Jing Daily compiles the best in Chinese luxury, culture, business, arts, and investment news from around the world

NEW YORK – November 5, 2009 – Jing Daily, the source for the most important and timely news about the business of luxury and culture in China, today announced the launch of its new website (http://www.jingdaily.com). With insight and commentary gathered from the Chinese- and English-language blogosphere and top news sources around the world, Jing Daily offers up-to-date information about crucial developments and current trends in China’s luxury, business, arts, and cultural markets.

With a middle class now roughly equivalent to the entire U.S. population (and growing), China’s consumer market is among the world’s largest. But for Westerners looking to do business there – or simply understand the contemporary culture – China can be a confusing, extremely fast-paced, and at times contentious place. Published in English and Chinese, Jing Daily cuts through the clutter to focus on the intersection of luxury and culture in China: the ins and outs of business development with an eye toward the upscale consumer market, as well as the business of culture – from auctions, museums, and contemporary art to performance, publishing, and public events.

Published through a strategic partnership with AW Asia, a New York-based arts organization working in the field of contemporary Chinese art, Jing Daily is compiled in New York City and Beijing and incorporates original content from reporters based in New York, Beijing, Shanghai and Hong Kong.

“China’s high-end and cultural markets are among the most dynamic and fast-changing in the world,” said Larry Warsh, publisher of AW Asia. “Jing Daily is a concise resource for individuals and companies whose interest in China extends beyond simple economics and encompasses contemporary Chinese culture in all its complexity.”

With original interviews, commentary, book reviews and videos, along with a proprietary “Media Roundup” gathering the latest China news worldwide, Jing Daily is designed for anyone looking to stay on top of luxury and culture in today’s China.

In Mandarin Chinese, jing means energy, essence, excellence and proficiency. That’s the principle by which Jing Daily compiles the most significant news and insights about China today.

Zeng Fanzhi is one of the most interesting and top-grossing contemporary Chinese artists of the last 30 years

Artxun (Chinese) reports this week that Zeng Fanzhi — one of China’s top contemporary artists — has gained the title of “Number One” Chinese artist in terms of auction prices over the last year, leapfrogging longtime title-holder Zhang Xiaogang. While some of this may be down to the slower pace with which Zhang is producing new works, Zeng’s growing popularity within China and, ostensibly, among New Chinese Collectors, could have something to do with it. Zeng, who sprang to prominence in the 1990s mostly through his “Mask” series but has since begun experimenting with more abstract pieces, recently sold 5 of 6 pieces up for grabs at Sotheby’s autumn auction of contemporary Asian art in Hong Kong well above high estimates, indicating that his popularity among the primarily Mainland Chinese bidders remains strong.

The Artxun piece, rather than focusing only on Zeng’s auction prices, does an excellent job of looking into the artist himself and some of the personal projects he has undertaken, including the “Zeng Fanzhi Art Scholarship,” which awarded 10,000 yuan to a disabled university applicant in July of this year. From the article (translation by CLCB staff):

Compared to last year’s [Artprice] list, Chinese artists comprised 16 of the top 50 artists in the world, down from 18 the year before. Among Chinese artists, Zeng Fanzhi was the highest selling, surpassing Zhang Xiaogang by 1,010,000 yuan, becoming China’s most “expensive” artist of 2009. Zhang Xiaogang slipped from the top five this year down to #7. Chinese artists who made the top 50 list last year, namely Yin Chaoyang, Liu Wei, Fan Dehai, and Guo Hai weren’t strong enough to make the list this year, although Yan Peiming is expected to enter the top 50. Another interesting thing to look at is Chengdu’s growing power — aside from Zhang Xiaogang, Chengdu-based contemporary artist Zhou Chunya was ranked 17th in the world and #11 in China in 2008, and in 2009 rose 3 places in the world ranking to #14 while rising 6 places in China to #5 there. Another Chengdu artist, Luo Zhongli, ranked #38.

