Tag Archives: Boston Consulting Group

China Expands Its Legions Of Millionaires And Super-Rich

China has moved up a notch to third in having the most ultra-high-net-worth households, according to the Boston Consulting Group’s latest annual global private wealth report. Ultra-high net worth is defined as having more than $100 million in private financial wealth. There were 983 Chinese households that did in 2013, BCG reckons.

China’s ranking in the list of millionaire households remained unchanged at second with 2.4 million, but that is up from 1.5 million in 2012. That year it just edged Japan for second place, but in 2013 pulled clearly ahead, although the Abenomics-driven fall in the value of the yen against the U.S. dollar magnified the effect to some degree.

Private wealth increased faster than it did in 2012 across most regions with the Asia-Pacific region excluding Japan being the fastest-growing region worldwide. Five years ago the region had 50% less private wealth than North America. That gap has since closed by half, thanks to the effects of the 2008 global financial crisis and the continuing rapid growth of the Asia-Pacific region.

The strong rebound in equity prices last year drove an acceleration in the growth of private wealth worldwide, although not in China, where equity markets fell 6.8% in 2012. Instead, BCG says, private-wealth products from the rapidly expanding shadow-banking sector was a prime driver of China’s 49.2% growth in private wealth.

That, and the general slowing of the economy, is likely to moderate the pace of growth of private wealth in China this year, if not by much. As BCG also forecasts, China is likely over the next five years to continue to consolidate its position as the world’s second wealthiest country, and continue to close the gap with the U.S. 

Don’t expect all that wealth to remain in China, however. The BCG report notes the increasing volume of offshore assets being deposited in Hong Kong and Singapore. Chinese money is also flowing into U.S. and European real estate, while officials are increasingly sending their families abroad, offering another conduit for wealth, in this case probably not overly clean wealth, to flow out of the country.

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China’s Next-Gen Multinationals

For the past five years, Boston Consulting Group, a management consulting firm, has published an annual list of 100 companies from emerging economies that it reckons have the potential to become multinationals. All of what it calls its global challengers are fast growing and expanding internationally through acquisition. Sixteen countries from Argentina to the UAE contribute to BCG’s 2011 list. A third of the companies on it are from China.

Nine of the 33 Chinese firms are new additions this year, accounting for 40% of all debutantes. The nine are:

The concentration in mining and minerals, steel, construction and fossil fuels, across the list and highlighted by the Chinese newcomers signal, BCG says, the rising importance of infrastructure and natural resources to the success of developing economies. Add in, in China’s case, emerging clean technologies. Note, too, the emergence of Chinese civil engineering firms among the world’s leading contractors, thanks to access to cheap labour and capital, vertically integrated suppliers and lots of experience with large-scale infrastructure projects at home.

Within the next five years, BCG forecasts, half of those on its list could qualify for inclusion among the world’s 500 largest companies. Several of those will inevitably be Chinese. They will have to battle with the challenge today’s multinationals face, of being global companies decreasingly rooted in their home countries, a challenge that culturally may prove more difficult for Chinese companies than U.S., European and Japanese ones. But note the names now.

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