While the sinking finances of Western consumers prompted them to temporarily halt their indulgences in 2009, the Chinese consumers continue to march ahead on the gilded road of luxury.
While rapid economic growth and swelling ranks of the rich are fueling the market, there are clear cultural factors which make the Chinese more attracted to luxury products than some other markets.
The old Chinese saying yi jin huan xiang (return home in golden robes) expresses the phenomenon of using visible symbols to reflect your success. Having succeeded, it is important to make sure that your achievement is noticed and applauded.
But at the same time traditional Chinese values do not suggest sticking out or drawing undue attention on oneself through conspicuous behaviors or consumption (qiang da chu tou niao – the bird that sticks out its head gets shot!).
Why then are the Chinese consumers lapping the expensive symbols of luxury? Apart from economic and cultural factors, there are a few other elements serving as psychological fuel for the luxury market in China.
1. Universality of ambition and common standards of evaluation of success.
In China there is near universality of ambition – almost every person dreams of and strives for success.
As compared to other societies that are more class-based (social or economic), the relatively flat social structure and the fact that all money is "new money" puts everyone on a relatively equal footing in their endeavor for success. Luxury goods provide easily recognizable symbols or markers of having reached certain milestones.
2. The simple perception of money. In China the history of branding and availability of quality goods is rather short.
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Ashok Sethi is head of Consumer Insights – Rapid Growth & Emerging Markets. Shanghai Daily condensed the article.