Cultural/Historical Aspects Lead Luxury Consumption In China
This week, an article in The Wall Street Journal suggests that China will overtake Japan in terms of appetite for luxury goods this year, based on a study released last week by HSBC. According to the report, consumer spending power in the Western world continues to fade, while that by affluent Chinese is only just beginning to emerge.
As HSBC highlighted, culture is one of the primary reasons for the shift of luxury consumption from West to East:
On the one hand, “displaying wealth has become a trend in China, and this will continue to translate into growing purchases of luxury goods for oneself, or as gifts.” On the other hand, “consumer habits may not necessarily always correspond to income levels due to the need to socially fit in and show off wealth.”
In addition to this cultural perspective, HSBC added, historical aspects also play a role in leading Chinese luxury consumption:
“In Chinese and Russian communist societies, individual property was not allowed and private wealth was traditionally suspicious. With the liberalization of the economy, a new class system was created where your place on the ladder may depend on how much money one earns, and owning luxury goods can help display the level of one’s wealth.”
In addition, the report found that social shifts that have occurred in recent decades in China, including delayed marriage, the growing financial independence of women, and increasing brand awareness also contribute to the growth of luxury sales in China.