‘Chinese superrich to sustain growth despite economic slowdown’

Despite the continued economic slowdown and a recent big stock market crash in China, the number of Chinese dollar billionaires is expected to hit a record high of 450 this year, up 26 percent from 358 in 2014, an expert on successful Chinese individuals said. 

“Wealth creation in China has been extraordinary over the past 16 years. There was only one dollar billionaire when I started doing research on China’s rich people back in 1999,’’ Rupert Hoogewerf, chairman and chief researcher of Hurun Report, said in a recent interview with The Korea Herald.

Hurun Report, a leading luxury publishing and events group, is famous for its annual China Rich List, which comes out every September. The annual research-based report has covered trends in wealth creation of Chinese high-net-worth individuals and their spending habits since its debut in 1999. 

The company also releases the Global Rich List of the world’s dollar billionaires every March.

“I expect a new No. 1 on the list this year. For the past 16 years (between 1999 and 2015), we have had 12 new No. 1s. The No. 1 has kept changing each year, but it is not because of bankruptcy. The reason is the dynamism of China and this is why the country makes people interested,” Hoogewerf said.

Over the years, the source of Chinese wealth has evolved from real estate to manufacturing and IT.

Li Hejun, chairman of solar energy company Hanergy, is one of the strongest candidates for the new No. 1 spot this year as he topped Hurun’s 2015 Global Rich List, published in March.

On the 2014 China Rich List with the cutoff of $330 million (2 billion yuan), the “sun king’’ was placed third with a fortune of $20.8 billion. Jack Ma, chairman of Alibaba, was crowned the richest man in China with a fortune of $25 billion, followed by Wang Jianlin of Wanda with $24.2 billion.

“There are many different ways that we look at China. One is to look at successful individuals in the country because sometimes it is difficult to understand China from the macro point of view. For instance, the per capita GDP of China is around $7,500 and it doesn’t mean that much for people from bigger economies like Korea and the U.K.,” the founder of Hurun Report said.

“But when you get more personal and talk about (self-made) successful individuals like Jack Ma and Wang Jianlin, there are much more exciting stories. They are very active, dynamic and they let people understand the reasons behind the success of the Chinese economy,” he said.

Going global

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. 

Confidence on wealth growth in China 

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.”

(jyseo@heraldcorp.com)