Luxury costs soar, 8-person Jet package from Sanya to Beijing costs rmb320k
The passion for luxury products in China is still growing, though consumption of luxury goods among the wealthy has tapered amid the global economic slowdown, according to the 2012 Hurun Luxury Consumer Price Index released on Wednesday.
The Hurun Report index noted a 4.94 percent increase in the cost of luxury goods bought by China's wealthiest group, 2.72 percent higher than the national Consumer Price Index, a major gauge of inflation, which experienced a 0.6 percent drop in June.
The Luxury Consumer Price Index is based on the prices of a basket of 62 luxury goods and services in nine categories over a year's time.
However, the rate of luxury inflation fell 2.79 percent compared with last year's Luxury CPI increase of 7.73 percent, showing the slowest growth in the past six years.
"The slowdown in the economy has knocked the confidence of the Chinese luxury consumers," said Rupert Hoogewerf, chairman and chief researcher of Hurun Report.
In the Hurun Report basket of goods and services, luxury travel saw the sharpest price rise, at 11.92 percent this year, followed by a 7.84 percent increase in the cost of high-end wines and cigarettes.
"Although the cost of luxury traveling is going up, I still prefer to spend a large amount on it, traveling around the world with family or friends from time to time, for relaxation and to get away from the grind of work," said Yu Zhiwu, a 37-year-old millionaire businessman who owns a trading company in Wenzhou, Zhejiang province.
Yu planned to spend at least 1 million yuan ($157,500) a year on travel.
The cost of watches and jewelry rose by 6.25 percent, compared with last year's 5.7 percent increase.
"The prices of luxury goods keep increasing, but the demand for giving gifts to friends and business partners continues growing too," Yu said.
Yu added that he normally spends 600,000 yuan a year on luxury products for himself, but the gifts he bought for friends and business contacts cost him more than 1.4 million yuan last year.
The only sector where prices fell is the luxury property category, which dropped 2.42 percent, mainly due to the central government's increased macroeconomic control.
The price of education continued to swell, rising by 7.58 percent overall this year, similar to the 7.4 percent jump last year.
Chen Xiuqing, a property developer in Wenzhou, said his luxury spending on his daughter consisted of sending her to a private school in the United Kingdom.
"I want my daughter to get a superior education in manners and practical abilities, which she probably will fail to learn if she continues studying in China," said Chen, who sent his daughter to eighth grade last year at the Queenswood School, a private, girls-only Methodist school in the UK.
Chen said the tuition cost 10,000 pounds ($15,900) a semester last year, including accommodations, and increases each year.
"Compared with other private schools, which have lower requirements, there are more local students from high-class or well-educated UK families and fewer international students like my daughter," said Chen.
He said that more wealthy parents recognized that ensuring the children have the highest level of education is a promising path to a successful future.
After last year's steep price increases in the yacht and jet category, 20.11 percent, these super-luxury products experienced only a moderate 2.14 percent price rise this year.
In addition, China's wealthy people have an ever-increasing appetite for private chartered flights.
A private flight for 15 people from Los Angeles to Beijing cost 2.87 million yuan, and an eight-person package from Sanya to Beijing on the Hawker Private Jet 850XP increased by 7 percent to 320,000 yuan.
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