumers appreciate the uniqueness of luxury brands, and some of them require the exclusivity the comes along with a premium product, most American HNWIs are not the type to overtly show off their wealth, and hence do not need other people to recognize the brands they are using. This is why logo free designer handbags are more likely to succeed in the US where individuality trumps conformity, than in China.

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IN CONCLUSION

For years, the HNWI market was driven by the US which has the largest population of HNWIs in the world. Times are changing fast, and China is quickly catching up. Not only are their HNWIs growing in number, they are younger, more confident in the future and much more willing to spend on luxury goods than their counterparts across the Pacific. Any luxury brand looking to grow in the next years must ensure their long term marketing plans guarantee a brand relationship and successfully appeal to Chinese HNWIs, or risk losing out.

To learn more about the Affluent Insights ™ HNWI Report, and to purchase, go to: www.affluential.com/report/hni-report-2015.

The video of the launch of the HNWI report on BBC can be seen here: https://www.youtube.com/watch?v=3iEZsKUAtdI

Details for this article are taken from Agility Research and Strategy’s Affluential Insights 2015 study that was run from May to June 2015. Respondents were recruited online and were required to meet a minimum annual household income to qualify as an affluent consumer. They are USD150,000 for the US, SGD135,000 for Singapore, HKD960,000 for Hong Kong, and CNY 240,000 for China. A minimum of 100 High Net-Worth Individual (defined as affluent consumers who have at least USD$1,000,000 in investable assets) respondents were interviewed per market.

Agility Research & Strategy is Asia’s fastest growing research company, ranked globally as a Top 10 research firm in the Luxury and Premium brand research space. As Agency of the Year nominee and with over 30 years combined experience in understanding the Affluent consumer, we are truly Fluent on the Affluent™. We partner with leading brands to provide actionable insights through a suite of data, research and intelligence solutions to boost their market share.

AFFLUENTIAL ™, the World’s first Global Consumer Intelligence portal, powered by Agility is a comprehensive platform for brands looking for intelligence on Affluent consumers across categories in more than 20 key economies including the United States, Europe and Asia Pacific.

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