Art helping the disabled: Highest donation by Zeng Fanzhi, to the tune of 350,000 yuan

This year, 45-year-old Zeng Fanzhi is the illustrious representative of contemporary Chinese art. His “Mask” series sold at Christie’s auction for a surprising price of over 70,000,000 yuan, setting a new record for a Chinese contemporary artist. Zeng Fanzhi and [Artxun] actually have some common threads. Artxun and [contemporary Chinese artist Zhou Chunya]‘s jointly created “Multicolor Fund” (“五彩基金”) donated some 350,000 RMB to establish the “Zeng Fanzhi Art Scholarship,” the largest single donation. At that time, Zeng Fanzhi expressed in an interview with Artxun journalists that he’s an artist, so he pays particularly close attention to charitable activities directed toward youths with dreams of becoming artists who were seriously injured in the Sichuan earthquake (of 2008). Said Zeng, “When I went through hard times myself, I received help from others, so since I now have the ability to help other people, I’m going to do everything I can to do so.” This July, Deng Yu, who was severely injured in the Sichuan earthquake, became the first recipient of the “Zeng Fanzhi Art Scholarship,” receiving a 10,000 yuan annual scholarship after completing his university exam.

 

“Bullish” News Gives Chinese Contemporary Art A Shot In The Arm

Some art organizations and galleries have closed [in the wake of the global economic crisis], causing many critics to think the contemporary art bubble’s time has come, but world famous art monitoring organization Artprice found after a survey that there is reason to be “bullish” about the developmental tendencies of the Chinese contemporary art market, and that the Chinese contemporary art market has unexpectedly risen to the third largest in the global ranking. Last night, a Chinese contemporary artist ranked in the top 20 — who declined to give his name — told a reporter that the economic downturn had a major influence on the whole world, not only China, saying, “The data from this survey is a real shot in the arm for the Chinese contemporary art market.”

 

Chengdu-based contemporary art critic Chen Moze said, “In terms of all of Asia, Chinese contemporary art is worthy of the title ‘Big Brother,’ because there are lots of Chinese artists, and the overall strength is great. Since domestic contemporary art became integrated internationally, and the market got on track, it’s easy to see how an exceptional artist like Zhang Xiaogang can build up global fame after 30 years. [To me] there’s nothing unusual about that.”

"Untitled" by Zeng Fanzhi

Diamonds are becoming more popular -- and accessible -- every year in China

Good economic news in China this year has translated to good news for diamond producers, if figures released recently by China’s news agency, Xinhua, are correct. This year, following a nearly 50% decline in diamond sales in the US and 24% drop in Japan — according to China’s Global Times — China has become the world’s third largest diamond market with $300 million in sales through the first half of the year. Although this might sound like a lot, particularly in the context of the global economic slowdown, the Chinese market still has a lot of room to grow. Despite rough figures in the US over the past year, the American market still accounts for nearly half of world diamond sales, so the emerging Chinese and Indian markets will take several years of sustained growth to reach the capacity and consumer awareness of the established American and Japanese markets, a prospect that must please diamond producers immensely.

According to the Global Times, less informed middle class Chinese consumers are likely to be the easiest to reach for years to come, as diamonds are still relatively new to the Chinese market (about as new as the middle class itself). As younger Chinese buyers slowly become more informed about diamond grading and quality standards, the market is likely develop and mature:

Diamonds, once a luxury rarely owned by a Chinese family, has now become a must for Chinese newlyweds. According to [Wang Fei, researcher at the Cheungkei Research Center for Luxury Goods and Services (SITE) in the University of International Business and Economics,] the largest population of diamond buyers is newlywed couples born in the 1970s and 1980s.

They are heavily influenced by western culture, where diamonds are seen as a token for love and loyalty. The second-largest customers are couples born in the 1960s who are financially more capable of affording a diamond than they were 20 years ago. The last group to buy diamonds are those who see the investment value in diamonds, which becomes clear in the economic downturn where currencies are depreciating faster than ever.

