News>2008.07.20

 

【Column】"Segmentation and growth stage of rich"

 

Following the previous topic of " who is high class", I would like to consider rich class segmentation and its growth stage.

I can divide rich class into two segments in terms of a way to build its wealth, the one who is “Traditional Rich”, inheriting a large fortune from his or her relatives and parents, and the other who is “New Rich”, creating wealth with his or her own venture business or investment. Because of two different ways to create wealth, I can easily imagine that they have different consumption trend.

As an actual example, let's see Chinese rich class. Due to the World Wealth Report, Chinese rich class with net asset worth more than 1 million USD are around 41.5 million people. High (Rich) class ratio in total population is about 0.03%. 

Majority of Chinese rich in terms of a way to build wealth are not traditional rich but new rich, who created wealth through their own new businesses like venture business, stock and real estate investment. In other words, economic growth of China as a nation helps these new riches to increase. (Financial Times, July 8, 2008, : Strange fortunes of China's super-rich China super rich)

As other example in US, US riches are almost new rich as same as those of China. Due to the articles of Financial Times in the past, out of high class with more than 5 million USD, 97% are new rich in US. These riches created wealth by starting new venture business in US in 1980's and 90's as venture capital industry grew. (Financial Times Dec 13, 2005: Rich, but not fortune's fools)

Does this mean that US with wealth ratio 1% has been distributed wealth to more widely than the other countries? The answer is probably yes. At least industries, governments and academics in US must positively support business environments to enhance new entrepreneurs like Google and Yahoo! in terms of financing, idea creation and challenging culture more than those of the other countries do. Against that of US, in Chinese case, nations economic growth seems to boost the number of new rich.

So how about that of Japan?

Although I have not found data, I assume that traditional rich ratio out of high class outweighs those of US and China. Given slow economic growth and low acceptance to venture business in Japan, traditional rich ratio could be by far higher than those of US and China.

Finally let's look at interesting stages of becoming rich. Due to financial times as I mentioned see above, becoming rich is not overnight success but results of long term effort among mainly 3 stages. These stages consists of "Apprentice" with net asset for less than 5 years, Journeyman between 5 to 15 years, and "Master" more than 15 years.

Stage of becaming wealthy

 

It reminds me of the proverb that Rome was not built in a day.

Just as a reminder, these stages are just analysis about riches of "Master" afterwards, and do not mean that all "Jorneyman" and "Apprentice" in stream are supposed to be "Master".

Next topic I will be considering tele communication industry lifecycle.