China's jet-set getting picky over luxury brands

SHANGHAI, Jan 12 (Reuters) China's fast-growing monied elite is becoming more selective when it comes to buying luxury goods and cares less about brand loyalty, a survey showed.

Listing top-end cars, watches and other luxury products, the Hurun Report survey of more than 600 entrepreneurs showed yesterday China's nouveau riche are more willing to switch to new foreign products from brands with a longer history in the country.

Vacheron Constantin, part of luxury group Richemont SA and in China since 1998, lost its lead position on the Hurun list as the most popular ''high complication'' watch brand to rival Patek Philippe, launched in China in 2005, it said.

''The immediate brands they think of when they first get rich, is a fast car -- probably a BMW or a Mercedes -- and a Rolex (watch),'' said Shanghai-based Rupert Hoogewerf, who published the Hurun annual report for the third consecutive year.

''When they've had their Rolex for a while, they learn that there are other types of brands, such as Patek Philippe. These entrepreneurs are becoming more sophisticated.'' China's market for luxury goods -- excluding private jets and top-end yachts -- was worth US billion in 2004, making the Chinese the world's third-largest consumers of luxury goods, according to Goldman Sachs.

The market is growing fast, with Asia excluding Japan accounting for 19 per cent of group revenues for LVMH Moet Hennessy Louis Vuitton, the world's largest luxury goods group, in the first half of 2006.

LVMH's Louis Vuitton was ranked second on the Hurun list of China's most popular brands, behind BMW's premium cars.

Mandarin-speaking Hoogewerf also issues an annual report listing China's wealthy. The latest report, issued in October, showed the 500 richest Chinese are worth an average US 276 dollars million, up 48 per cent on a year earlier, and control US 138 dollars billion in assets.

The rise in China's super-rich comes amid a widening gulf between rich and poor that analysts say threatens social stability even as the economy booms.

Chinese President Hu Jintao in July called for stronger efforts to tackle the wealth gap, saying salaries should be market-oriented but that the country must focus on fairness.

REUTERS PDM DS1057