around the world the HNWIs (High Net Worth Individuals), to use the polite term for filthy rich persons in banking circles, are gaining in wealth during the pandemic years of 2020 and 2021.
HNWIs are defined as people with investable assets of 1 million USD or more, excluding their primary residence, collectibles, consumables and consumer durables. Their number in 2020 for the first time surpassed the 20 million individual mark. The ten richest persons alone added 400 billion USD to their coffer in 2020, whereas the close to 1,000 USD-billionaires in China made an additional 1.5 trillion USD. In the first half of 2021, this trend continued.
However, in recent months the many problems slowing down the global economic recovery, including the shortage of many goods and resources due to the disturbances in the global supply chain, electricity shortages in China and the many extreme weather events as a result of climate change, have started to change the picture. Especially in China the problems of Evergrande and other real estate companies, which essentially were running on a Ponzi scheme business model, made headlines around the world. In September, for the first time in six years the prices for apartments fell in a housing slump. The SSE Composite Index of the Shanghai Stock Exchange is close to falling back to the level of Dec. 31st, 2019, the day the SARS-2-CoV drama started, losing all that was gained in the meantime.
With many countries in the process of reopening to international tourism and many of these also accepting visitors vaccinated with the Chinese vaccines, and with indications of the Chinese government finally changing their policy from zero-case to “living with the virus” like the rest of the world, a question starts to be discussed: Will the Chinese may have the opportunity to travel again in 2022, but may not have the money anymore to do so?
After 1989, the East Germans found out quickly that after the Berlin Wall came down they were able to finally travel to their dream destinations like Paris, Italy or NYC with their brand new EU passports, but that travel money was the other requisite next to freedom of travel. In Venice outraged restaurateurs told the story that East Germans would jam the city but bring their own “Stulle” (a kind of Northern German sandwich) to eat on the steps of one of the many churches, as they could not afford to give custom to the – mostly overpriced – restaurants.
Luckily there is no need to worry that we will see Chinese sitting on park benches eating cup noodles in the Tuileries of Paris or the Tiergarten in Berlin for lack of money to pay for some oysters or a hefty dish of Eisbein (pork knuckles) in a restaurant. The top 10 of the Chinese society owning a passport may have stopped recently to become richer as quickly as before and may also be a bit more worried than before about taxes they may soon have to pay on profits from real estate and stock market business successes. Spending a couple of thousand Euros or dollars on a trip will however still be within their reach and will become again a fixed part of their lifestyle. Fine dining establishments will rather see an increase in the Chinese buck entering their tills, luxury brands may have to have to fight harder than before.
Scotland brought back last week their China marketing activities to a pre-pandemic level, Israel announced that persons vaccinated with the Chinese vaccine will be allowed to enter the country from next week, in time for Chinese Christians to visit Bethlehem during Christmas. To prepare for the next wave of Chinese travellers, COTRI will roll out the Edition 2022 of the CTT China Tourism Training and will also introduce an innovative tool to use the sales of souvenirs and other regional merchandise to stay in touch with the Chinese source market. Watch out for more details in the coming weeks!
As always, all best wishes from Prof. Dr. Wolfgang Georg Arlt and the entire COTRI WEEKLY team!