Archive for ‘Affluence’

12/06/2014

China Minting Millionaires in Global Wealth Surge – Businessweek

Where do the world’s rich live? As has long been true, the U.S. has more millionaires (in U.S. dollars) than any other country, with 7.1 million. But China last year came in second with 2.4 million millionaire households, beating Japan with half as many. The number of millionaire families around the world reached 16.3 million last year, up from 13.7 million the year before.

Visitors crowd around a luxury yacht on display during the 19th China International Boat Show in Shanghai on April 10

All told, the total value of global private wealth grew far faster than global economic output, up 14.6 percent, to $152 trillion, compared with an 8.6 percent increase in 2012. Much of the new money originated in the Asia-Pacific region (excluding Japan), up by 30.5 percent, to $37 trillion. That put Asia in the No. 3 spot for riches, behind North America and Europe, according to the 14th annual survey on private wealth by Boston Consulting Group.

Driven by rapid GDP growth in China and India, Asia is expected to surpass North America and Europe as the leading source of global wealth in 2018. That year, the global pot of gold will total a bit less than $200 trillion, with the proportion from Asia projected to reach $61 trillion, slightly more than North America, with $59.1 trillion. “The Asia-Pacific region and its new wealth will account for about half of the total growth,” the report predicts.

via China Minting Millionaires in Global Wealth Surge – Businessweek.

06/06/2014

In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek

Cruise lines are betting that the growing number of middle class consumers in China are keen to sample chocolate buffets and stroll the Lido deck. And that’s leading to an influx of ships being sent to sail year-round from mainland China.

The Carnival Sun Princess

China is expected to be the world’s second-largest cruise market (after the U.S.) by 2017, with growth rates far higher than in North America and Europe, the two regions where the industry has historically collected most of its profits. Carnival (CCL), the industry’s largest player, with 10 brands and more than 100 ships, plans to base four ships in mainland China next year, while also boosting its year-round fleet in Australia. The Asian Cruise Association estimated in a 2013 report that area demand will nearly triple to 3.8 million annual cruisers in 2020, with 1.6 million from China.

“The reality is that the [Asian] market’s huge, and it’s going to be very significant over the next 10 to 20 years,” Carnival Chief Executive Officer Arnold Donald says. “We have never been more committed to China as a market of great strategic importance for our company.”

via In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek.

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24/05/2014

China’s 430 Million Families Shrink and Age – Businessweek

China’s families keep shrinking in size, says a new report by the National Health and Family Planning Commission, released earlier this month.

Retired Chinese women practice Tai Chi at a park in Haikou city, south China Hainan province on March 25

It’s well known that the One-Child Policy played a key role in radically reducing the size of China’s households, which have shrunk from an average of 5.3 members in the 1950s to just 3.02 in 2012. (The numbers were 3.96 and 3.10 in 1990 and 2010, respectively.)

But that longtime policy restriction has not been the main driver in recent years, according to the China Family Development Report 2014. Instead, internal migration and changing social norms have been bigger contributors to the phenomenon in recent years. (That also means last year’s loosening of the family planning regulation isn’t going to reverse the smaller household phenomenon.)

By 2010, China had 160 million households made up of either one or two people. That’s 40 percent of the total number of households, a proportion that rose from 25 percent of the total in 2000. Over the same decade, the number of single person households doubled, and those of two people went up by 68 percent, according to the commission.

So what’s driving the surge in little families? In the cities it has a lot to do with young people waiting longer to get married. “A growing number of well-educated people now decide to marry at a later age because of their careers,” the China Daily reported, citing the survey. “Changing attitudes toward marriage also prompted many to stay single.”

As China’s population rapidly ages, more and more families are elderly. China now has 88 million families made up of people over 65, about one-fifth of the total, the report says. That reverses the longtime Chinese custom of older parents living with their children. With some 300 million rural migrant workers living far from their hometowns, the problem is particularly acute in the countryside—that is contributing to a growing problem of poverty among the elderly.

via China’s 430 Million Families Shrink and Age – Businessweek.

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23/05/2014

In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek

Cruise lines are betting that the growing number of middle class consumers in China are keen to sample chocolate buffets and stroll the Lido deck. And that’s leading to an influx of ships being sent to sail year-round from mainland China.

