Chinese Attitudes Toward The Wealthy Complicate Results
We already know that China is the world’s second-largest luxury consumer market, and we’ve seen jet-setting Chinese luxury shoppers head to Europe and South Korea to take advantage of the relatively stronger yuan, but despite their emergence on the world stage, Chinese luxury devotees lag behind their Korean counterparts in one regard. According to a new survey by McKinsey & Co., South Korea is the most “luxury friendly” country in the world, reflected by a low rate of social stigma and an unstated social imperative about publicly flaunting wealth.
In the survey, China ranks second behind Korea in the percentage of respondents who spend more on luxury goods in 2009 than 2008, with 44% to Korea’s 48%. However, reflecting the complex nature of luxury consumption in China, 38% of respondents there said that showing off luxury goods is in bad taste, and 14% said they feel guilty about the amount of money they spent on luxury goods.
This puts China in second place across all three rankings, and paints a suitably convoluted picture of the current state of the Chinese luxury industry.
According to the Wall Street Journal‘s analysis of the McKinsey study, part of the reason for Korea’s “luxury friendly” attitude is the country’s homogeneous culture, “which both encourages people to distinguish themselves with high-end products and pressures them to keep up with those who do.” We’d also add the fact that South Korea’s high-income developed economy and comparatively low income gap take away much of the social stigma of “showing off” that we see in developing countries like China where the wealth gap is widening.
In addition to, or possibly as a compliment to, the growing wealth gap in China, it’s well-established that Chinese attitudes toward wealth are largely somewhat contradictory. While many newly wealthy Chinese are quick to outfit themselves head-to-toe in luxury brands or have themselves chauffeured around in limited-edition Bentleys, and the pursuit of wealth is largely considered a societal imperative and not entirely without merit, broader social attitudes toward the wealthy are decidedly mixed. Last year, a study by the Zhejiang Academy of Social Sciences found that 96% of respondents said they feel resentment toward the wealthy, and another survey conducted earlier this year by the People’s Daily found that 91% of respondents believe that the country’s nouveau riche has leveraged government connections to build their fortunes.
At least in the short- to medium-term, results of surveys like the one released this week by McKinsey will likely continue to reflect this complex image of the China luxury market: one in which a steadily-growing number of people increase their purchases of luxury goods year-over-year, and one in which people remain luxury aspirants, yet one in which a significant percentage of respondents are reluctant to openly flaunt their purchases in public. However, as always, it must be reiterated that China is a highly segmented market, one in which attitudes towards luxury purchases differ greatly depending on location.
As a result, there are definitely pockets in China that are far more “luxury friendly” than South Korea as a whole, and it’s these pockets that luxury marketers are targeting — and will continue to target — to great success.