The Hindu Business Line : High on money power

At the entrance to the Forbidden City — the symbolic centre of the erstwhile Middle Kingdom — a gigantic portrait of Chairman Mao watches over the thousands who pass every day through the vast expanses of Tiananmen Square, located right opposite. The square itself has been the setting for a succession of ceremonies and protests, speeches and marches and is the primary backdrop for China's recent history of revolution.

But were a tourist to walk past the monument to the People's Heroes that looms up from the square today, past the imposing portrait of the Chairman himself and into the wide courtyards of the Forbidden City, all signs of revolutionary fervour would evaporate. In their stead she would find a Starbucks coffee house, packed with Chinese hipsters greedily slurping away on Jamaica chocolate chip cookie frappacinos with extra vanilla syrup.

Barely 500 metres in any direction from the Forbidden City, gravity-defying sheaths of glass stretch up giddily into the sky. In these glass and chrome temples to mammon, the biggest ongoing coming out party that the world has ever seen keeps the shop registers ringing and credit card companies singing.

Have it, flaunt it

Those coming out of the closet here have one thing in common: money and the desire to spend it.

Less than 30 years after China's economic reforms first began, wealth has gone from being a dirty word to a sign of success and source of envy. During the Cultural Revolution (1968-78), those with money were humiliated and punished as class enemies. The consequent mentality persisted into the early years of the reform era, so that even as wily entrepreneurs amassed fabulous riches, there was a deep reluctance to flaunt this money. Wealth remained tainted with the whiff of the unsavoury.

It is only now in the middle of the new century's first decade that money is losing that whiff and acquiring an alluring perfume instead.

At an upmarket bar-lounge with dramatic views of the historic Bund in Shanghai, every time a client buys a $500 bottle of bubbly, a spotlight turns on her as she is presented with the champagne on a tray decorated with sparkling candles. The hundreds of others present in the bar stand up and clap in support and appreciation of this extravagance.

In Beijing, weekends at the city's burgeoning golf clubs are busy. There are waiting lists for the $200-an-hour golf classes on offer. An average golf club membership in China's big cities costs $40,000 a year.

The millionaire tribe

At the end of 2005, China had 3.2 lakh known millionaires, compared to just 50,000 in 1996, according to wealth management company Merrill Lynch. The Hurun Report, widely accepted as the most reliable rich-list in China, reveals that the 500 richest Chinese are now worth an average of $276 million, a 48 per cent rise on the previous year and as a group they control a total of $138 billion.

It takes a minimum of $100 million to make the list today. In contrast, eight years ago when the first Hurun Report was published, only 50 individuals were ranked with a cut-off of $6 million.

What's unusual about China's super-rich is that their average age is 40-something, making them much younger than their counterparts in the West.

Almost all are self-made men and women, unsurprising given China's recent history and the consequent lack of inherited wealth. The majority of the wealthy come from the boom-towns in China's south east. Seventy five of China's richest 500 live in Guangdong and another 74 in Zhejiang province, according to the Hurun Report.

The bulk of these wealthy czars made their money from real estate. As once collectively owned land became privatised there was a killing to be made in real estate and those with the foresight and right connections made fortunes.

China's new rich expectedly have every luxury brand company from around the world salivating at the mouth.

China is already the third-largest buyer of high-end luxury products accounting for 12 per cent of the global market behind only the US and Japan, according to Goldman Sachs. What's noteworthy is the rate at which the market is growing. Only five years ago mainland buyers accounted for merely one per cent of luxury product sales. Goldman Sachs predicts that China would surpass Japan to become the second-largest consumer of luxury brands by 2015, by which time it will account for almost 30 per cent of global sales.

A cursory glance at the teeming roads of China's metropolises is enough to confirm such predictions.

These are teeming not with the bicycles of yore but every luxury brand of car imaginable.

Luxury cars

BMW sold 23,600 cars in China in 2005, 50 per cent more than in 2004. Bentley's Beijing dealership has sold six $1.2-million Mulliner 728 limousines, ranked the most expensive car in the world, and has bagged the top rank among dealers worldwide. Porsche sold 857 cars in 2005 and while the figures for 2006 are not yet available, the number is expected to have doubled.

And it's not only cars. High-end watches, fashion, perfume or jewellery, the trend is the same: a market growing at over 50 per cent a year.

Moreover, aside from China's super-rich there are millions of ordinary, young, salaried professionals, who are also spending on luxury. Yang Qingshan, secretary general of the China Brand Association, said in a recent speech that 13 per cent of China's population or 170 million people now buy top-end brands.

Anna Huang, for example, is a 22-year-old secretary at a local investment bank where she earns a monthly salary of RMB 3,000 ($380). She lives frugally, travelling an hour by bus from the small room she rents in Beijing's eastern suburbs to her office in the posh central business district.

Yet her preferred handbag is a Gucci, particularly if it matches her latest Burberry coat. Every month, Anna spends half of her monthly salary in purchasing one luxury item. She may not be a luxury glutton but she's certainly a nibbler. Despite the disapproval of her parents she's fiercely protective of her lifestyle choice. "It's my money and I can spend it how I like," she says. "These products make me happy. What's wrong with that?"

Given the fact that for millions of Chinese parents even basic items such as soap and toothpaste were taboo not so long ago, it's unsurprising that they sometimes disapprove of their spendthrift offspring. But the same fact simultaneously drives others to spend big bucks on ensuring their children never have to undergo the deprivations they themselves suffered.

Across China, middle-class families are shelling out hundreds and thousands of dollars on giving their children an early start. At etiquette schools kids learn all about class without the struggle; they learn the piano and horseback riding; they feast at McDonald's.

No longer a question of conscience or ideology, money for China's new generation is simply a necessity for a successful life. "To get rich is glorious," said Deng Xiaoping, the famous architect of China's economic reforms. It's a lesson his people have taken to heart.

Riding back home after a night out at a new edition to Beijing's gourmand scene, Lan — a Philip-Stark decorated, nouvelle Sichuan food restaurant, where bejewelled women sip champagne under massive gilt-fringed mirrors that hang from rococo ceilings — this correspondent struck up a conversation with her taxi driver. "Are you a Hindu?" the driver asked. "Yes and you?" I queried in return. "Me? I only believe in money," he replied carelessly.

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High on money power