As 2007 began, a charity cocktail party was held in Yiwu, a small city in East China's Zhejiang Province. Representatives from more than 30 of the world's leading luxury brands, including Hennessy, Ballantine's, Porsche, Jaguar, Martini and Costa were in attendance as scores of local tycoons participated in an auction, raising almost 1 million yuan for charity.
It would not be surprising if the fundraiser was held in a large metro area like Beijing or Shanghai, but for city of only 680,000 people, the prevalence of luxury goods made it remarkable.
A small city, perhaps, but potent. By the end of April, Yiwu had over 4,000 luxury cars, 2,150 of which were Audis, 1,300 were BMWs, 370 were Mercedes Benzes and 110 were Porsches.
Such a level of top ownership leads all small cities in China. As a result, Mercedes, BMW and Audi have all set up "4s stores" to provide sales, service, spare parts and surveys.
Known as "a sea of commodities and a paradise for shoppers", Yiwu is famed as one of the largest consumer retail marketplaces in China. When combined, total markets size is now 2.6 million square meters and with 58,000 storekeepers, making it a major consumer distribution and sourcing center for the international market.
Luxury cars
With so many successful business people, a luxury car has become their first purchase.
Car ownership habits have become more mature in recent years, says He Yanqing, general manager of Yiwu Car City, the largest automobile market in the city.
He says more than 60 percent of luxury cars are bought with cash, leaving only some 35 percent purchased with loans.
"This shows that most customers are financially competent enough to buy such cars, which are easily 1 million yuan. In the past, customers were unrealistic - their savings could not reach the high level," he notes.
Middle-class buyers in the city prefer cars around 150,000 yuan, for the simple utilitarian function of transportation, while luxury car owners look for high class when meeting business partners and clients.
By the end of April, Yiwu's car ownership reached 99,566, 85 percent of which are private cars. The figure for last year was 80,660.
The city has 47 auto dealers, including 10 car boutiques selling 14,000 vehicles a year, with a resulting revenue of over 1.5 billion yuan a year.
He says Yiwu's automobile market grew by 28 to 30 percent year-on-year, while sales of luxury cars increased by 35 percent. Such high growth rates will continue for another two to three years, he predicts.
Shopping mall
Another example is Yiwu Tianyuan Center, the city's top residential and commercial complex. Even as the 20,000-square-meter shopping mall is under construction, its developer is already in contact with global brands like Armani.
Yang Fujia, sales manager of Tianyuan Real Estate Development Co Ltd, says the shopping center, scheduled to open at the end of next year, will change the requirement for local consumers to go to Shanghai or Hangzhou to satisfy their luxury desires.
There are 109 apartments in the complex, ranging is size from 150 to 200 square meters. Each apartment sells for about 4 million yuan, which is more expensive than many high-end residences in Beijing and Shanghai. Yet He is confident, saying sales will start very soon, and that selling them all is not a problem at all.
"Very few local people spend money on luxuries to show off their wealth. They pay because they need it for further business development," says an anonymous city official.
"Most of the affluent people have just rolled down their pant legs - transforming from farmers to entrepreneurs - so they still have a naivet," the official explains.
His statement is reinforced by the tradition that many entrepreneurs take their families to villages to eat farmer cuisine in their spare time instead of spending thousands of yuan on dinners. Coffee shops are popular in the city because local entrepreneurs prefer to meet their business clients there.
The consumption power is there, so promoting a quality life and raising the consciousness of buying luxury goods are essential in Yiwu, says Zhu Jianfeng, general manager of Tianyuan Real Estate Development Co Ltd, also the organizer of the charity reception held this year.