Although a rapidly growing market, Liu of GAC points out that the current diamond market is not a mature one, saying diamond consumption in China is still for sensational reasons. A true mature diamond market should be one driven by the diamond’s investment values, Liu said.

The maturation of high-end markets in China really is shaping up to be one of the big potential stories of the next 10-15 years, as articles about everything from diamonds to automobiles indicates. It seems that the key factor in the development of China’s luxury market is the dual growth of consumer education and home-grown luxury companies. As Chinese consumers become more familiar with diamond standards and Chinese companies increasingly gain market share by appealing to the cultural design aspects most coveted by the domestic audience, we should see not only more diamond purchases in China, but also more diamond appreciation — on par with, or possibly exceeding, the appreciation of traditional stones like jade.

No matter what the Chinese middle class ends up buying, high-end consumers still remain some of China’s most devoted diamond fans — a distinction that apparently extends all the way to the top brass in business and politics. From the Christian Science Monitor:

Young married couples are not the only Chinese to show an interest in diamonds. Last week Xi Jinping, China’s vice president and expected successor to President Hu Jintao, visited the World Diamond Center. He walked away with gifts of a two-carat diamond laser-engraved with the Chinese flag and a Chinese flag pin made of 60 rubies and five diamonds.

High-end jewelers are also expected to seek to expand in China as traditional markets elsewhere flag as a result of the economic slowdown. Cartier, a French jeweler and watchmaker, expects that China will become its biggest market within three or four years, CEO Bernard Formas said last month. The firm plans to double the number of its outlets by 2014, according to Mr. Formas.

The Peninsula Shanghai is designed to emulate the city's Jazz Age style (Graphic courtesy Peninsula Hotels)

Over the past few years, in preparation for the 2010 World Expo, Shanghai has become one of the world’s top destinations for hoteliers looking to get a piece of the Chinese business and luxury traveler yuan. With upwards of 7 million visitors — mainly Chinese — expected at the expo, newly constructed hotels have added nearly 4,000 five-star rooms to the city’s already vast luxury hotel market. The question is, after the World Expo party ends, will 2011 bring a sustained flow of business and luxury travelers to Shanghai? Or will the city’s massive building boom lead to lingering overcapacity?

Today, the Independent UK looks at the city’s five-star hotel explosion, and discusses how the relatively low impact of the global economic downturn on the Chinese market has given some hoteliers hope that overcapacity is a word they’ll never have to use in major Chinese cities like Shanghai:

The opulent Peninsula, the only new building on the main part of Shanghai’s historic Bund in 60 years, just opened, embracing the city’s Jazz Age heyday with a chauffeur-driven 1934 Rolls Royce Phantom and a Great Gatsby-esque pool.

The Peninsula’s owner, Hongkong and Shanghai Hotels Limited, is making a return to the “Paris of the East” where it was founded after a 60-year absence, but it is facing stiff competition.

Ritz Carltonis building a second hotel here, Hyatt already has three landmark properties and Shangri-La is expanding from one to four hotels.

Conrad, Jumeirah, Waldorf Astoria and the legendary Peace Hotel — managed by Fairmont — are all also preparing to enter the fray, with work done or nearly completed on each property.

It seems as if there is a mix of factors at play in the Shanghai five-star hotel market. On one hand, you’ve got the world’s top luxury hotels tripping over themselves to establish a strong foothold in Shanghai, and on the other hand you’ve got a handful of these luxury hotels working overtime to emulate Shanghai’s Jazz Age style and reputation as “The Paris of the East.” As Shanghai’s luxury market develops further, and further away from a slightly adapted copy of the Western market, we should see more hotels, restaurants, nightclubs and fashion boutiques following the lead of the Peninsula and bringing a bit of the city’s decadent past back to the forefront.

