This report covers investments made by the Chinese private sector into the UK, as well as the UK brands that have had the greatest impact on the Chinese luxury consumer. 

• Sharp Rise in Chinese Private Sector Investments into UK
• Property Market, especially commercial, leads the way
• UK Number One Destination of Choice for Education
• Burberry wins ‘Best UK Luxury Brand’ for Chinese Luxury Consumers

Leading authority on Chinese high net worths, Hurun Report releases UK Engaging the Chinese Private Sector Report 2015

The Hurun Research Institute released the UK Engaging the Chinese Private Sector 2015, highlighting the key points of engagement between the Chinese private sector and the UK. This report covers investments made by the Chinese private sector into the UK, as well as the UK brands that have had the greatest impact on the Chinese luxury consumer.

Hurun Research focused only on mainland China, and did not take into account Hong Kong, Taiwan or Macao. “The mainland Chinese private sector is the most dynamic and the one with the brightest future,” says Hoogewerf. “Were this report to include Hong Kong, Macao and Taiwan, then the largest investor would be Hutchinson, led by Li Ka-shing, who famously sold off his mainland Chinese property investments to buy into the UK.” This report also does not include mainland China’s state-owned enterprises, which have paved the way for other Chinese companies to come to the UK.”

Hurun Report Chairman and Chief Researcher said: “The doubling of the Chinese stock markets in 2015 has created more wealth in mainland China than ever before. To equate the Chinese private sector to a human life, then the stock market boom of 2007 was the equivalent of going up to university and 2015 is first day at work. How to engage the Chinese private sector has become a priority not just for the UK, but for governments around the world.”

8 Key Findings

1. Masters courses and boarding schools have been the most important drivers of personal connections with Chinese entrepreneurs. “When it comes to studying abroad for the families of China’s entrepreneurs, the UK enjoys a huge advantage with its schools, particularly its boarding schools. There has been a clear evolution of Chinese wanting to send their children to the UK and US, whereas a decade ago it was Canada and Australia,” says Hoogewerf. Another trend is the age Chinese are looking to send their children to study overseas. “As little as five years ago, it would have been at the age of 23 to study for a masters, but now it is 16, to get in two years at sixth form, which gives them a better stab at a top university,” continues Hoogewerf. Today there are just under 4500 Mainland Chinese at British boarding schools, according to a recent report by the Independent Schools Council, making up 6.5% of the total number of boarders in the UK, or one in fifteen boarders. In China, there are 50,000 students studying A-levels. Notable alumni from UK boarding schools, include Wang Sicong, son of Wanda chairman Wang Jianlin, the richest man in China with a personal wealth of US$30bn, who studied at Winchester and UCL.

2. Investments on the rise. There has been a notable rise in job-creating investments, led by Huawei. Hoogewerf said “2015 is ground zero, the first year of significant Chinese investments into the UK.”

Important investments by the Chinese private sector into the UK include:

• Huawei, led by dollar billionaire Ren Zhengfei, is China’s largest investor into the UK, having invested the best part of GBP 1bn and today with 1000 employees.
• Wanda, led by billionaire Wang Jianlin, has a GBP 600m residential development at Nine Elms in London and a GBP 320m purchase of luxury yacht-maker Sunseeker.
• Lenovo, led by Liu Chuanzhi and Yang Yuanqing, invested GBP 900m into Pizza Express through Lenovo’s private equity division Hony Capital in July 2014.
• Sanpower, led by billionaire Yuan Yafei, surprised many with its GBP 400m purchase of the House of Fraser in 2014, making Sanpower the largest Chinese employer in the UK today with 5,000 employees and 13,000 concession staff.
• Fosun, led by billionaires Guo Guangchang and Liang Xinjun, bought 5% of Thomas Cook for GBP 90m in 2015, control luxury brand Links of London through its investment in Folli Follie, and bought into theLloyds Chambers building in London for GBP 60m. Earlier this week, Fosun announced it was setting up a GBP 1.6m joint venture with Thomas Cook in China.
• Wheel manufacturer Wanfeng, led by Chen Ailian and husband Wu Liangding, recently announced its acquisition of Wanfeng MLTH for around GBP 130m.
• ABP, led by Xu Weiping, won approval for but has yet to start its GBP 1.9 billion office space development in the Royal Albert Docks of London in association with China Minsheng Investment Corporation.
• Bosideng, led by billionaire Gao Dekang, bought Yorkshire-based men’s outfitter Greenwoods for GBP 40m in 2011 and is reported to have 500 employees in the UK.
• Geely, led by billionaire Li Shufu, is one of China’s earliest investors into the UK, with an initial 20% purchase of Manganese Bronze, maker of London “black cabs”, and then a full buyout in 2013 for GBP 11m.
• Alibaba, led by billionaire Jack Ma Yun, has set up his European headquarters in London.
• Capula Investment Management, a US$10bn investment fund run by China-born Yan Huo, is headquartered in London.
• BlueFocus bought a strategic stake in Huntsworth, a PR firm, in 2013 for GBP 36 million.
  Restaurants. Little Lamb, led by Yu Jiarong, has set up a hotpot restaurant in London.
• Confucius International, led by Kong Lingtao, announced that it is in the process of acquiring Riddlesworth Hall, a boarding school in Norfolk, best-known for being Princess Diana’s former school.

