China’s lust for luxury brands


China’s lust for luxury brands What’s in a Name: Luxury Brands in China & the Internet

see Gucci. Chanel. Prada. If you had seen people toting products with these labels through Wangfujing in Beijing orNanjing Road in Shanghai just a few years ago, you may have assumed they were counterfeit.

Now, you’ll find the locals sporting an authentic Louis Vuitton bag in one hand and a Starbucks cup in the other. Big name luxury shops have multiplied throughout Chinese coastal cities, while counterfeit vendors have been pushed towards the outskirts and alleyways. Chinese consumers are fixated with luxury brands, and fakes are increasingly for foreigners only. You may wonder: why the shift? Is this a sign of Westernisation? Are luxury brands really here to stay in China?

Western Extravagance with Chinese Characteristics

Luxury goods are status symbols in China, as they are in the West. Owning a Celine purse or an Apple product is an aspiration for upper middle class urban Chinese on their way up in the world, proof positive that they are successful. Chinese luxury buyers display their purchases both by wearing them around town and by posting about their purchases on BBS communities, in a practice known as shai or “showing off”. Due in part to the advent of social media as a catalyst force, by 2015 it is expected that 20% of the world’s luxury sales will be funded with cash from Chinese wallets – the equivalent of $21 billion. So what does extravagance mean to the Chinese? It would be foolish to assume that the sudden spike in demand for high-end brands on the mainland is a sign of a desire to be Western. Confucian notions of interconnectedness and the precedence of the whole over the individual reign supreme – the Chinese are not necessarily buying luxury items to boast individuality or good taste, but rather to show worthiness and demonstrate belonging. As Tom Doctoroff noted in a recent article on luxury consumption in China: “whereas Americans dream of ‘independence’, Chinese crave ‘control’ of their own destiny and command over the vagaries of life.” Businesses looking to market in China should consider how their product plays into this ethos, and how it can help target Chinese consumers “stand out while fitting in.” Luxury brands, like Louis Vuitton and Chanel, have built brand awareness by giving their Chinese fans a forum in which to relate to each other and demonstrate their knowledge of the products – be it through livestreaming of fashion shows or generating content on Sina Weibo. By using social media, the luxury brands have given Chinese consumers the chance to market products to each other, to great effect.

The Future of Luxury in China

Despite the unprecedented high demand for luxury goods in China, there has been a recent downturn in sales. Last month, the Wall Street Journal reported that high-value goods typically given as gifts (handbags, watches, jewelry) were selling at substantially lower rates than in 2011. A cool down in Chinese economic growth and an upcoming leadership change are currently being blamed, along with backlash from microbloggers against public officials wearing luxury goods – items which social media users allege were purchased with state funds. While this hardly indicates the end of luxury gifts in China, it does serve as an important reminder than it isn’t just the markets that are rapidly changing. As the public increasingly voices its opinions via social media networks likeSina Weibo, Chinese social mores are more strictly reinforced, and will continue to reap tremendous influence over Chinese spending habits.

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