Eat the rich

Are class tensions rising?

Eat the rich

The world's priciest hound

It costs $585 in London, $589 in Paris and just $574 in New York.

But the very same Christian Dior ladies’ wallet will set you back $805 in Shanghai.

This none-too-trivial differential came to light in a recent Wall Street Journal survey. One conclusion: Shanghai commands the highest price for the item because of the price insensitivity of China’s super-rich.

But while the world’s luxury goods makers get more excited by their sales prospects in China (see WiC42), there are also those with a more negative reaction to the rise of the Chinese rich.

It doesn’t help that a number of the local nouveau riche seem highly susceptible to Marie Antoinette moments (like the woman from Shaanxi who spent $586,000 on a Tibetan Mastiff dog and had it chauffeured from the airport by a convoy of 30 Mercedes-Benz limos).

Such behaviour doesn’t always go down well. That message came across loud and clear in a just-published survey by the Zhejiang Academy of Social Sciences. In a poll of 1,159 respondents it found that 96% felt “resentful towards the rich”. Around 70% reckoned there was a “big gap” between rich and poor and 50% estimated the gap would continue to widen.

The survey was commissioned in the first half of the year. The Xinmin Evening News reports that it was made as representative as possible by incorporating responses from 10 social groups, including public servants, entrepreneurs and farmers.

The China Daily notes that income disparities (and displays of conspicuous consumption) are becoming thorny social issues. It cites the example of Cherry Chang who complains that she has had her red Porsche vandalised three times in Shanghai in the past fortnight. That is down to “deep resentment”, Chang thinks.

Zeng Xiangquan, the dean of Renmin University’s School of Labour and Human Resources, says that the richest 10% of China’s population control 45% of the country’s wealth.

One lightning rod for much of the current mood of discontent is the property market.

As reported in WiC41, the popular soap opera Dwelling Narrowness was recently taken off the air because government officials had become concerned at how audiences were reacting.

Although it is set in the fictional city of Jiangzhou, the drama’s theme of surging property prices – taking home ownership beyond the means of ordinary folk – seems to have resonated with viewers.

Indeed, another survey – this time completed by the China Medical Doctor Association – reports that property prices are the leading source of stress for white-collar workers.

The ratio of housing prices to family income has risen to a multiple of 8.3 times this year and the survey found that 85% of white-collar families now cannot afford to buy a home. Their own incomes have remained largely static over the same period.

Frustration can lead to a search for scapegoats, and many think the rich fit the bill rather well. Not just the real estate developers themselves but also the wealthier speculartors who buy up multiple properties and drive up prices. Hence the China Daily quotes a civil servant from Guangdong who lambasts “real estate manipulators” for controlling swathes of the available real estate market in search of easy profit. “I simply cannot accept the skyrocketing prices,” he thunders, “Isn’t it unfair to the majority who are unable to afford an apartment, even if we squeeze together the savings of three generations?”

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.