According to the “2022 China High Net Worth Consumer Insights Report” by Yaoke Research Institute, consumers with a net worth higher than 10 million yuan ($1.37 million) accounted for 73% of the luxury consumption in 2019. But this figure increased to 80% by 2021.

This shows a fact, the proportion of the rich consuming luxury increases in proportion to the decline in the spending power of the middle class.

The first half of 2022 also saw a serious decline in business activities for a series of high-end businesses in the mainland.

Mainland media reported that CDFG, China’s largest duty-free sales company, saw income in the first three quarters fall by 20.47% year-on-year and the net profit belonging to the parent company decreased by 45.48% over the same period.

Premium liquor brand Maotai has taken a hit in its share price. Its latest total market value is $246.46 billion, down more than $95.85 billion from the beginning of the year.

The economic picture for many other branded companies is generally dark.

In the first three quarters of 2022, the country’s gold consumption decreased by 4.36% over the same period in 2021.

Under general weakness, the performance of related jewelry companies was also dismal. Famous jewelry brands in China all announced net profit ratios decreased in the double digits. For example, DIA’s net profit fell 22.0% year-on-year during the first three quarters.

Luxury brands from the U.S. and Europe have not fared any better. Even Gucci China had to close a third of its stores.

The same thing has happened to other industries such as high-end automobiles and real estate; worse than no growth they registered a negative.

Basically, it can be seen that the cost of living is increasing, disposable income for clothes and jewelry is less and less.

The premium standard Starbucks coffee brand, which is loved by the middle class, saw sales drop 6 percent year-on-year.

Travel is also a middle-class favorite – it is even a necessity for many. However, during the peak tourism season—the National Day holiday, the industry also witnessed negative growth compared to last year.

This all directly shows a problem, the consumption power of high-net-worth individuals contributes very little to the entire consumer market. It cannot fund the prosperity of the consumer goods industry nor finance the economic development of a large country.

In addition, middle-class consumers, the mainstay of the economy, have become much more conservative in their spending in general. They are also no longer interested in luxury goods. More than 58% of people like to save and 19% like to invest as a result of a survey conducted by the People’s Bank of China in 50 cities with over 20,000 depositors.

Mainlanders, especially the middle class, have developed a mentality of “wanting to make money but afraid to spend.”

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