As the Independent article goes on to point out, it’s probably in the best interests of Shanghai’s upscale hotels to be seen not only as expensive and exclusive, but a destination…with Chinese characteristics:

The number of high net worth individuals in China surpassed the number in Britain last year to become the fourth largest in the world, according to research published by Merrill Lynch this month. China passed France in 2007.

China now has more than 364,000 people with more than one million dollars in liquid assets, the investment bank said.

That is a key figure for the luxury hotel sector, executives say — and one that puts them at ease.

“China’s a very big market and there’s a place for everybody and everything,” said the Peninsula’s general manager Paul Tchen.

“With our arrival, we’re providing another option … Choice itself is a luxury.”

Guo Wei's art reflects the rebelliousness and angst of China's so-called "post-80s Generation" (Image: Kansas City Star)

With regular news about China’s most famous artists selling works for hundreds of thousands of dollars, and in some cases well over a million dollars, over the past five years, it can be easy to forget that China’s art world is in a constant state of flux, with thousands of young artists coming out of art schools and vying for attention. Although artists like Yue Minjun and Zhang Xiaogang have quickly become major global art stars, China’s younger artists are little known outside of their home country (and, more often than not, are unknown there as well), so the news that Kansas City is mounting a relatively large-scale and far-ranging exhibition of works by young Chinese artists must give some of these art greenhorns some hope for their future prospects.

The “Looking East” group exhibition, held at the Byron C. Cohen Gallery for Contemporary Art, follows previous solo shows of Chinese artists Hong Chun Zhang, Chong Siew Ying and Deng Wushu at the gallery, and offers viewers a glimpse at many of China’s burgeoning young talents. From the Kansas City Star:

Three prints by Yang Qian seem shallow and self-indulgent compared with [Sheng Qi's politically-motivatd] oils. Yang wields tremendous skill to produce voyeuristic fantasies of spying on beautiful women through moist windowpanes or in foggy mirrors.

In the lower gallery, Feng Zhengjie offers three striking silkscreens of women. Unlike Yang’s bathers caught unaware, these women are explosive products of the collision between consumer culture and traditional Chinese culture.

“Chinese Portrait Series No. 53” presents a fiery redhead. Her windblown hair recalls product ads of the ’80s, and her porcelain, angular features resemble the commercial works of Patrick Nagel. Intriguingly, her eyes look in opposite directions, perhaps to express being divided by a “duplicity of ideology,” to borrow a phrase from the artist’s biography.

Three prints by Guo Wei cast defiant adolescents as protagonists of individualism in a country that favors the collective. Silkscreen editions of his acrylics on canvas, these brazenly graphic images display teenagers vying for attention with the energy of young, brassy MySpace users.

Two figures make their presence known in “Chambre Ave Nuage.” Against a gray background decorated with generic, fair-weather clouds, a boy in loose-fitting clothes opens his mouth wide as if to shout. A girl in a white wig and spaghetti-strap slip strikes a pose as if for a camera.

The images in this exhibit are visually arresting. They also offer a fascinating window onto how young Chinese artists view political and cultural developments in their country.

LVMH's baijiu joint venture with Wenjun Distillery could be a huge money-maker in China; But will it appeal outside the country?

Although most westerners may be unfamiliar with baijiu, the traditional spirit of China, drinkers within the country have been sipping the powerful, often tear-inducing alcohol for centuries. Less famous abroad than Japanese sake or Korean soju, two of its descendants, baijiu is most certainly big business in China, with the most expensive bottles often selling for more than $10,000 USD. This high-end spectrum, populated by rare bottles produced by only a handful of companies, has apparently garnered the attention of more than one foreign company looking to get a piece of the premium baijiu market, as Diageo bought a 43% share in baijiu producer Sichuan Chengdu Quanxing Group last year and, recently, LVMH Moet Hennessy acquired a 55% stake in one of China’s top producers, Wenjun Distillery.

