According to the Wall Street Journal’s Wealth Report a lady in China sent 30 Mercedes to the airport to pick up her $580,000 Tibetan mastiff last month. It’s not known what the other 29 were for, one unkind comment in the WSJ suggested they were the other diners.
But even below this level car sales in China are booming. Vehicle sales are forecast to hit 15 million this year and car makers in China, which include a lot of Western companies in partnership with the Chinese, racked up profits of 82bn yuan ($12bn) in the first quarter of this year, Shanghai Automotive alone making 2.9bn yuan ($424m) which is more than BMW made in the whole of 2009 everywhere ($209m).
China is now General Motors’ biggest market and a key reason why the recently-bankrupted US car giant recently bounced back to its first quarterly profit since pre-credit crunch times.
It won’t last (quite) of course, the market is forecast to slow down in the remainder of 2010 although it will still dwarf any car market anywhere else.
But cars aren’t the only market where it’s China first and the rest of the world second. China is now the world’s second-largest market behind Japan for sales of bling, or luxury goods to be polite.
According to Goldman Sachs, which knows a thing or two about wealth, Japan’s wealthy registered a decline in worth of around 16 per cent last year while those in Hong Kong tumbled 61 per cent. But the Chinese ‘fu er dai’ or second-generation ‘little emperors’ got richer (we don’t know by how much yet) and didn’t spend all their money on Tibetan mastiffs or Mercedes.
A survey by New York firm Pao Principle found that 90 per cent of well-heeled Chinese bought a designer handbag in the past year while two thirds of the men surveyed and one third of the women bought a luxury watch. Tiffany sales are going through the roof.
Is it too good to last?
Well the Chinese government seems to turn money on and off like a tap and recently it’s usually been on. With inflation rising in China some are forecasting a slowdown in consumer growth. But it’s also likely that the government will allow the yuan to rise in value against the dollar to curb inflation.
This will make Chinese exports more expensive (which will please Barack Obama and US businesses) but bring down the cost of purchasing Tibetan mastiffs.
Some relief there then.