A new report shows that 64 percent of Chinese millionaires have either emigrated or plan to emigrate—taking their spending and fortunes with them. The United States is their favorite destination. One-third of China’s super rich—or those worth $16 million or more—have already emigrated.
The data offer the latest snapshot of China’s worrying wealth flight, with massive numbers of rich Chinese taking their families and fortunes overseas. The main reasons rich Chinese are leaving is to pursue better educations for their kids, and to escape the pollution and overcrowding in urban China.
But analysts say there is another reason the Chinese rich are fleeing: to protect their fortunes. With the Chinese government cracking down on corruption, many of the Chinese rich—who made their money through some connection or favors from government—want to stash their money in assets or countries that are hard for the Chinese government to reach.
According to WealthInsight, the Chinese wealthy now have about $658 billion stashed in offshore assets. Boston Consulting Group puts the number lower, at around $450 billion, but says offshore investments are expected to double in the next three years.
A study from Bain Consulting found that half of China’s ultrawealthy—those with $16 million or more in wealth—now have investments overseas.
The Shanghai Travelers’ Club, a China Elite Focus luxury lifestyle publication for China’s wealthiest, reported that 62% of their readers will consider to buy a property overseas in 2014, and 76% of them had overseas investments.
The mass millionaire migration out of China is also hitting luxury companies hard. China’s luxury sales last year fell 15 percent—the biggest drop in over a half a decade. Spending on gifts, which made up a sizable portion of luxury sales, fell 25 percent.
Bentley Motors last week said that its sales in China slowed last year in part because of “the migration of high net worth individuals from China.”
In other words, it isn’t that wealthy buyers in China are spending less—they’re just disappearing.
The United States was their top destination, which any real estate agent in San Francisco, Seattle or New York can confirm. Europe is their second favorite destination, followed by Canada, Australia, Singapore and Hong Kong.