3. Commercial property is perhaps the hottest sector for Chinese investment today. “For Chinese companies with global ambitions, the bragging rights to owning a building in London, one of the global financial centres, is as important as the investment value itself,” said Hoogewerf.

Important purchases include Reignwood, led by billionaire Yan Bin, which invested GBP 400m into 10 Trinity Square in London since 2010, and then bought Wentworth Golf in 2014 for GBP 150m; billionaire Xu Rongmao of Shimao, who purchased a building by St Paul’s in London for GBP 400m; PingAn, led by Peter Ma Mingzhi, which purchased the Lloyd’s Building in London for GBP 260m; Taikang Insurance, led by billionaire Chen Dongsheng, which purchased Milton Gate in the City of London for GBP 190m.

4. Residential purchases are also very hot now for Chinese. “The UK’s schools are the main driver for Chinese buying a residence,” says Hoogewerf.  

London was the only European city to make the Top 10 preferred cities for Chinese to buy residential property, coming in ninth, according to the Chinese High Net Worth Individuals & Immigration Report put out by Hurun Research in association with Visas Consulting in June 2014. North America and Australia led the way with LA, San Francisco, Toronto and NY.

Prominent examples include billionaire Qi Jianhong of Sparkle Roll, who bought an apartment in One Hyde Park. Qi is also a key player for British luxury, owning the Rolls-Royce and Bentley dealerships for Beijing, regularly amongst the best-selling dealerships worldwide for these two brands, and a minority shareholding in Burberry China.

Billionaire Larry Rong Zhijian of Citic Pacific was one of the earliest known owners of an important country estate, buying Harold Macmillan’s former residence before selling it in 2011. “Chinese today are the largest buyers of new builds in London, especially in apartments of GBP1m and above,” says Hoogewerf.

5. Listed companies. Surprisingly, given London’s position as a global financial center, there are no significant Chinese private companies listed on the London Stock Exchange. This is in stark contrast with HK, the US and even Singapore. Only eight mainland Chinese have companies with a measly market cap of GBP 10m or more, led by Liu Cheng’s GTS Chemicals with a market cap of GBP 70m. Others with GBP 10m or more of listed stock include of Pan Weijia of Global Market, Zhang Shufang of China Chaintek United, Wu Xinghe of China Rerun Chemical, Tsoi Pingping of Jiasen International and Wang Xiufa of JQW.

6. Donations and sponsorships. Despite the strong impact of universities and boarding schools on the Chinese private sector, there are no known important donations to universities or boarding schools, which is in stark contrast again with the US. Reignwood, led by billionaire Yan Bin, became a major sponsor of the London Symphony Orchestra in 2015, leading the way for private Chinese companies to engage with British institutions.

7. British brands with the greatest impact on the Chinese luxury consumer 

• Fashion. Burberry flew the flag for British fashion brands, making the Top 3 Fashion labels for Women (behind Chanel and Dior) and Top 5 Fashion Labels for Men.  Dunhill won the Accessory for Men Star Performer, coming in second behind Giorgio Armani, and came in sixth for Fashion Label for Men.
• Luxury retail. Harrods won Best Luxury Shopping Destination in London, and Marcus Watches Best Specialised Luxury Watch Shopping Destination. Net-a-Porter won Online Luxury Retailer Best New Arrival. Hoogewerf said, “With 7 out of 10 purchases of luxury now being made outside of China, this makes influencing the luxury Chinese consumer in their home country before they travel of paramount importance.”
• Cars. The UK dominated the Super Luxury Executive Cars category, with the Rolls-Royce Phantom winning Best Super Luxury Executive Car, followed by the Bentley Flying Spur, the Rolls-Royce Ghost and theBentley Mulsanne. The Rolls-Royce Wraith was Best Super Luxury Executive Car for Self-Drive and in the Luxury Executive Car category, the Jaguar XJ moved into fourth place behind the Audi A8L, the BMW 7-Series and the Mercedes S-Class. Jaguar picked up another gong for Best Luxury Cabriolet for the Jaguar F-type. The Aston Martin DB9 won Super Luxury Sports Car Star Performer. Land Rover, which last year won the Best Luxury All Terrain SUV Award for the Range Rover, put in a solid performance but not quite enough to win an award this year.
• Drinks. Royal Salute was the run-away winner for the Best Premium Whisky award for the eighth year running.  Johnnie Walker Blue won Premium Whiskey Star Performer for closing the gap with Chivas. Macallan won Best Single Malt Brand for the third year running, riding a boom in interest in single malt. Royal Salute won a second award for Best Ultra Luxury Whisky for Royal Salute 62 Guns, whilst Haig Clubwon Premium Whisky Best New Arrival.
• Residential real estate. Ten Trinity Square by Reignwood won Best New Arrival Luxury Development in London, whilst Battersea Power Station won Landmark Development in London Best New Arrival, both seeing strong growth from Chinese buyers. Berkeley won Best Luxury Home Builder in London.
• Real estate brokers. Knight Frank won Best Luxury Real Estate Advisor in the UK. Christies Internationalwon Global Luxury Real Estate Network Star Performer and JLL won International Residential Service Star Performer.
• Interiors. Clive Christian won Top 5 furniture brand, coming in fourth.  De Gournay won Best Hand painted Wallpaper Brand.
• Finance. HSBC won Best Foreign Bank for Personal Banking for the 11th year running. Bank of China London won Best Bank for Global Chinese in London.
• Collecting. Christies won Best International Art Auction House.  Interestingly, classic cars broke into the Top 10 collectables for the first time.
• Value Retail Suzhou Village won Outlet Shopping Destination in China Best New Arrival.

