Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21
Dell S3220DGF Price CRASH to £305! 32 Inch 165hz Curved Gaming Monitor Amazon Bargain - 16th Jul 21
Google, Amazon and Netflix are Scrambling For This Rare Gas - 16th Jul 21
Sheffield Millhouses Park New Children's Play Area July 2021 Vs Old Play Area - Better or Worse? - 16th Jul 21
Inflation Soars, Powell Remains Unmoved. What about Gold? - 16th Jul 21
Goldrunner: Gold Could Jump To $1,900-$2,100 In Next 30 days – Here’s Why - 15th Jul 21
Tips For Finding The Right Influencers - 15th Jul 21
ECB Changed Monetary Strategy. Will It Alter Gold’s Course? - 15th Jul 21
NASA And Big Tech Are Facing Off Over This Rare Gas - 15th Jul 21
Will the U.S. Dollar Lose Momentum In the Second Half of 2021? - 15th Jul 21
Bitcoin Stock to Flow Model Forecasts Infinity and Beyond! - 14th Jul 21
Proteomics: The Next Truly Massive Investing Opportunity - 14th Jul 21
Massive Solar Storm to Hit Earth 2025, Coronal Mass Ejection (CME) Danger and Protection Solutions - 14th Jul 21
Is This The Best Way To Play The Coming Helium Boom? - 14th Jul 21
Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown - 14th Jul 21
How NFTs Are Shaking Up Arts Trading - 14th Jul 21
Gold: High Time to Move Out of the Penthouse - 13th Jul 21
Climb Aboard! Silver Should Run Up To $38 In Next 30 Days - 13th Jul 21
How Will Remote Work Impact the U.K. economy? - 13th Jul 21
Why Helium Stocks Are Set To Soar in 2021 - 13th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How to Cash in on China's Chuppies' Spending Spree

Stock-Markets / China Stocks May 20, 2008 - 10:06 AM GMT

By: Money_and_Markets


Best Financial Markets Analysis ArticleTony Sagami writes: Even though I'm the right age, I've never considered myself to be a yuppie. Even when I was young and dumb, I never drove a BMW ... bought a Rolex ... or belonged to a country club. But I know a yuppie when I see one and China is full of them.

And unlike the U.S. where there is debate about how rapidly the economy and consumer spending are slowing, chuppies are making sure there is no such concern in China.

The Chinese National Bureau of Statistics reported that retail sales soared by an eye-popping 22% in April!

Those Chinese shoppers aren't just buying chopsticks or tofu, either. They're buying big ticket goods like crazy. Jewelry sales jumped by 37.5%, apparel by 32.6%, and furniture climbed 41.7%.

The fuel behind that spending boom is growing urban incomes, which rose by 17.6% over the last 12 months, and gave chuppies (also known as "little emperors") large disposable incomes.

These chuppies are often the sole children due to the one-child policy in China and have been spoiled with an overblown sense of self-importance and entitlement. They often live at home and spend their entire paychecks on luxuries...and frequently on luxury goods.

Asia: The Epicenter of the Luxury Boom

After a masterful job of branding, Louis Vuitton now dominates the luxury fashion market across Asia.
After a masterful job of branding, Louis Vuitton now dominates the luxury fashion market across Asia.

It doesn't matter where I travel in Asia — Hong Kong, Shanghai, Tokyo, Singapore, Taipei, Beijing, Kuala Lumpur, or Shenzhen — I always find a sea of Louis Vuitton handbags. You'd have to see it with your own eyes, but the number of women without Louis Vuitton handbags is in the minority.

A Louis Vuitton handbag, more than any other luxury good, is the 'must have' status symbol for women in Asia. In fact, the last time I was in Singapore, so many shoppers were crowding into the Louis Vuitton store on Orchard Road that the manager had to hire security guards to keep people out. Talk about demand!

And get this: China bought only 1% of luxury handbags five years ago but according to a recent Goldman Sachs survey, China is now the third-largest consumer of luxury handbags at 12% of the market. And it is expected to become the #1 luxury market in the world.

The reason for the luxury spending spree is simple — China's booming economy is rapidly creating an army of millionaires as well as a bulging eager-to-spend, affluent middle class population.

Arrow There are 100 million middle class Chinese today and that number is expected to double by 2010. These affluent middle class Chinese yuppies are educated, have well-paying city jobs, and have money in their pockets to spend.

