/ 19 November 2010

New members flock to China’s bling-bling club

New Members Flock To China's Bling Bling Club

When I first arrived a decade ago in the world’s factory capital, Beijing, the lack of consumer comforts such as cheese, yogurt and bread (that didn’t taste like Fizzers) was apparent.

The city’s broad streets were awash with Xialis, copies of outdated Toyotas, bicycles and pedestrians sporting cheap clothes that the European fashion police would have oppressed and incarcerated with national-socialist vigour, all under a canopy of grey, hazy pollution. But, the constant hustle and bustle coupled with the constant smell of concrete from construction everywhere you looked also produced the striking realisation that this was a country on the move.

Fast forward to 2008, and the construction came to a grinding halt with one of the world’s greatest modern architectural feats standing proudly and ready for the hosting of the Beijing Olympic Games.

The roads were cleared of the terrific traffic, Xialis had been replaced with Buicks, Volvos and BMWs, restaurants were serving succulent steaks, and R1 000 tables in clubs frowned upon anything less than Grey Goose or Moët & Chandon. Even the skies became blue.

Many an observer refers to Beijing in pre- and post-Olympic terms. If the pre-Olympic city was defined by the growth of consumerism, the post-Olympic city is being defined by exorbitance.

China’s Hurun Rich List of 2009 shows that China has about 1 300 rand billionaires, and the recently released Forbes China Rich List shows that China’s United States-dollar billionaires have skyrocketed from 79 in 2009 to 128 this year, this while Europe and North America continued to reel from the financial crisis. Of the 128, Beijing is home to 15, surpassed only by Shenzhen, the Cantonese economic Rome built in a figurative day.

The finer things in life
Foreign luxury brands can barely contain their predatory excitement, with Gucci, Prada, LVMH and Lane Crawford logos blasted over the new high-end malls as subtly as Saddam Hussein’s portraits over Baghdad during his reign. Porches, Ferraris, Aston Martins and Lamborghinis are seen constantly, mostly driven by kids who have departed from their parents’ restrained ways.

The Beijing Auto Exhibition made headlines earlier this year when the show turned into an orgy of opulence with at least 40 luxury cars being sold for an estimated R150-million.

A Bugatti Veyron Grand Sport with a price tag of R38-million was sold on the first day, and Maserati sold 15 cars at R2,5-million apiece. Compared with these communists, our controversial tenderneurs look like paupers.

Helicopter and private jet-makers are lobbying hard for China’s security strong establishment to open its skies. China is expected to become the world’s biggest civil helicopter market in the future, with 2 000 sales projected over the next four years, in spite of barely having 100 in total at the moment.

Although China’s airspace regulations do not currently cater to the whims of its oligarchs, the pilot testing of loosening regulations in the south and northwest have premium brands like Gulfstream private jets on the edge of their seats.

Quarter-of-a-million-rand holidays, including Arctic Circle expeditions for chief executives, no longer raise eyebrows and the world’s leading cities are inviting them with open arms hoping that they will indulge in their favourite leisure pastime: shopping.

Love of the bling
A Bain & Company study found in 2008 that Chinese consumers spent more on luxury goods abroad than when at home, totalling about $12-billion while travelling overseas. Just as China recently overtook Japan to become the world’s second-largest economy, they are soon set to beat their estranged neighbours in the purchasing of bling.

Disregarding China’s ultra-rich for a moment, the sheer number of China’s estimated 250-million middle-class consumers is enough to dazzle luxury brands.

Although China is reputedly an income-saving country, that reputation has been shattered like a crystal glass on a karaoke floor by its emerging young adults with no siblings.

A graphic designer I hired recently stayed in a luxurious villa when on holiday to a familiar Thai island — I know the villa well; it is up the road from the bamboo hut I normally stay in — whereas a younger US MBA graduate friend of mine who works as an office secretary spends a month’s salary on one Gucci handbag and more than two months’ salary on an additional luxury branded bag, this time second-hand. Are there many countries where a secretary blows R35 000 on two bags within six months?

Starwood Hotels & Resorts, the owners of five-star brands Sheraton and Westin, recently held its biannual top 100 global leadership conference in Beijing, the first time outside of the United States in its corporate history.

Why? Because China is already its second largest market after the US. Its existing portfolio of 62 four- and five-star hotels in China will expand to a whopping 148 in the next five years.

At the same time, those who follow the money are gathering in large numbers in China to lure its ultra-rich to spend their billions abroad.

Real estate
With local property prices having exploded over the past five years — high-end apartments are going for $10 000 a square metre — and new government regulation in place to curb speculation, China’s ultra-rich welcome foreign realtors trading in mansions in London, Vancouver and Los Angeles.

Joyce Rey, one of the US’s leading real-estate agents with $2-billion of luxury house sales under her belt, was recently in Beijing and Shanghai to promote her portfolio of luxury properties in south California, the most lavish of them all selling for a jaw-dropping $125-million.

It’s a moot point to state that China has progressed significantly over the past decade, but although those who have not visited here recently continue to perceive it as a homogenous factory of workers, little consideration is given to the stupendous rise in its wealthy factory owners.

Today, there is nothing that I cannot buy here, but the list of what most of us will never be able to afford is growing by the day.

Michael Jones is a China-based researcher