What’s the Mandarin word for “tumbril”? Devin Friedman reports for GQ on China’s new rich, and the people marketing to them:
… These people were not merely wealthy. We are not talking about individuals who just go ahead and order the premium cable channels without even trying to play DirecTV against Comcast. We’re talking dislocating, alien, dehumanizing amounts of money—the kind of stratospheric wealth that seems inevitably to propel people into a kind of post-geographic realm. At this level of wealth, you’re not really a citizen of Baku or Hamburg or Pacific Palisades or whatever the location of your birth; the only people you have anything meaningful in common with are other people who are also that wealthy, people you meet at the private airports and luxury boutiques and resorts and the better yacht clubs of the world, citizens of a kind of nationless, concierged realm we can call Yachtland. By this logic, China is sending more people to Yachtland than any other nation in the world.
The problem with China, though, is that there exists almost zero in the way of native Yachtland infrastructure. There are precious few private airports, no James Bond-style Monte Carlo casinos, no Portofino-esque towns populated only by people who smell of Acqua di Parma, and there is literally only a single yacht club at which a Russian oligarch or an Italian real estate magnate would feel at all comfortable…
While more than a dozen billionaires and hundreds of millionaires were en route to Dalian, a micro-class of expat Europeans had converged on the city and were already here, putting the finishing touches on a little outpost of Yachtland they’d built out on a vast new municipal marina. It looked not unlike a United Nations tent city, except that at the center of it was a “beach polo” pitch and dozens of yachts, plus some Aston Martins and Ferraris and stuff. It had been constructed for an event held over a long weekend this summer called “SO! Dalian,” which you can think of as a kind of orgiastic ultra-luxury pop-up shop. Many of these European expats were here to sell yachts of the mega-, ultra-, and holy-shit variety, and on the first morning of the event they were already gathering in the main tent, which had been chilled to the temperature of a package of grocery-store chicken thighs. Little Frenchmen in tiny fitted blazers and driving mocs, mustachioed Germans in pink pants, macho beaming Italians named Giordano. A tanned little tribe that had pulled up stakes in the Old World in order to dedicate themselves to selling super-extra-perversely-expensive vessels to people on the other side of the globe who have a reputation of being kind of scared of the ocean and have no idea what these yacht salesmen are talking about half the time…
“SO! Dalian” was a rare and valuable event because the hyper-rich of China are hardly ever in the same place at the same time. These men (they are almost entirely male) are figures of intense fascination if you happen to sell yachts, or anything expensive, or want to fund a company. You could argue they’re the most important figures in our contemporary global economy. And since many of them had never been even to a simulation of Yachtland, this weekend they would begin to be educated about the world they might someday inhabit…
In 2004, there were three billionaires on the Hurun list of Chinese billionaires. (The Hurun and Forbes lists are the gold standards when it comes to counting rich Chinese people.) Today there are 354 Chinese billionaires on that list—388 if you include the billionaires in Hong Kong. There are also 60,000 Chinese people worth at least $200 million—another line of demarcation between being wealthy and being a photon cannon of currency.
Now, America is still number one in billionaires with 492. Fuck yeah, America, etc. But Rupert Hoogewerf, the Luxembourg-born man behind the Hurun list, estimated for GQ that even given their relative economic slowdown, the Chinese would overtake us in billionaires in two years. He also said that for every billionaire Hurun knows about in China, they suspect there’s another one they don’t. “Some of them we don’t know about because their wealth is new or they live somewhere remote, and some of them are secretive because they’re government officials or what have you,” Rupert said. But in a world of profound income stagnation (the median income in America is essentially the same as it was fifteen years ago), in a world where more and more money is being concentrated in the hands of the hyper-rich and where most of the hyper-rich have already established their spending patterns and taste preferences—not to mention parked their capital in the banks and companies of their choice—you could argue that the new and soon-to-be billionaires of China are the most important market in the world. If you want to sell things like, say, mega-yachts, China represents close to 100 percent of your potential growth market….