8. UK lifestyle impact on the Chinese luxury consumers

• Food. Food in the UK is considered better than food in France, Australia and the US, according to theChinese Luxury Traveler 2015, a survey of 300 luxury travelers from China, put out in Jun 2015 by Hurun Research in association with ILTM. Hoogewerf said, “I think this surprising result can be explained by Chinese restaurants in the UK being better than Chinese restaurants in France!” One such example is the UK-founded Hakkasan, which won the Hurun award for Contemporary Chinese Restaurant in Shanghai Best New Arrival.
• Travel. The UK broke back into the Top 10 Preferred International Luxury Travel Destinations, for the first time since the London Olympics, coming in at eighth. “For the Chinese luxury traveller, the UK is seen as a luxury destination,” says Hoogewerf.
• Time of travel. Chinese New Year is the preferred time to travel in the year followed by the first week of October. British Airways won the Business Class to Europe Star Performer. Shangri La Hotel at the Shard London won the Luxury Hotel in London Best New Arrival. Hoogewerf said, “Chinese luxury consumers continue to be extremely busy, away on business trips for 8 days a month on average, whilst the super-rich with the equivalent of US$16 million in wealth, are on business 11 days a month. 6.4% are out of town for more than 20 days a month. Despite this, they take 8 and 12 days of holiday respectively, one more than last year.”
• Education. The UK is the Number One destination of choice for educating at secondary school level the children of China’s most successful businesspeople. At university and post-graduate level, the UK is �" together with the US �" part of the Big Two. BE Education won Best High-End Overseas Study Brand for the sixth year running. Several British boarding schools have been making an impact in China, led by Dulwich in Shanghai and Beijing, Harrow in Beijing, Wellington in Shanghai and Tianjin, and OIC in Changzhou, Jiangsu province.
• Horses. Riding has been one of the fastest-growing sports enjoyed by China’s richest, rising to fourth place behind golf, swimming and jogging. The China Horse Club has shaken up the global horse market, and won the Horse Race Best New Arrival for its Shanghai race at the end of last year. Heilan Equestrianwon Best Equestrian Center in China, whilst Nine Dragons Hill won Best Polo Club in East China and Tang Polo won Best Polo Club in North China.

This was the eleventh consecutive year Hurun Research has revealed the brand preferences, consumption habits and lifestyle trends of China’s wealthiest individuals. Widely regarded as an ISO9000 for China’s luxury sector, the CLCS has become a benchmark for the luxury sector.

Wealth Distribution in China

The country has 1,090,000 dollar millionaires, defined as individuals with US$1.6m, and 67,000 super-rich, defined as individuals with the equivalent of US$16m, an increase of 3.8% and 3.7% respectively from the previous year, according to the Hurun Wealth Report, released in September 2014.

The number of millionaires in Beijing increased by 8,000 in comparison to the previous year, reaching 192,000. Furthermore, there are 600 more super-rich this year than the previous year, with 11,300 overall, the highest in the whole country. Guangdong was second overall, with 180,000 millionaires and 10,000 super-rich. Shanghai was third, with 159,000 multimillionaires and 9,100 super-rich. Apart from Hebei, Inner Mongolia, Heilongjiang, Liaoning and Shanxi, in all the other provinces and cities the number of millionaires has increased.

Rupert Hoogewerf, Chairman and Chief Researcher of Hurun Report, said, “Although we have been seeing a slowdown in spending, the money is still very much there.”

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About Hurun Report Inc.

Nobody Knows China’s Rich Better!

Established as a research unit in 1999 by British accountant Rupert Hoogewerf, Hurun Report Inc. has grown into a leading media group based in Shanghai, China. Hurun Report Inc. has a stable of six titles (2 digital and 4 print), the Hurun Research Institute and an active business events division targeting China’s entrepreneurs and high net worth individuals. 

The flagship Hurun Report magazine is published monthly and reaches the households of 116,000 proven wealthy Chinese individuals and their advisers. Hurun Report is best known for its annual Hurun China Rich List, widely considered the bible of wealth and de-facto Who’s Who of Chinese business.

For further information, see www.hurun.net or contact our International Dept. led by Liu Yu on liu.yu@hurun.net