Wealth Report Asia 2018: Shanghai reclaims the top spot
This year’s Julius Baer Wealth Report Asia
In this year’s report, Shanghai displaces Hong Kong as the most expensive city, whereas Kuala Lumpur remains the most competitive.
Following a strong recovery since 2015, global luxury consumption is expected to moderate alongside a cooling Chinese economy. Yet the longer-term outlook remains rosy premised on structural demand from Chinese millennials and a more prominent female presence in the luxury market.
Living in luxury in Asia: The Julius Baer Lifestyle Index
Our Julius Baer Lifestyle Index maintains its upward trajectory since its launch eight years ago, underscoring the strength in demand for luxury goods and services in Asia. Government efforts to boost domestic consumption, price harmonisation by luxury companies, and scarcity were among the contributing factors to robust price trends.
Introducing the His & Hers Index
This year, we introduce the His & Hers Index. This index compares the prices of several luxury goods in relation to personal adornment and grooming – wrist accessory, outfit, bags, shoes and fragrance – specific to each gender across all Asian cities. Across all categories, Seoul comes up as the most expensive city for both male and female luxury goods. On the other hand, Jakarta ranks as the cheapest for men’s luxury goods, while Mumbai is the most price competitive for luxury female goods, particularly for handbag, shoes and perfume.
Is the pink luxury tax real?
A study of e-commerce stores of Saint Laurent, Valentino, Gucci, Dolce & Gabbana, Balmain and Alexander Wang in 2016 found 17 instances where the male and female versions of a style had different prices. In most cases, the women’s was more expensive than the men’s version, with women charged up to USD 1,000 more.
Our His & Hers Lifestyle Index findings corroborate this to a certain degree. On average, it costs USD 2,158 more to purchase our Hers index relative to our His index. The differential is lower (USD 126) when we exclude the wrist accessory (which is skewed higher due to the Cartier Love Bracelet for women).
Obviously, there are other factors at work beyond discriminatory pricing for luxury goods such as the fact that women are willing to pay more for fashion, or that women’s products require more workmanship than men’s. In addition, price inflation is sometimes the way to also establish product value especially with luxury brands.
Womenomics in Asia
The report also delves into the power of the female dollar – namely, Womenomics in Asia. Women now account for half of Chinese luxury spending and the purchasing power of women in Asia is increasingly gaining recognition, with more women in senior management positions and becoming more financially savvy.
Accounting for the lion’s share of luxury spending in the region is indisputably China. The composition of China’s high-end spending has changed over the past five years from being male-dominated to female centric. With the rise in spending power, women are also spending more on products that were traditionally viewed as masculine domains. Cars, which are increasingly seen by females as a status symbol, constitute the highest proportion of spending among affluent females in China.
Females in Asia – Savvy Shoppers, Intuitive Investors
Women in Asia are not purely preoccupied with the consumption of luxury goods and services – they are also proving their mettle at making investment decisions.
According to a report featured in Harvard Business Review, women in Asia were remarkably confident about their financial knowledge, as compared to their counterparts in the West. They also surpassed women in the US and the UK in terms of risk tolerance and senior representation in the financial services industry across the region.
Financial market returns have been lacklustre this year and some industry watchers portend a contraction in global luxury consumption from a China slowdown. While Chinese consumer confidence has weakened, we do not think that luxury sales will see a substantive decline but rather expect a moderation following peak profitability of the sector. Over the medium term, e-commerce and online luxury marketplaces could create greater pricing transparency, particularly in Asia, where online shopping is gaining pace.
More information can be found in the attached report, the media release and the factsheet (available in English and Chinese).