More work needed on engaging Chinese
wealthy
Most Mainland Chinese high net worth (HNW)
clients continue to have only a basic understanding of private
banking and the services banks offers, a joint report released by
the Boston Consulting Group (BCG) and the China Construction Bank
(CCB) has found.
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“For these individuals, customised and
priority banking services are the most important functions a
private bank can provide,” the report said.
Access to exclusive services in branches was
also deemed very important by these individuals.
The report showed that educating their
children, preserving their wealth and sustaining their way of life
are the most important priorities for Chinese HNWIs. However, there
is also a growing recognition amongst them for the importance of
social responsibility.
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By GlobalDataChina continues
upward rise
China’s wealth market continued to grow in
2011 to an estimated RMB 62trn ($9.8trn) despite global economic
uncertainties, the BCG and CCB study found.
The report estimated that by the end of 2011
the total amount of investable assets held by Chinese individuals
was expected to be near $10trn. This represents a compound annual
growth rate of 32% for the past three years.
RMB27trn of these investable assets will be
held by high net worth households (HNWHs) while the total number of
Chinese HNWHs was expected to reach 1.21m by the end of 2011.
This means that the number of Chinese HNWHs
has grown at a rate of 42% over the last three years.
Increasing demand for offshore
banking
The report highlighted that offshore
private-banking services are growing in demand as Chinese
entrepreneurs increasingly look abroad to grow and expand their
business.
It also noted that this demand increases
proportionally to the client’s wealth. About 75% of individuals
with more than RMB300m in assets expect more exposure to offshore
products and services in the future.
Higher risk tolerance among new
generation
The BCG and CCB study found that currently
around 60% of HNWIs tend towards moderate risks, about 32% describe
themselves as risk averse and 8% will tolerate higher risks in
pursuit of higher gains.
However, this could change as almost half of
HNWIs have already transferred their wealth to the next generation,
or are preparing to do so.
It adds that this next generation of wealth
inheritors have a higher tolerance for risk and a preference for
more complicated investment products. They also expect more from
private banks.
Low share of wallet
The BCG and CCB found that a single bank’s
share of wallet for a Chinese HNW client was only about 20% and
concluded that banks should aim to increase this figure.
The report recommended that private banks in
China spend more time listening to their clients in order to
develop long-term relationships and client loyalty.
Related Chinese HNW news
China: HNWIs Long March to offshore wealth
Chinese HNW prefer local private banks: Bain
Battling
it out for China’s HNW prize
