Emerging wealth

BEIJING (AP) — With millions of Chinese being laid off from state factories and the economy teetering toward recession, most foreign retailers would be expected to look for ways to lure bargain seekers.
Not Haagen-Dazs.
The gourmet ice cream maker has revamped the facade of Beijing’s stodgy old International Club in a splashy art deco style and set up an ice cream parlor with polished granite table tops and elegant French doors, where its confection sells for $3 a scoop.
Some foreign retailers are tapping downscale markets, setting up discount warehouses and weathering hard times by catering to the frugal. But Haagen-Dazs is deliberately courting China’s newly rich.
Like some other upscale retailers, Haagen-Dazs is betting that the appetite of affluent Beijingers for luxury will lead them to dish out more than double what they would pay elsewhere.
In the early decades after the communist state was founded in 1949, incomes were low and roughly the same. Only those with special Communist Party status or connections could indulge in luxury.
However, economic reforms over the past 20 years have created a substantial class of newly wealthy Chinese, with more than 5.3 million families boasting annual incomes of $6,000 or more, according to a report Sunday in the newspaper Beijing Daily.
That’s a far cry from the average annual urban income of about $600, and worlds apart from the average of about $230 earned by rural residents.
Private businessmen and managers make up the core of the newly affluent. Others include teachers who tutor privately, consultants, securities traders, entertainers or advertising executives, the paper said.
The roughly 30 million Chinese considered to be well off are only a small fraction of China’s population of 1.2 billion. Heavily concentrated in major cities such as Beijing and Shanghai, they represent a newly emerging market for all sorts of luxuries.
China is counting on the desire of the well-to-do for better housing and consumer goods to help keep an otherwise sluggish economy growing.