This acquisition should fit seamlessly with Louis Vuitton Moet Hennissey’s broader China strategy. As we wrote earlier this week, LVMH is making a massive push into the Chinese market, buoyed by figures that indicate China has leapfrogged past traditional luxury markets like the United States this year and should surpass the Japanese market within five years. Acquiring a premium baijiu with real brand pedigree — the first Asian brand to be owned by the LVMH group — is being greeted as a gutsy move, as the high-end baijiu market is both exclusive and highly competitive. As Karen Cho writes, the acquisition of Wenjun has huge potential as incomes grow throughout China, but — as uncharted territory – presents LVMH with a host of new challenges:

“This is the first experience for the whole LVMH group owning an Asian brand,” says Allan Hong, development manager at Sichuan Wenjun Spirits Sales Company. “Because of the great potential in China, the whole group decided to run the Wenjun brand as a super-premium brand in China,” he adds.

The article goes on to discuss increased foreign interest in the high-end baijiu market, exemplified by Diageo’s investment, and looks at some of the unique cultural challenges presented by the Chinese market, such as Chinese drinkers’ preference for drinking baijiu at restaurants rather than nightclubs:

[A]s LVMH had always targeted modern nightspots, and no one was drinking bai jiu in those outlets, they had to shift its focus to Chinese restaurants.

This, Hong says, posed an immediate challenge, because LVMH’s sales force had relatively less experience with Chinese restaurants.

“So (in our) communication with our distributors, with restaurant owners, we have made a lot of efforts to understand their needs and (also) what their consumers want in those kind of outlets.”

Although LVMH will undoubtedly face massive difficulties in this vast yet complex market, the combined brand power of LVMH and Wenjun names should give the new joint venture a leg up in the market. As Allan Hong says in the article, it is all about serving the lucrative but mysterious niche market of super-premium baijiu drinkers: “[With this joint venture,] we want to capture this opportunity; we want to get a niche market that only belongs to ourselves.”

Although Beijing and Shanghai are China's "crown jewels," second-tier cities like Chongqing may ultimately prove the engines for the creation of a more comprehensive Chinese consumer culture

We’ve discussed recent reports on the rebound of the Chinese luxury market (which didn’t drop that much to begin with, despite global economic woes), and this year’s findings in McKinsey & Company’s Insights China report that China is rocketing towards the top of the list of the world’s biggest luxury markets. Although China remains one of the only bright spots in the world of luxury retailing at the moment, foreign luxury brands — despite rapid growth in the mainland market — often have difficulties convincing many of the country’s highest-potential customers (the wealthy and super-rich urbanites in top-tier cities) to buy their products within the mainland, strangely enough, because of the large luxury tax China levies on high-priced imported goods.

Possibly to combat this problem, as we’ve seen this year, many companies are looking towards second- and third-tier cities as a source of future growth, and perhaps leaving the top-tier cities alone and letting their Beijing or Shanghai boutiques function only as “showrooms” for ultra-rich customers who’ll simply buy the products on their next overseas or Hong Kong/Macau trip. In these smaller urban areas, middle- and upper-middle class customers, who still want to differentiate themselves through conspicuous consumption but are most certainly not part of the economic elite, could be the key for luxury brands who want their China locations to actually sell things rather than simply show them off like a real-life catalog. Middle- and upper-middle class urban professionals in cities like Xi’an, Qingdao, Nanjing and Chongqing — who make a decent living but can’t afford to fly to Hong Kong or Macau (let alone Paris or Tokyo) for luxury shopping sprees — are likely going to buoy luxury brands’ losses in top coastal cities.

Second-tier cities in particular present major opportunities for businesses in a range of industries. A 2006 U.S. Commercial Service in China study (PDF) indicated that lower competition and lower saturation in second-tier cities made them an excellent target for importers, and the relative novelty of foreign brands would give them a leg up on domestic competitors for the medium- to long-term. From the study:

A less-saturated market also means one with fewer competitors, presenting a crucial opportunity for U.S. companies to be among the first to touch a market. This advantage also gives U.S. exporters the chance to win over a Chinese customer base, known for its strong brand- loyalty behavior and tendency to associate U.S. brand names with high quality. One exporter recently explained, “In big cities there is a lot of competition already. But in second-tier cities, we have an edge because fewer of our international rivals are there.”