Cruise Ship

Cruise Ship (Photo credit: sebastien.barre)

China is expected to be the world’s second-largest cruise market (after the U.S.) by 2017, with growth rates far higher than in North America and Europe, the two regions where the industry has historically collected most of its profits. Carnival (CCL), the industry’s largest player, with 10 brands and more than 100 ships, plans to base four ships in mainland China next year, while also boosting its year-round fleet in Australia. The Asian Cruise Association estimated in a 2013 report that area demand will nearly triple to 3.8 million annual cruisers in 2020, with 1.6 million from China.

“The reality is that the [Asian] market’s huge, and it’s going to be very significant over the next 10 to 20 years,” Carnival Chief Executive Officer Arnold Donald says. “We have never been more committed to China as a market of great strategic importance for our company.”

The industry’s second-largest cruise company, Royal Caribbean Cruises (RCL), surprised many in the industry last month by announcing plans to move a brand new ship, Quantum of the Seas, to Shanghai in May after its inaugural six-month run in New York. Traditionally, the industry has deployed only older ships to Asia—a practice that’s likely to wane, given Chinese consumers’ demand for equal access to the newest and best amenities from companies vying to break into the market.

via In China, Cruise Lines Hope to Woo Millions of First-Time Guests – Businessweek.

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06/05/2014

Weak Economy Means There’s More Room at India’s Hotels – India Real Time – WSJ

The subcontinent’s fanciest hoteliers are plumping their pillows for fewer guests as the economy takes a toll on travel.

Corporations are chopping their travel budgets. Foreign tourism isn’t what it used to be. And there was an oversupply of hotel rooms in India to begin with.

For reasons like these, hotels particularly at the higher end of the business will be facing “muted revenue growth, stagnated profitability and elevated credit risk” in the fiscal year that started April 1, a rating agency said.

Premium hotels, a category that includes five-star and four-star properties, are feeling most of the pain, according to a report from India Ratings & Research, a Fitch Ratings Inc. firm. They get about two-thirds of their business from corporate and foreign travelers.

“The demand slowdown has put pressure on occupancy and average room rate across major cities,” the report said, limiting hotels’ ability to pass along rising costs due to inflation.

India currently has around 100,000 hotel rooms in what is called the “organized” sector (which excludes myriad smaller and often cheaper properties), as well as an additional 85,000 to 90,000 rooms being built. Weak demand has led many hotel companies to delay new projects and even shelve 40% to 50% of new-hotel construction proposals due to the slumping business, rising financing costs and increase in construction costs, Chandan Sharma and Salil Garg, analysts at Indian Ratings, said in the report.

via Weak Economy Means There’s More Room at India’s Hotels – India Real Time – WSJ.

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01/05/2014

China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek

The gap between China’s rich and poor is now one of the world’s highest, surpassing even that in the U.S., according to a report being released this week by researchers at the University of Michigan.

The metric used in these studies, the Gini coefficient, would be zero in a society in which all income is equally distributed, while a score of one would reflect a society in which all income is concentrated in the hands of a single individual. Over a three-decade period starting in 1980—shortly after China’s economic reform and opening commenced—the Gini coefficient has grown from 0.3 to 0.55 in 2010.

In the U.S., by contrast, the index reads 0.45. Anything over 0.50 is considered “severe disparity,” says the report in the Proceedings of the National Academy of Sciences. The authors used data from seven separate surveys conducted by a number of Chinese university-affiliated organizations, including Peking University’s Institute of Social Sciences.

via China’s Income-Inequality Gap Widens Beyond U.S. Levels – Businessweek.

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24/04/2014

Chinese Travelers Breathe New Life Into Australian Tourism – China Real Time Report – WSJ

Chinese investors, done splurging on Australia’s once-booming mining industry, are sniffing around the country’s tourism market in search of bargains.

As Ross Kelly and Rebecca Thurlow report:

Their arrival promises to give a new lease of life to dilapidated resorts and properties stretching from Queensland state on the eastern coast to rural Western Australia.

Many investors are betting on an explosion in tourism Down Under, particularly from China—where people from the country’s expanding middle class are increasingly choosing to spend their holidays in countries that are considered exotic. Although Australia remains a relatively expensive destination, more Chinese are attracted each year to the country’s sunny beaches and unusual wildlife.

Sensing an opportunity, Chinese investors have begun snapping up hotels across the country at an unprecedented rate. They’re also weighing into casinos, a popular hangout for Chinese travelers, as well as experimenting with more offbeat attractions such as a China-themed amusement park.

Tourist arrivals in Australia surged by 10% in the 12 months through February, helped in part by a sudden pullback in the Australian dollar last year from historic highs. The number of Chinese traveling to Australia touched a record 748,000 people in the same period—up 16% from a year earlier, according to government figures.

