Significant Need for Long-Term Wealth Planning Among Urban Chinese Families

September 28, 2009, Beijing A new study has found that despite a rise in income and assets among urban Chinese families, a significant proportion are without long-term wealth planning strategies. The finding is part of the results published by the Tsinghua-Citi Consumer Finance Behavior Research Project, a multi-year study examining consumer financial behavior in China. The findings revealed that 43% of urban households lack long-term wealth planning strategies.

The research study forms a core component of a wider program carried out under the umbrella of the Tsinghua-Citi Financial Education Hub, which was established in 2008 with a grant from the Citi Foundation. The initiative is designed to better understand trends and issues relating to the financial behavior of Chinese consumers.

Mr. Anand Selva, Country Business Manager, Consumer Banking, Citi China, said: “It is critical that a strong focus be placed on how consumers in China are behaving financially in order to help educate consumers and also to aid policy makers when it comes to generating ideas that serve to promote financial literacy and economic prosperity. We believe this new study will contribute in this respect and will support the continued education of consumers when it comes to financial planning and decision making.

Mr. Qian Yingyi, Dean of Tsinghua SEM said: “Although in the first year, the Research has revealed many insightful findings. We believe that as the Research continues and more data is collected for analysis and comparison in following years, it will provide a valuable addition to the existing knowledge of Chinese urban households financial behavior, as well as a good reference for the government and industry regulators when crafting important policies.

In 2008, a total of 2095 households from 15 different cities across China were surveyed with a view of gaining new insights into consumer financial behavior, as well as financial planning and financial education needs. Cities included Beijing, Shanghai, Guangzhou, Wuhan, Chengdu, Haarbin, Changsha, Xi’an, and Urumqi.

Additional survey highlights included:

• 86% of the surveyed population indicated to owning a property. High property market values increased the average urban family asset value to RMB607,802
• The percentages of stock and mutual fund possession are relatively low, at 26.64% and 15.82% respectively. Cash and deposit remain the main form of family assets
• Payroll makes up the main source of households income, contributing nearly half of the overall income. 60% of interviewees said they have bonus or allowances, but their contribution to family income (11.93%) is less than that from other commercial sources (18.61%), which 32.21% of interviewees said they have.
• On the expense side, the average figure per household was RMB 33,227 in 2008, among which, food and dining accounted for 38.14% with RMB12,392, and clothes and other utility expenses accounted for 15.34% with RMB4,983.

An international academic symposium was held at Tsinghua SEM to coincide with the results being announced. Around 250 academics, researchers and industry practitioners from China and around the world attended the symposium. Professor Liao Li, Associate Dean of Tsinghua SEM and Executive Deputy Director of the China Center for Financial Research at Tsinghua University presented the first year results. Furthermore, two panels of experts were invited to share their views and perspectives on the current state and needs of investor financial education as well as personal wealth planning among Chinese consumers.

Over its three-year tenure, the program will survey more than 10,000 Chinese households of different ethnic and socio-economic backgrounds in selected large, medium, and small cities in both costal and inland areas. Survey topics include financial knowledge, financial behavior, financial services needs and financial education needs. In addition, the survey will reach out to regulators and industry practitioners to capture their views about current market trends. The final results of the survey will be included in a series of research reports and academic papers.