China Merchants Bank and Bain & Co have co-authored a report looking into the Chinese private wealth market between 2006 and 2016.

The Chinese private wealth market has continued to skyrocket ten years after it began to flourish, according to a report by China Merchants Bank and Bain & Co.

The report, titled 2017 China Private Wealth Report, has found that China’s most wealthy have continued to grow richer and also become more geographically disperse. Their wealth has also become more diversified.

The number of high net worth individuals with at least $1.5 million of investable assets increased dramatically from 180,000 in 2006 to 1.6 million in 2016. Growth in the Chinese private wealth sector also includes an increase in the number of ultra-high net worth individuals, up from 10,000 to 120,000 in the same time period.

In total, China’s private wealth has swelled to RMB1.65 trillion ($24 trillion), which is six times the level it was in 2006.  This amount is almost twice the size of the country’s GDP.

The other key findings of the report were:
-    While HNWIs remain concentrated in major cities and coastal areas, 22 of mainland China’s 34 provinces now each have at least 20,000 wealthy individuals.
-    In 2009, nearly half of HNWIs ranked “wealth creation” or “quality of life” as their top priorities from a list of seven objectives. Today most respondents name “wealth preservation” and “wealth inheritance” as their main goals.
-    About 40 per cent of UHNWIs would consider using family offices for asset allocation management, wealth preservation and inheritance, tax planning, legal consultation, and business inheritance planning.
-    The percentage of HNWIs surveyed with overseas allocation has increased from 19 per cent in 2011 to 56 per cent in 2017, but the overall percentage of assets allocated overseas has levelled off.
-    Today, 63 per cent of China’s wealthy rely on financial services providers to manage their domestic financial assets, and among that group, about half use private banking services provided by commercial banks. 
-    When selecting wealth managers, HNWIs value the institution’s reputation above all else, with 61 per cent ranking “brand and trust” as the most important criteria, while 58 per cent selected “expertise.”

“This year’s results are fascinating as they show the continued and immense surge of wealth creation in China that has continued to flourish from a decade ago,” said Jennifer Zeng, partner at Bain & Co, and co-author of the report. “It represents an entirely new frontier with abundant opportunities and challenges for financial services providers. While this growth is exciting, firms need to truly understand the high level of sophistication, knowledge and technological savvy among this new generation of HNWIs and UHNWIs if they are to succeed.”

It has only been ten years since the Chinese private wealth market took off, and the country’s approach to the sector has change a lot. The report found that there may have to be more changes in order to reach out to more individuals and families. It stated that there should be more emphasis placed by firms on wealth management and planning.