Why China Is on an L.A. Spending Spree: "It's Just Monopoly Money to Them"
"$20,000 on drinks is a plain night on the town," says one local restaurateur, as big-time Chinese money pours into Los Angeles, consuming everything from wine to diamonds to watches to cars to prime real estate (in one case, 25,000 square feet for a teenage college student).
A version of this story first appeared in the Oct. 9 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
The ultra-wealthy Chinese tend to get what they want, and right now most of them want one thing: to get out. More than 60 percent of China’s most affluent citizens have already left the country or are planning to leave it, according to the Los Angeles Times. And L.A. — a politically stable and always-comfortable metropolis where catering to the rich is a way of life — is among their most coveted destinations. The numbers don’t lie: In 2014, a full 20 percent of the city’s $8 billion in real estate sales was purchased by Chinese buyers. Showing no signs of slowing down, this injection of Chinese capital and influence can be felt at every level of L.A.’s culture of consumption.
Thanks to big import and consumption taxes introduced in recent years by President Xi Jinping, most wealthy Chinese consider the cost of homes and luxury goods in L.A. to be something of a bargain. “They’ll buy high-end watches in threes and fours,” says Korosh Soltani, owner of Rodeo Drive jewelry store David Orgell, of his Chinese clientele, who’ll typically drop $200,000 on gifts in a single shopping spree. (Soltani has so many Chinese customers, he asks companies like Corum and Baume & Mercier to send him watches bearing the Mandarin logos they are more familiar with.)
Brand names are essential: Hermes tableware, Lalique crystal and yellow-gold jewelry from Carrera y Carrera — gold is the most popular gift among Chinese — are consistent hot sellers. Spending can easily soar much higher if shopping for a special occasion: “We just had a Chinese family come in looking for the finest, most vivid canary yellow diamond you can have. Fortunately I had one,” says Beverly Hills jeweler Martin Katz of a recent engagement ring purchase. “It was a seven-figure-priced stone in the six-carat range.”
While money is frequently no object, the Chinese still like to negotiate and won’t close a deal without getting “big discounts … it’s in the culture,” Soltanti says. They also expect a little something extra: “We ask our brands to give us pens or hats that will keep them happy. They’re very appreciative of it.”
The Beverly Center, meanwhile, has taken active steps toward luring China’s big spenders: The high-end shopping mall — which houses Louis Vuitton, Prada and Fendi boutiques — provides a Chinese version of its website and brochures, staffs Mandarin-speaking concierges, accepts China UnionPay credit cards and promotes itself on Sina Weibo, China’s answer to Twitter.
“They arrive with this endless stream of money without working or earning it. It’s just Monopoly money to them,” says Gotham Dream Cars’ Rob Ferretti of Chinese customers who come to him in search of an exotic ride. They lease cars like the $397,000 Maybach 57S for $2,200 a day. Color-wise, “They love these light blues,” Ferretti says. They’re even particular about the car’s VIN number: They like when it has as many eights in it as possible.
“Eight in Chinese rhymes with the word for prosperity. It’s extremely significant,” explains architect Anthony Poon of Beverly Hills-based Poon Design Inc. The Chinese fixation on the number can verge on the obsessive: One client, whose husband is a major film director, wanted Poon to design her an 8,888-square-foot home, while another Chinese developer working on a luxury community in Pacific Palisades insists that it have eight estates.
“They understand vertical living very well, and they love new construction, so condos are very much in their wheelhouse,” says Beverly Hills realtor (and Real Housewives of Beverly Hills star) Mauricio Umansky of his Chinese clients, most of whom are relocating from densely packed urban centers like Shanghai to the comparative expansiveness of Arcadia, an L.A. suburb and Chinese-wealth magnet. If their kids are attending UCLA, parents will think nothing of spending $1 million to $3 million or more on a Westwood pied-a-terre instead of putting their children up in dorms. “The wealth and lack of reference point can be staggering,” marvels Poon, before sharing an anecdote about the family who purchased a 25,000-square-foot home in the Hollywood Hills for their teenage son. On the ultra-high-end market — mansions that cost $50 million and above — Umansky estimates that about 25 percent of sales are made to Chinese, a figure he says is climbing due to ongoing “political and financial uncertainty in China.”
When it comes to design, feng shui — the ancient philosophy of living in harmony with your surroundings — is a top priority among Chinese buyers, with architects scrambling to accommodate its highly specific criteria. According to Poon, a contained foyer is preferable to an open-plan entryway (it helps retain life force, or chi); floor plans must be simple, with no awkward or cramped spaces; furniture should be placed away from doors and be round, not rectangular; sloping backyards are a no-no (again, to avoid chi loss); and, says Umansky, “you don’t want the staircase facing the front door because it’s the money and fortune flowing out.”
Dining, too, comes with its own set of Chinese rules. For a taste of home, Chinese emigres gravitate to authentic dumpling houses like Din Tai Fung — either the original in Arcadia or either of two trendier outposts in Costa Mesa and Glendale. (The latter location, nestled in Rick Caruso’s Americana at Brand, serves the much-coveted black-truffle soup dumplings, a Hong Kong delicacy.) Restaurateur Peter Garland, owner of Porta Via on Canon Drive, notes that uber-wealthy Chinese diners spend freely on high-end wines — especially chardonnay and California cabernet. That extends to any restaurant boasting a stellar wine list, as Beverly Hills mainstays like Cut or Mastro’s regularly draw a deep-pocketed Chinese clientele who’ll think nothing at dropping four-figures on rare vintages and for whom “$20,000 on drinks in one night is a plain night on the town,” says Poon.