By Jeffrey Hodgson
HONG KONG (Reuters) - China is likely to surpass Japan by 2015 as the Asian country with the highest number of wealthy individuals, an executive with management consultancy Bain and Company said on Thursday.
But many global financial firms, including private banks who cater exclusively to the wealthy, are underestimating the difficulty of winning a profitable piece of the booming market, said Johnson Chng, head of the firm's Greater China financial services practice.
"Outside, from afar, China looks attractive, but from the inside it's a lot more complex ... You need to get in early in order to learn the market, because the customer behavior is very different," he told the Reuters China Century Summit, held at the Reuters office in Hong Kong.
"The early years may be more about just getting up the learning curve, rather than making a profit out of it. Then when 2015 comes, or whichever year the market is ready, you are also ready."
Japan was home to 1.4 million high-net-worth individuals -- people with more than $1 million in financial assets excluding their homes -- worth a combined $3.5 trillion in 2005, according to report by Merrill and consultants Capgemini.
By comparison, mainland China was home to 320,000 of these wealthy individuals, together worth about $1.59 trillion.
But since the start of 2006, Chinese stocks .SSEC have risen more than fourfold, powered by double-digit economic growth.
"One would expect that China will continue to grow at 10 to 12 percent for the next 5 to 10 years. And that kind of economy is going to create a lot of million or billionaires," said Chng. Continued...
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