In the last decade or so, consumer behavior towards the luxury market has shifted in China. While China’s economy improves, the national interest on splashing out on indulgence, from clothes to accessories to cosmetics to cars, has also rapidly grown. Despite the weakening luxury market in developed countries as a result of the global financial crisis, China has maintained strong growth momentum and demand for these lavishing goods. And this trend looks to continue. From current statistics, China is likely to overtake Japan and the US to become the biggest spender in luxury market, with sales soaring over USD 28 billion a year.
As the number of trips abroad made by Chinese increases, especially to European areas since their currency weakened, the number of purchases made overseas also followed. Many now travel deliberately for the shopping experience, some to places like Hong Kong, others to farther destinations like the US and UK. Truth is, branded items are expensive in China. After the influence of high import taxes, logistic costs and price positioning, some items may appear to be sold 30 to 80 percent more expensive than their elsewhere. Though it should be acknowledged that this splurge in luxury buying was beneficial in some ways, as it slightly relieved the intense pressure on the European economy.
But that’s not all. During the short period of Spring Festival holiday season in 2012, it was reported by the Beijing-based World Luxury Association that purchases made by Chinese consumers in foreign countries reached a staggering USD 7.2 billion, displaying a huge increase of almost 29 percent from the USD 5.6 billion during same period in the previous year. When questioned about their reasons for purchasing abroad, many quoted that aside from the fact that prices of luxury goods overseas are significantly cheaper than at home, they also enjoy the larger selection of items as well as the better service and product authenticities.
But why do the Chinese adore luxury lifestyle so badly?
In Chinese culture, superficiality is a predominant attitude- the exterior matters somewhat more than what is on the inside. Take matchmaking as an example, this is where the difference between the Americans and the Chinese comes clear. Typically the Americans will look for someone they can connect and share their interests with, while the Chinese, on the other hand, will prepare a long list of boxes ready to be checked, including appearance, height, educational background, annual salary, apartment, number of cars, etc. Never mind what true love means, satisfying the conditions is the real deal.
Back in the late 1970s, the slogan and policy was to lead the rest to be rich after you become a little bit richer than others. But nowadays, this doesn’t seem to be the case. The more wealth you can amass, the more resources you have to finance expensive purchases. And if you’re a newbie in the elite circle, it’s just apt to express your social status by flaunting your luxury properties. Gone are the days when the rich Chinese would care to share their fruits so that others may also improve their lives. Our current society pushes the rich to aim for further wealth and to physically showcase to the public their success.
Above all, it is the instant celebrity effect that follows from flashing off those bags and shoes and jewelries that stimulates the financially capable Chinese locals to embrace luxury. 20 year-old MeiMei Guo became an online spectacle after she showed off her luxury items on Weibo, including her Maserati which she boasted with pride, while her profile claimed that she worked as a GM at the Red Cross. This caused so much anger from the public: how could an employee of a charitable institution be the owner of such expensive attires? Needless to say, she got her ten minutes of fame.
It is no longer surprising to see the young Chinese generation as the owners of branded items, as research has shown that the average age of Chinese consumers who are fond of splashing out is 15 years younger than that of Europe and 25 years younger than that of America. This sort of lifestyle is no longer dependent on one’s age or income, but more of their social pressures and changing mentalities.
To sum it up, in China, luxury equates to a certain kind of fame that one gets for being able to afford such expensive items or leisure. In this day and age, more and more Chinese have affiliated themselves with foreign luxury brands to establish their social status. For some, it has grown to become a way of life, much more than just the occasional reward.
About the Author
Aug 14, 20133862
May 16, 20142355
Jun 20, 20142432
Apr 21, 20142302
SmithStreet provides you source for today’s leading business ideas. Our content explores the topics critical to China market today.