International Business News – On November 20, Hurun Report and CITIC Prudential Life jointly released the 2022 China High Net Worth Family Heritage Report, which shows that the size of China’s high net worth families with 10 million RMB family net assets reached 2.06 million, an increase of 40,000 from the previous year, with Guangdong overtaking Beijing as the region with the largest number of high net worth families, and Hong Kong’s high net worth family size declining year-on-year. Over the past year, the high net worth In the past year, the proportion of gold collars among the population increased and the proportion of business owners decreased.
The report provides statistics on the overall size of HNW households in China by wealth level: the number of “affluent households” with RMB 6 million in household net worth reached 5.08 million, the number of “HNW households” with RMB 10 million in household net worth reached The number of “ultra-high-net-worth households” with RMB 100 million net assets reached 130,000.
By region, the top five cities with high net worth households are Beijing (298,000), Shanghai (262,000), Hong Kong (211,000), Shenzhen (79,000) and Guangzhou (71,000). Among the TOP5 cities, Shenzhen saw the fastest increase in HNWIs (up 4.4 per cent year on year), while Hong Kong saw a decrease (down 5.4 per cent year on year).
In terms of the composition of the HNWI population, professional stockholders and real estate investors both accounted for 10%, consistent with last year; business owners accounted for about 50%, down 10 percentage points from the previous year due to the impact of the epidemic on the private economy; and gold collars accounted for about 30%, up 10 percentage points from the previous year.
The survey found that the investment style with the highest percentage of HNWIs is that of the stable investor (46%). Negatively affected by international current affairs, economic environment and epidemic fluctuations, for short-term investment and financial goals, HNWIs are most concerned with wealth security, which is more important than wealth growth for the third consecutive year.
The total wealth assets of Chinese HNW households rose from $126 trillion in 2020 to $160 trillion in 2021. Looking ahead, HNW households are expected to pass on $18 trillion in wealth to the next generation in 10 years, $49 trillion in wealth to the next generation in 20 years, and $92 trillion in wealth to the next generation in 30 years.
The report points out that in the face of the continuous growth of wealth scale and the basic law of life cycle, family inheritance is bound to become a key issue of increasing concern for high net worth families.
The survey found that 97% of HNWIs will consider family inheritance matters. For those who consider family inheritance, 40% have already implemented family inheritance planning. For current family wealth, the highest proportion of HNWIs is allocated to family inheritance (30%), followed by wealth investment, offspring education, current consumption and retirement savings, and charitable giving at about 8%.
Among the three major aspects of family wealth, spiritual wealth is the most important, followed by material wealth and finally, social wealth. The survey found that the head attention of business owners to social wealth is relatively high. Moral quality, real estate, and political and business connections are the most concerned objects of inheritance of spiritual, material and social wealth.
It is worth noting that regarding family inheritance, 95% of HNWIs have concerns about internal family factors, with the biggest concern being the ability of children to take over and keep the wealth (50%), such as children’s squandering of wealth and children’s mental immaturity. For external factors, changes in tax policies related to inheritance and gifts (46%) received the most attention from HNWIs. Seventy percent of HNWIs in the survey believe that China’s inheritance and gift-related tax policies may be introduced within 10 years.
As for the means of family inheritance, the most expected effects of Chinese HNWIs are “beneficiary designation to avoid disputes” (46%), “stable asset preservation” (42%), and “embodiment of inheritance criteria and constraints” (38%). All these reflect the high importance of certainty for HNWIs in the process of family inheritance.
Regarding the appropriate opportunity to advance family succession, the survey found that most HNWIs consider their own age as the primary consideration (57%), followed by the age of their descendants (30%), the process of corporate development as a consideration (14%), and the point in time when they are close to retirement as the appropriate opportunity to advance succession matters (34%). On average, the average age at which Chinese HNWIs begin their inheritance actions is 54.1 years.