Recently, McKinsey Quarterly's article Understanding China's Wealthy (behind the premium subscription wall) has provided fascinating reading for our team and a rare glimpse into the data behind the phenomenon of China's growing middle and upper classes. The implications are clear for multinational corporations hoping to target this segment, as well as for groups like ours who are seeking to broaden the appeal of charitable giving among China's wealthy.
The key message from the report is: China's wealthy are different from their global counterparts and effective approaches to engaging them must reflect these differences. Consider these findings:
- Chinese household earnings more than US$36,500 annually have the equivalent spending power of US households making roughly US$100,000 per year.
- China will have the fourth largest population of wealthy households in the world by 2015, growing at an annual rate of 16% per year for the next 6 to 7 years.
- Most of this growth is happening outside of the major metropolises such as Beijing or Shanghai, in the so-called 2nd or 3rd tier cities such as Chengdu and Wuhan.
- About 80% of wealthy consumers are under 45 years of age, compared with 30% in the US and 19% in Japan.
- A few years ago, almost all luxury goods were purchased abroad; now over 60% are purchased domestically.
Perhaps the most fascinating aspect of the report is a breakdown of Chinese consumers into 7 distinct categories in descending order of household income, with descriptive names such as "Demanding," "Flashy," "Climber," and "Down to Earth," each with their key characteristics (for example: "Flashy: Confident financially but continues to work hard; cares less about health and environment.") I find these categories are helpful as rough references for engaging the Chinese donor base as well. For example, what causes will resonate with a "Demanding" donor versus a "Down to Earth" one? What type of meaning will different donors ascribe to charitable giving? (It was natural to think of some of the local new up and coming philanthropists we know in China and guess which categories they fall into!)
Without a doubt, China's wealthy will be a predominant force for bringing funding and social engagement into China's still nascent grassroots nonprofit sector in the years to come. Though the process seems slow-going at times, the overall trends are moving in this direction. I believe that there will be opportunities for charitable giving at all 7 levels of the ladder. The big questions remain: what causes will each group engage in? What voices will be speaking to them about their giving choices?
-- Grace
Comments