It is said that in 2010 the expenditure of Chinese luxury goods will amount to 500 billion yuan, becoming the third largest luxury goods market, preceded only by the US and Japan.
Have the Chinese already become a favorite of the luxury goods market? What type of people are consuming luxury goods?
Using animals to represent the different social classes we can outline a map of the relative distance between consumption of luxury goods.
0 meters from luxury -- lion kings
They are the creators of the luxury goods market; it is not money that they take into consideration but the issue of choice. Just like king lions, they can show disdain for everything in this market because of their kingly status. They have no concept of money; this is only a question of numbers. The Topmarqrues which was held in Shanghai in October 2005 attracted over 7000 millionaires with a turnover of 200 million yuan. It is reported that, of the 7000 millionaires over 90 percent came from Chinese mainland. They already had firm spending goals, many of them making the decision to spend as soon as they tried something out. This made many of the foreigners participating in the business fair sigh, "We would never have thought Chinese millionaires are so generous."
10 meters from luxury -- foxes
They have generally received higher education and maintain a higher level of consumption. Most importantly, they have a sense of what is in fashion and eagerly anticipate the social trends. These are the so-called "newly rich inlanders," many of who are born in mid or late 60's and the 70's. In terms of the distribution of job occupation, close to 50 percent are high-level superintendents, specialists and government officials.
100 meters from luxury -- rabbits
They are represented by the "moonlight clan," a group of people with a monthly income between 1000 to 3000 yuan who are able to "spend millions." They dare to buy handbags of 1800 yuan with 2000 yuan monthly salaries, use Dior perfume but nevertheless wear cheap clothes worth less 100 yuan and beefsteak for a few dozen yuan so that there is often little money left remaining on their credit cards. In their opinion it is the appearance that determines one's value; diligently spending can also be productive and young people need to publicize themselves better.
What is the attraction of luxury goods?
For millionaires it is a symbol of social status.
On October 18 of last year, the Chinese millionaires repeatedly surprised the foreigners participating in the Topmarqrues exhibition of Commerce.
On April 29 of this year, a similar experience occurred at the world summit held in Shanghai. The Chinese spent money generously and during the course of the three-day exhibition that had audience of 10,000, earnings from the entrance ticket alone amounted to over income of seven million yuan.
Has China really reached such a level of prosperity? Wouldn't it be better to take the seven million yuan and use it for investment or charity? But to a millionaire, this might seem only like a poor person's way of thinking. To them money is only a number, whereas luxury goods are a sign of status.
Workers with salaries: prestige project
Workers with salaries have entered in an age that is completely different from their previous generation. Worshipping high quality designer goods has lead paid workers into an age where a large group collecting luxury goods now replaces a small group of rich people buying luxury good.
What has changed from previous ages is that the salaried workers consume both high quality goods and low-grade commodity. They believe that luxury can bring themselves happiness, confidence and prestige. Hence they are glad to spend more than half a year's saving on one item of clothing.
Country: macroeconomic regulation and control on luxury consumption is through tax revenue.
China has collected taxes on spending on yachts, golf and the watches since April this year. This policy adjustment has been the largest scale adjustment since the reform of the tax system began in 1994. Imposing heavy taxes is the best way to guide healthy consumption of upscale luxury goods.
Society: The establishment of luxury goods rent industry is needed
Nowadays high-level European female white-collar workers have found a good way to be able to maintain their budgets whilst keeping their dignity by renting luxury goods. This emerging business, along with the automobile renting industry allows the consumer to freely face some situations and be able to save money, according to the US media. Therefore, one could for-see that if the renting luxury goods industry comes into fashion in China, this could develop into a new profession with good prospects.
(People's Daily June 6, 2006)