Arrow 50 individuals in China had wealth of at least $1 billion, while 2,000 were above $100 million, 35,000 exceeded $10 million, and 150,000 people had $5 million. At the same time, total assets owned by Chinese millionaires reached $1.7 trillion, increasing 8.8% year over year.

Asia is all about consumption. Every time I visit, I'm bowled over by the sheer volume of shopping going on. I'm not talking about people buying crappy tourist-type t-shirts, either. These rich Chinese are buying so aggressively that they are pushing up the prices of all luxury goods.

A popular China luxury index that tracks 32 items, including Rolls-Royce Phantoms and the Louis Vuitton Speedy Bag, showed that the price of luxury products in China jumped 8.7% in 2007.

That's why luxury retailer Cartier has opened 25 new stores in mainland China as of March 2008 and Hermes International said that it will triple its stores in China over the next five years.

China isn't the only country that is minting millionaires and a free-spending middle class. India is the second fastest growing economy in the world after China and its economy is growing at a 9.4% annualized rate — the fastest pace in 18 years!

India had 83,000 millionaires in 2006, a 19.3% year-over-year increase, and now has a middle class population of 300 million, roughly equal to the entire population of the United States!

According to the Knowledge Company, a New Dehli consulting company, there are now about 1.6 million Indian households that spend an average of $9,000 a year on luxury goods.

While I don't usually talk about specific companies here in Money and Markets , I'm going to break that rule today and tell you about a company ...

One of the Best Ways to Play The Chuppies' Luxury Spending Spree

As I see it, few luxury retailers are better positioned to profit from the Chuppies' spending boom than Louis Vuitton Moet Hennessey (LVMH).

LVMH was formed after mergers brought together Moet et Chandon and Hennessey, a leading manufacturer of cognac, and Louis Vuitton in 1987. The end result was one of the most prestigious luxury brand names in the world.

There is a lot more to LVMH than just Louis Vuitton handbags, though. The conglomerate owns 60 sub-companies that offer a wide variety of luxury brands that are sold only through exclusive boutiques in upscale locations in wealthy cities. As of the end of 2006, LVMH operated approximately 1,900 stores worldwide.

LVMH's main product lines can be divided into four distinct segments of the luxury market ...

1) Fashion and Leather Goods: Louis Vuitton, Givenchy, Donna Karan, Fendi, Celine, Berluti, and several other luxury names that mere mortals like me have never heard of.

2) Wines and Spirits: Moët & Chandon, Dom Pérignon, Hennessy, Glenmorangie, Domaine Chandon, and many other premium brands. The oldest of the LVMH brands is wine producer, Chateau d'Yquem, which dates its origins back to 1593.

3) Perfumes and Cosmetics: Christian Dior, Guerlain of Paris, Kenzo, Loewe, Acqua di Parma, La Brosse et Dupont

4) Watches and Jewelry: TAG Heuer, De Beers, Zenith, Chaumet, FRED of Paris

As LVMH expands aggressively into Russia, India, and China, CEO Bernard Arnault expects global spending on luxury goods explode.
As LVMH expands aggressively into Russia, India, and China, CEO Bernard Arnault expects global spending on luxury goods explode.

And get a load of this — LVMH CEO Bernard Arnault said he expects global spending on luxury goods to almost double in the next five years to $440 billion. According to Arnault,

"This is due to three factors. The creation of new wealth, the amount of existing consumers is increasing, and we are continuing to develop new markets.

"Russia, India, and China represent very important business and one third of all luxury goods will go to these markets in the next 10 years."

Coincidentally, the top four markets for luxury products are the United States, Japan, China, and Russia.

Bottom line: It is no coincidence that LVMH's fortunes have increased with Asian incomes and that trend is not going to change. In fact, the long-term economic growth story of Asia is still in its infancy.

I have to confess that I wouldn't dream of dropping $200 on a bottle of Dom Pérignon and I don't own any Louis Vuitton bags, but all my status-conscious friends and most middle-class women in Asia do. And that's why I recommended LVMH to my Asia Stock Alert subscribers back in December.

I'm not saying you should run out and buy the shares right now, but I do think the company proves that the explosive Asian economy is creating its own base of money-spending chuppies and that will benefit not just manufacturers and exporters but also plenty of retail concerns.

Best wishes,


P.S. If you want all my current Asian recommendations, along with my specific buy and sell signals, subscribe to Asia Stock Alert by clicking here!

This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in