“They have no idea how to spend it,” Geoffrey Ravoire, one of the people who ran the “SO! Dalian” event, told me. That’s where the “SO!” people come in, as they see it: They don’t just put rich people and yacht companies together; they provide a kind of public service—instructions on lifestyle—for the super-rich. Delphine Lignières, the founder of the event, put it this way as we sat in the VVIP tent and drank rum drinks: “We try to give the message to stop and enjoy,” she said. “We try to teach them to have experiences.”…
Corner Stone
God in His Heaven.
Corner Stone
So much wealth they don’t even know what to spend it on? I think that’s a little condescending from our Western betters.
I’m pretty sure they know what to spend it on. Places the Party can’t find and reclaim at will.
mdblanche
What China could really use is a political party devoted to ruling on behalf of the workers and peasants. Has it ever had one of those in power?
kc
W How did they get all that money?
WereBear
Behind every great fortune there is a great crime
Balzac
raven
@kc: Buy low, sell high.
Keith G
Meet the new pharaohs, not unlike the old pharaohs only there are more of them.
Keith G
@kc: Example: There are 1 billion 200 million cell phones in China. Make a couple of bucks of profit per month off of each one and that adds up.
srv
You people have no idea what is coming – if you live anywhere nice, they are coming and the trunk of the rented Mercedes has $1M in it for your quaint townhome. Red Dawn indeed.
I went to a boat show just yesterday, and could pick up 3 or so lightly used Beneteau Oceanis 41′ for the median home price here now.
Chris
@WereBear:
In an age when the rich have enough money to piss away on $500,000 yachts while people are still ending up broke, homeless, or yes, dead for lack of health insurance, I’ve always thought that the great fortune was the great crime.
Amir Khalid
On second thought, let us not go to Yachtland. It is a silly place.
Keith P
Communist bastards!
mdblanche
@Corner Stone: and the emperor is far away.
ruemara
@Chris: exactly
Armadillo
粪车。fen4che1. Literally “dung-cart”. There’s a longer definition, but it’s along the lines of “cart for taking people to go be executed.”
Roger Moore
@Corner Stone:
Yep. And it’s not just the ultra rich who are doing it. Plenty of Chinese who are just really rich rather than unbelievably rich are putting money- and family members- here in the USA because it’s out of reach of The Party. Arcadia, CA- the next town over from me- is already majority Asian, and there’s a booming market tearing down modest-sized houses on nice lots with good Feng Shui and putting in what can only be described as mansions.
Chris
@Corner Stone:
Holy masterpiece of understatement, Batman!
The old money is bitching about those crass and tasteless nouveau riche again, refusing to conform to their definition of what frivolous things are in fashion this year.
mdblanche
@Keith P: The communists are worse than Obama, they sold us out!
srv
All this class hate
38% of the world’s 1% live in the US, so chances are someone in your extended family is the enemy.
Tree With Water
“We have met the running dogs, and they are us”.
Schlemazel
HA! Not even if I go back to the Gilded Age. Though I know some people who are at least close to a 1% even my wealthiest relative couldn’t scrape together a million free and clear.
I wonder if the risk of bloody uprising is greater in China than the US/Europe given that they have a much more recent history of that sort of demonstration against imperial wealth.
another Holocene human
@Corner Stone: Eh, there is a vein of bathos to be mined here. Like so many nouveaux riches before them, an army of conmen appear to provide them with the requisite trappings of old wealth (their grandchildren will go back to ‘roots’ and make the old, lost lifestyle upscale).
Lots and lots of creatively labeled not French wine in China.
Chris
@Schlemazel:
Look at it this way: orthodox Marxist theory says you have a capitalist phase, then a workers’ revolution, then a socialist phase, and then a communist phase.
Well. Here’s a good rationale for a new Chinese revolution: “all right, we’ve had our capitalist phase now, the one we hadn’t had yet when Mao came along. Now on to the socialist phase! REVOLUTION!”
