One recent night, the ballroom at Hong Kong’s Grand Hyatt hotel was transformed into an elegant Parisian salon. Several dozen very wealthy families from all over China were flown in for a weekend of cruises, property tours and a gala auction. Chow Tai Fook (CTF), a Hong Kong firm that is the world’s largest jeweller, paid the bill.Adrian Cheng, an executive director at the firm and scion of CTF’s controlling family, put it all together to reward customers who spend over 1m yuan ($158,000) a year. Many come from the provinces in and around Beijing, Mr Cheng whispers: “closer to power and money” than Shanghai or Shenzhen.
Even in provincial cities like Kunming, the rich routinely expect luxury shops to pamper them with cocktails and massages, says Francis Phua of DKSH, a consultancy. However, these days China has so many people flashing gold and platinum cards around that the seriously wealthy expect luxury firms to treat them to ever more exotic and exclusive events, to maintain their sense of superiority. CTF has taken its “VVIPs” on junkets to Paris Fashion Week, on helicopter tours and rare-wine tastings.
A new report from CLSA, a stockbroker, forecasts that more than half of this year’s growth in luxury goods will come from China, where sales are set to soar by 24% in 2012. The country is already the largest market for jewellery after America, and for gold after India, and is gaining fast on both leaders. Prada and Gucci owe a third of their global sales to the rich in China. CTF saw same-store sales on the mainland shoot up by 45% from April to September last year.
Mao may be spinning in his grave at how much China’s super-rich appreciate being “educated” on how to blow extravagant amounts on fine cigars and fancy watches. Whereas the West’s rich like it when luxury firms give them discounts for repeat purchases, their Chinese counterparts care more about having their status recognised, says Franklin Yao of SmithStreet, another consultancy. He thinks this is especially true for women, who make up 70% of CTF’s VIP scheme.
For such super-rich Chinese, an invitation to a lavish weekend is not enough, Mr Cheng explains. They expect a personal butler to fetch them and fuss over them. If that is what his very best customers want, that is what they shall have.
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