Even though this study is a few years old, the trend of increased spending on imports in second-tier cities seems to have not only continued but intensified. This summer, a joint report on China’s luxury market issued by Ruder Finn Asia and Albatross Global Solutions found that purchasing patterns in first- and second-tier cities were only marginal, as consumer confidence and purchasing power in smaller cities shows signs of growth. As a Global Times article this summer pointed out, while first-tier cities will probably maintain their role as luxury brands’ “crown jewels,” with opulent showrooms in Beijing, Shanghai and Guangzhou, the important stores — the ones actually selling items — are the real key to long-term revenue in China:

“While brands continue to allocate image-building resources in tier-1 cities, tier-2 cities are anticipated to be key to their long term and sustained success,” said Jean-Michel Dumont, chairman of Ruder Finn Asia.

Despite optimism among many analysts looking into the second-tier luxury sector in China, uncertainty remains among others about the future of luxury retailing in China. This week, an excellent Luxury Society article investigates the two outlying concerns that many luxury execs have about the future of the Chinese market: consumer taste and prohibitive pricing (a byproduct of the aforementioned luxury tax). In this article, the author discusses the short- to medium-term prospects for luxury in China with a number of industry experts, and finds that there are no easy routes for sustainable revenue in the Mainland market. As long as wealthier customers can find luxury products abroad at a cheaper price, or can pop over the border to Hong Kong or Macau for a quick day-trip, even the most exclusive luxury brands will have trouble cajoling these customers to shop locally.

[D]espite the allure of these glamorous and expansive retail establishments, many anecdotal reports suggest that a significant proportion of Chinese shoppers don’t use local malls as the primary outlet to buy luxury goods.

[Simon Lock, managing director of IMG’s Fashion Asia Pacific division] explains: “At the moment, it’s all about the land grab for the brands, trying to establish spots in as many retail luxury shopping centres. These retail centres are acting more as showcases for the brand, which are distinct from actual retail sales. So you’ll find a lot of Chinese consumers will go into the Dior shop in Plaza 66 in Shanghai [for example] and they’ll look at the merchandise that’s in there. But because of the 30% luxury tax at the moment, their first luxury experience with the brand will actually be when they come to Hong Kong or Macau.”

As Lock suggests, the high price of luxury goods in China is the foremost hurdle. Between tariffs and value-added taxes, prices in China can be up to a third higher than in Hong Kong. Hence, a quick and cheap flight to Hong Kong can deliver more bang for their buck since travel visas are relatively easy to acquire for wealthy Chinese customers. For the hardcore luxury addict, Tokyo offers more luxury options than anywhere else in Asia, becoming an increasingly popular destination with visa restrictions now also reduced. McKinsey found in its “Coming of Age” survey that the Chinese rarely justify their foreign purchases on price differential alone, as they also want access to the more expansive product selection in Hong Kong and Tokyo retail branches.

But even if Hong Kong is driving away some sales from the mainland, boutiques in China do perform an important function within promotion and brand awareness, equally providing a critical communications channel for fostering sales abroad.

Although this article is wide-ranging and incredibly informative, a fuller sense of the buying habits of second-tier, and even third-tier, cities would probably be necessary to get a better sense of where the Chinese luxury market is headed. Quoting an expert on luxury markets in emerging economies, the Luxury Society article noted that conspicuous consumption of flashy (or, some would say, gaudy) and expensive luxury items is a hallmark of societies with wide income disparity, and in China’s growing urban areas this disparity is vast and, in some cases, growing.

If this trend holds true, we should probably see a two-sided growth for luxury brands in second-tier cities, as more brands open boutiques or mall showrooms and income gaps yawn. Though both will, over time, slow down and probably reverse, for the medium- to long-term it looks like brands looking to build a real footprint in China and build real brand equity should look past the marquee cities in the east — or at least understand that these eastern cities are just going to function as living catalogues for the Chinese urban jet set.