Roger Moore
@Tree With Water:
I think it’s actually the capitalist roaders who deserve most of their ire right now, not the running dogs.
another Holocene human
@Schlemazel: Not really.
Bill Arnold
@srv:
I found the Credit Suisse Research Institute pubs to be too irritating to read (not my thing), but did find this piece Finding the wealthiest 1 percent which says that to qualify for world top 1%, you need a “personal worth of $798,000 or more”. Did anyone see any other threshold, or slog through the numbers?
scav
Even their trickle down promises are proving rather hollow, those rootless %ers. Lights-out London and the non-doms for example.
another Holocene human
@Roger Moore: Same thing in Canada only moreso and the word is the Canadian government doesn’t give a damn if you committed a crime in China to get the money.
Bill Arnold
@scav:
Lord, that sounds like a set up for a real-estate crash. (Is there any short analysis of what would happen if there were a London real-estate crash?)
Chris T.
@Bill Arnold: Hm, what is the definition of “personal worth”? How does this differ from “net worth” (sum of assets minus sum of liabilities, e.g., if you have a $500k house on which you owe $490k, you add $10k; if you have a $30k car on which you owe $20k, you add another $10k, etc)?
Corner Stone
@Bill Arnold: Not sure it’s that much of a problem, overall. The insanely over-priced London area market should not expect to survive, long term.
It won’t be as big an issue as the immigrant garden workers buying $800K housing on CA during the last crash.
I'mNotSureWhoIWantToBeYet
@Chris T.: It seems to be defined the way you’d expect. Total assets – total liabilities.
The Credit-Suisse PDF (156 pages) has all the details.
5.9% of US adults have wealth greater than $1M according to CS.
Cheers,
Scott.
Bill Arnold
@Chris T.:
I think in that context “personal worth” is the same as “net worth”. Which is sad. Most people value other aspects of their lives, not necessarily convertible to dollars.
Roger Moore
@Bill Arnold:
It’s unlikely to cause a massive crash the way the 2007-8 crash did because the people buying outrageously expensive properties are mostly paying cash. It’s only going to be a big deal if people are using those houses as collateral.
draftmama
An indoor arena. A gooseneck draft size horse trailer with living quarters and a 2 ton flatbed truck. New fencing for 10 acres. A huge heated greenhouse. See – you don’t have to want a yacht to be a greedy fck.
kc
@srv:
They’re buying up property on the South Carolina coast.
Han
@srv:
How do you figure? Even back-of-the-envelope 1% of world pop. is 70 mil, one third that is 25 mil, out of 300 mil Americans. So chances are in favor of someone in that 7% or so being in everyone’s extended family? Without even figuring in the fact that group is self-selecting and perpetuating? Not like a lot of millionaires, let alone billionaires slum it and date/marry paupers.
Corner Stone
@Han: I don’t know how he gets there, either. I know some people in the 1%, but damned if I am related to them by blood or marriage.
Mike G
@Chris:
China has a long historical cycle of swings from left to right and back again, and a history of violent rebellions far pre-dating the communist era — the Taiping Rebellion, the Boxer Rebellion. The government is very much on the lookout to suppress any similar recurrence, even if they’re doing jack-shit about restraining the exploitation and ostentatious displays of wealth and corruption that triggered them in the first place.
opiejeanne
@Roger Moore: I grew up next door to Arcadia, in Temple City. My parents moved to Arcadia in the 80s and watched nice houses on large lots torn down and oversized McMansions built nearly to the lot lines. It was disturbing.
opiejeanne
@Bill Arnold: That seems a bit low, doesn’t it?
Mr Stagger Lee
I bet the revolutions Chairman Mao is making in his grave I bet Biejeng will rid its smog problem in no time.
Chris
@Mike G:
I thought Xi Jinping’s big thing was cracking down on corruption? (Though the articles I’ve read mostly have a ton of speculation about whether he is cracking down in any meaningful way, or simply using the excuse of an anti-corruption campaign to clean out political rivals).
gorram
@srv: *if you’re White. Remember Heather McGhee’s point on that.
