China Business 2012: The new society - class without struggle

A man walks past a Dior store in Beijing. Photo / AP

The number of Chinese billionaires and millionaires is reaching new heights according to the latest Hurun report.

The Shanghai-based publisher delights in pointing out that the net worth of the richest 70 members of the National Peoples' Congress increased by US$11.5 billion over 2011 to US$89.8 billion.

In comparison, the net worth of all 660 top officials in the US Government totalled just $7.5 billion.

But it's not just the rich who are getting richer in China. The Chinese middle-class is also on the rise and New Zealand needs to get savvy about China and its growing premium market.

Auckland International Airport - which is helping China Southern boost the number of "high value" passengers on its daily service from Guangzhou - says New Zealand can't keep dining out on its clean, green image and beautiful scenery. "They can get that elsewhere and probably closer to home, as Chinese travellers are more discerning than we understand."

Auckland Airport says New Zealand-based tourism operators must cater for wealthy Chinese who demand quality and special experiences.

ANZ Paul Gruenwald, chief economist (Asia-Pacific), says while the "Pure New Zealand" story resonates with the brand-conscious and status-seeking Chinese, New Zealand should be conscious of key trends.

China is becoming richer, more middle-class and more urban. Shopping patterns are changing from local markets to supermarkets. Food consumption will accelerate and China's endowment of fresh water is limited.

Says Gruenwald: "The big picture is that China will need to import goods with 'embodied water' from the rest of the world." He says that will benefit "soft commodity" producers like New Zealand with its strategic advantage in food production.

"We all know the story about urbanisation, with another 200 million to 300 million Chinese expected to move to cities. Hard commodities like steel have been in the ascendancy. The next will be food, if we buy the story that China will follow a path similar to Korea and Japan."

Gruenwald says China has a very poor endowment of fresh water. On a per capita basis it's a quarter of the level of the US and Europe. It needs to import agricultural products or embodied water from the rest of the world.

On a per capita basis, New Zealand tops the world endowment of fresh water. "This is very good for New Zealand. We should want to get in on this story and position ourselves for just a very small slice of the pie. This would include premium dairy products, wines and other aquaculture products."

China's rich get richer

There are now:
* 2.7 million high net worthers (with 6m RMB assets - NZ$1.16m)
* 63.500 ultra-high net worthers (100m RMB assets - NZ$19.4m)

Big trends in consumption

* Tourism 19%
* Consumer Goods 15%
* Children's Education 12%

Source: Chinese Luxury Consumer White Paper 2012