TNT's past staging of "Oliver Twist" was a big hit in Beijing

It seems that cultural exchanges between China and the rest of the world are becoming increasingly commonplace, with large-scale events like Carnegie Hall’s “Ancient Paths, Modern Voices” festivals in New York and Orange County, the ”Experience China in Israel” event in Tel Aviv giving foreign audiences a chance to see a cultural cross-section. Over the past few years in China, foreign cultural organizations and groups have made regular trips to the country to give Chinese audiences a chance to do the same. The most recent of these cultural exchanges, a staging of Shakespeare’s “Romeo and Juliet” performed by Britain’s TNT Theater, began its seven-city tour of China this week, and is set to perform the play throughout the country until November 29. From Xinhua:

Cui Yang, general manager of the Beijing-based Milky Way Arts and Communications Co., Ltd, the play’s importer, said the new version featured a cappella (singing without instrumental accompaniment) and live score which was specially commissioned for the play. 

 According to Cui, all the sound effects in the drama were created by human voices instead of being pre-recorded.

The TNT Theater, founded in 1980, has been distinguished for its simple stage decoration, strong British style and cross-gender performances. It has previously won the acclaim of Chinese audience with dramas such as Charles Dickens’ “Oliver Twist” and Shakespeare’s “Hamlet”.

In the run-up to next year’s Shanghai’s World Expo, and certainly in its aftermath, we should see a great deal more cultural exchange going on both inside and outside China, as more foreign audiences look to learn about China’s ancient and modern cultures, and Chinese audiences look to learn more about important global and historical trends.

Many investors are banking on the prospects for Chinese middle class consumption

We’ve kept a close eye on China’s burgeoning middle class, which — despite its recent appearance on the world stage — already numbers in the hundreds of millions, presenting a vast and unique potential consumer base for companies selling everything from cars to jewelry, household goods to fashion. While the Chinese middle class is expected by many to play a major role in the global economic recovery, their buying (and saving) habits, investment strategies, and long-term financial goals by and large remain poorly understood. Today, the Wall Street Journal looks into emerging market investors who eschew the popular financial planning target customer — the wealthy or ultra-rich — to serve the Chinese middle class, and investors in the West who are banking on the continued growth of this consumer class.

In coming years, it seems inevitable that the increased consumption of China’s hundreds of millions of middle class investors will affect, in some way, investors and money managers in other countries. If that is indeed the case, it pays to read up on this subject now, when the market is just starting to be defined and more fully understood:

Encouraged by the steps the Chinese government has taken to boost consumption, some equity-fund managers are putting money into sectors related to domestic demand, such as retail, automobiles and financials.

Chinese industrialization in recent years has lifted the average income of millions, propelling them into the ranks of a swelling middle class some say could grow to be the largest in the world.

“Thirty years ago, there wasn’t a consumer class in China, and that’s changed quite a bit,” said Constantine Papageorgiou, vice president and portfolio manager at Acadian Investments, which has roughly $9.9 billion in emerging market assets. “Those types of trends are likely to continue.”

As a strategy, investing in the Chinese consumer echoes a larger trend, where investors are seeking growth opportunities in developing-country consumers around the world, as they expand their buying prowess, purchasing a car or cell phone for the first time, for instance.

The move is also seen as a long-term investment, though, since China’s consumption push is still in its infancy phase. Some economists also say further policy changes are needed for China’s consumption trends to see upward trajectory long-term.

…

China’s private consumption was roughly 35% of the country’s gross domestic product in 2008– quite a bit lower than the levels in most developed markets. If China does pursue a more aggressive policy reform, the country’s private consumption could be raised to as much as 50% of GDP by 2025, according to an August report from McKinsey Global Institute, the economics research arm of consulting firm McKinsey & Co.