If the current pace of growth in tourism continues, China may soon surpass neighbor New Zealand as Australia’s primary source of visitors, brokerage Commonwealth Securities predicts. Chinese visitors are already spending more in Australia than travelers from any other country, government data show.

via Chinese Travelers Breathe New Life Into Australian Tourism – China Real Time Report – WSJ.

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23/04/2014

Xi’s Corruption Crackdown Hits China’s Restaurants – Businessweek

Dirty officials aren’t the only ones getting slammed as Xi Jinping continues his crackdown on corruption and waste. China’s restaurant industry grew 9 percent, to 2.56 trillion yuan ($411 billion), last year, its slowest growth in more than two decades, according to a report released by the China Cuisine Association on April 19.

Xi's Corruption Crackdown Hits China's Restaurants

Restaurants, particularly the pricier ones, have long been popular venues for China’s bureaucrats and the businessmen wanting to curry favor with them. “This is a sign that the central government’s antigraft campaign against waste and extravagance has been well implemented,” said Feng Enyuan, deputy chairman of the CCA, reported the China Daily on April 21.

Midrange and high-end restaurants have been particularly hard hit, according to the association. China Chuanjude Group, the 150-year-old state-owned roast duck chain, saw its revenue fall 2.13 percent, to 1.9 billion yuan, while net profit dropped 27.6 percent last year, to 110 million yuan. In response, the chain has tried to lure more families and friends, in part by adding more affordable dishes to its menu.

via Xi’s Corruption Crackdown Hits China’s Restaurants – Businessweek.

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19/04/2014

Audi expects to sell half million cars in China this year | Reuters

Volkswagen‘s (VOWG_p.DE) luxury division Audi plans to sell about half a million cars this year in China, the world’s biggest auto market, and raise the number of its Chinese dealers to 500 by 2017.

The company logo is seen on the bonnet of a Audi car during the media day ahead of the 84th Geneva Motor Show at the Palexpo Arena in Geneva March 5, 2014. REUTERS/Arnd Wiegmann

The German automaker hopes its car sales will exceed 500,000 this year, executives told reporters on Friday before the Beijing auto show, which opens on Sunday.

Foreign auto makers, such as General Motors Co (GM.N) and Toyota Motor Corp (7203.T), and domestic players such as SAIC Motor Corp (600104.SS) have been competing aggressively in China, where rising affluence is boosting car ownership.

“This country has an increasing number of mega cities,” Audi Chief Executive Rupert Stadler said, naming Beijing, Shanghai and Guangzhou as examples. “In these three areas, there are as many people as, for example, in Germany.”

In 2013, Audi sold 488,000 vehicles in China and a total of 492,000 including Hong Kong. Executives said it aimed to take advantage of the increasing popularity of SUVs and rising demand for compact premium cars.

China’s auto market is expected to grow 8-10 percent this year, easing from last year when it expanded 13.9 percent to 21.98 million vehicles.

Audi is stepping up efforts to unseat German rival BMW (BMWG.DE) as global luxury-car sales leader.

via Audi expects to sell half million cars in China this year | Reuters.

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11/04/2014

All you need to know about business in China | McKinsey & Company

A lot of people view China business as mysterious. Relax. Consumers behave pretty much the same everywhere. Competition is pretty much the same everywhere. You just need to ignore the hype and focus on the basic fact that in China today, there are six big trends (exhibit). That’s it. Six trends shape most of the country’s industries and drive much of China’s impact on the Western world. They are like tectonic plates moving underneath the surface. If you can understand them, the chaotic flurry of activity on the surface becomes a lot more understandable—and even predictable.

Coauthors Jeffrey Towson and Jonathan Woetzel discuss China’s six megatrends with Nick Leung, the managing partner of McKinsey’s Greater China office.

These trends move businesses on a daily basis. They’re revenue or cost drivers that show up in income statements. Deals, newspaper headlines, political statements, and the rising and falling wealth of companies are mostly manifestations of these six trends, which aren’t typically studied by economists and political analysts. In fact, we happen to think that Chinese politics or political economics are wildly overemphasized by some Westerners in China. So let’s tell a story about each of these megatrends, with some important caveats. They’re not necessarily good things. They’re not necessarily sustainable. For every one of them, we can argue a bull and a bear case. Most lead to profits or at least revenue. Some may be stable. Some lead to bubbles that may or may not collapse. We are only arguing that they are big, they are driving economic activity on a very large scale, and understanding them is critical to understanding China and where it’s headed.

via All you need to know about business in China | McKinsey & Company.

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