Roger Moore
@opiejeanne:
Apparently what’s going on now is an extension of the McMansion trend. As I understand it, a McMansion is generally an oversized house- something like 3000-4000 square feet- on a tiny lot. What’s going up in Arcadia now is what happens when you apply the same basic concept to the larger lots in a more prosperous community. One of the points the LA Times was making is that they love circular driveways, which require lots at least 75 feet wide to be practical. They’re taking those lots and putting actual mansions- 8000+ square feet- on them. They still have the same McMansion feel of having far too much house for the lot, but on an even larger scale.
Bill Arnold
@opiejeanne:
798K dollars as the threshold is for the top 1% of the world population, as I read it. (I would have guessed a little lower, maybe half that number. We U.S. residents live in a rich country.)
BBA
@Roger Moore: The Reformed Broker says securities-based lending is the new mortgage lending. We’ve gone back to what caused the crash of ’29. (Sorta – people aren’t borrowing on their stocks to buy more stocks. Yet. That we know of.)
Roger Moore
@Chris:
That and PR to convince the
peasantsrubespopulation that something is being done about corruption. They can’t make a serious go at putting all the corrupt officials in prison because they’d become a zero party state, not to mention the lack of non-corrupt prosecutors to handle the cases and jailers to run the prisons. The best they can do is to punish egregious offenders and take advantage of the opportunity to settle scores.PIGL
@Chris: $500,000 yachts? If only. You are missing two zeroes. For starters.
opiejeanne
@Roger Moore: Wow.
My parents’ house in Arcadia was pretty small but it was on a half acre, as was the house on the corner, next door. A developer bought both houses and subdivided it so that there was a third lot facing on the cross street. It left a decent back yard for the two small houses, but he tore them both down and built two monstrosities on those lots as well.
Tree With Water
@opiejeanne: I knew a man whose dilapidated old house in the beautiful upper Napa valley stood along the edge of a charming 100 acre vineyard, of which he owned 4 acres. When the property sold upon his death, the house was reasonably enough torn down- restoration was neither worth it, or cost effective. But rather than build a new house where the old house stood, the super rich couple that bought the property built a monstrosity of a hotel-looking thing smack dab in the middle of the hundred acres. It fucked everything up, especially the neighbor’s views. Bad taste, reprehensible decision… those two are charter members of the ugly rich. Fuck ’em ALL.
Matt McIrvin
@Keith P: I still remember the moment I realized “Wait a minute, I’M more Communist than those guys are.”
priscianus jr
“Today there are 354 Chinese billionaires on that list—388 if you include the billionaires in Hong Kong. There are also 60,000 Chinese people worth at least $200 million”
And I guarantee they’ve all bought apartments (in many cases dozens of them) in Manhattan. After all, they’re quite a bargain.
“The median sales price for homes in New York NY for Oct 14 to Jan 15 was $1,310,000. This represents an increase of 9.3%, or $111,000, compared to the prior quarter and an increase of 13.4% compared to the prior year. Sales prices have appreciated 47.2% over the last 5 years in New York. The average listing price for New York homes for sale on Trulia was $3,719,251 for the week ending Jan 14, which represents an increase of 0.5%, or $16,813, compared to the prior week and an increase of 2.3%, or $82,059, compared to the week ending Dec 24. Average price per square foot for New York NY was $1,450, an increase of 6.5% compared to the same period last year.”
http://www.trulia.com/real_estate/New_York-New_York/market-trends/
mclaren
These are the kind of people who pay the salaries of JTRIG operatives like burnspbesq and Omnes Omnibus and Mnemosyne and Church Lady, who are not what they appear to be; they’re all 20-something sallow-faced enlisted male privates sitting in their fatigues in the basement of some secure facility typing away while following a script written out by the NSA’s Joint Threat Research Intelligence Group.
pluky
@Chris: $500K is a very, very, very low end yacht.