Chinese households have far more money than previously thought, according to recent research, which says casino operators, property companies and even European luxury goods makers could be about to benefit from the rise of these deep-pocketed consumers.
The research, conducted by China Reform Commission professor Wang Xiaolu and commissioned by Credit Suisse, found official estimates of household income were well wide of the mark.
On average, mainland China''s urban household income was 32,150 yuan ($4,746), or 90% above the 16,880 yuan indicated by official data, according to the study which assessed spending and income patterns in China in 2008.
The study found that the "hidden" household disposable income could be as high as 9.3 trillion yuan in 2008, equivalent to about 30% of China''s gross domestic product.
Most of this wealth -- 63%, according to the survey -- is concentrated in the top 10% of Chinese households. That means the top bracket is about 3.2 times richer than official estimates suggest.
The report also said the government''s flow of funds data don''t accurately track the income of top households because much of it are the results of "illegal or quasi-legal" activities.
Wang reports "grey" disposable income -- the shortfall in the figures revealed in the economic census and what households really received -- at 5.4 trillion yuan in 2008.
Credit Suisse said the finding helps explain China''s growing wealth gap and could help explain "the rationale of the Chinese government''s recent strong push for faster wage growth and a more equitable income-distribution pattern."
Credit Suisse said investors may be setting their sights too low when it comes to gauging the impact of this vast pool of wealth.
Investors, the broker said, should look to casino operators in the party-zone enclave of Macau. Among its favored selections in the former Portuguese colony is Galaxy Entertainment Group Ltd. /quotes/comstock/22h!e:27 (HK:27 5.34, +0.09, +1.71%) /quotes/comstock/11i!gxyef (GXYEF 0.73, +0.01, +0.97%) , which is set to unveil a new casino geared to value-conscious gamblers.
Shares of high-end property developers with Chinese projects are another good bet, Credit Suisse says, pointing to Hong Kong-listed groups China Overseas Land & Investment Ltd. /quotes/comstock/22h!e:688 (HK:688 16.32, +0.16, +0.99%) /quotes/comstock/11i!caovf (CAOVF 2.04, -0.02, -0.97%) and Hang Lung Group Ltd. /quotes/comstock/22h!e:10 (HK:10 45.45, +0.50, +1.11%) /quotes/comstock/11i!hnlgf (HNLGF 6.05, +0.15, +2.54%) , as well as the mainland-listed developer China Vanke Co. /quotes/comstock/28b!e:000002 (CN:000002 8.84, +0.38, +4.49%) /quotes/comstock/11i!cvkef (CVKEF 0.00, 0.00, 0.00%) .
In the food area, Credit Suisse suggested specialist yoghurt-drink maker China Mengniu Dairy Co. /quotes/comstock/22h!e:2319 (HK:2319 23.10, -0.25, -1.07%) /quotes/comstock/11i!ciadf (CIADF 3.25, 0.00, 0.00%) . The largest dairy producer by market share in China has unveiled new products as part of efforts to re-brand itself under new management following the melamine-tainted milk scandal in 2008.
Among internationally-listed beneficiaries, favored selections were German luxury automobile maker BMW AG /quotes/comstock/11e!fbmw (DE:BMW 41.72, -0.30, -0.70%) , and Paris-listed handbag and drinks group LVMH Moët Hennessy Louis Vuitton SA /quotes/comstock/24s!e:mc (FR:MC 92.85, -0.08, -0.09%) /quotes/comstock/11i!lvmuy (LVMUY 23.80, +0.08, +0.34%) .
The research, conducted by China Reform Commission professor Wang Xiaolu and commissioned by Credit Suisse, found official estimates of household income were well wide of the mark.
On average, mainland China''s urban household income was 32,150 yuan ($4,746), or 90% above the 16,880 yuan indicated by official data, according to the study which assessed spending and income patterns in China in 2008.
The study found that the "hidden" household disposable income could be as high as 9.3 trillion yuan in 2008, equivalent to about 30% of China''s gross domestic product.
Most of this wealth -- 63%, according to the survey -- is concentrated in the top 10% of Chinese households. That means the top bracket is about 3.2 times richer than official estimates suggest.
The report also said the government''s flow of funds data don''t accurately track the income of top households because much of it are the results of "illegal or quasi-legal" activities.
Wang reports "grey" disposable income -- the shortfall in the figures revealed in the economic census and what households really received -- at 5.4 trillion yuan in 2008.
Credit Suisse said the finding helps explain China''s growing wealth gap and could help explain "the rationale of the Chinese government''s recent strong push for faster wage growth and a more equitable income-distribution pattern."
Credit Suisse said investors may be setting their sights too low when it comes to gauging the impact of this vast pool of wealth.
Investors, the broker said, should look to casino operators in the party-zone enclave of Macau. Among its favored selections in the former Portuguese colony is Galaxy Entertainment Group Ltd. /quotes/comstock/22h!e:27 (HK:27 5.34, +0.09, +1.71%) /quotes/comstock/11i!gxyef (GXYEF 0.73, +0.01, +0.97%) , which is set to unveil a new casino geared to value-conscious gamblers.
Shares of high-end property developers with Chinese projects are another good bet, Credit Suisse says, pointing to Hong Kong-listed groups China Overseas Land & Investment Ltd. /quotes/comstock/22h!e:688 (HK:688 16.32, +0.16, +0.99%) /quotes/comstock/11i!caovf (CAOVF 2.04, -0.02, -0.97%) and Hang Lung Group Ltd. /quotes/comstock/22h!e:10 (HK:10 45.45, +0.50, +1.11%) /quotes/comstock/11i!hnlgf (HNLGF 6.05, +0.15, +2.54%) , as well as the mainland-listed developer China Vanke Co. /quotes/comstock/28b!e:000002 (CN:000002 8.84, +0.38, +4.49%) /quotes/comstock/11i!cvkef (CVKEF 0.00, 0.00, 0.00%) .
In the food area, Credit Suisse suggested specialist yoghurt-drink maker China Mengniu Dairy Co. /quotes/comstock/22h!e:2319 (HK:2319 23.10, -0.25, -1.07%) /quotes/comstock/11i!ciadf (CIADF 3.25, 0.00, 0.00%) . The largest dairy producer by market share in China has unveiled new products as part of efforts to re-brand itself under new management following the melamine-tainted milk scandal in 2008.
Among internationally-listed beneficiaries, favored selections were German luxury automobile maker BMW AG /quotes/comstock/11e!fbmw (DE:BMW 41.72, -0.30, -0.70%) , and Paris-listed handbag and drinks group LVMH Moët Hennessy Louis Vuitton SA /quotes/comstock/24s!e:mc (FR:MC 92.85, -0.08, -0.09%) /quotes/comstock/11i!lvmuy (LVMUY 23.80, +0.08, +0.34%) .
