Luxury goods can't buy happiness
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China's National Bureau of Statistics has announced that the country's economic output rose by over 10 percent in each of the past two quarters even as much of the world economy remains mired in slow growth. Another indicator of China's rapid rebound from the global economic crisis is the sale of luxury goods, with the total amount rising to $9.4 billion by the end of last year.
China now accounts for more than a quarter of the world's purchases of luxury goods. At this pace, it will soon bypass the US to become the top market for such products after Japan, even though its per capita income is still much lower than in America. Indeed, according to Du Junfei, a professor of Nanjing University, while purchases of luxury goods amount to 4 percent of consumer's assets worldwide, the figure in China is as much as 40 percent or higher.
This Chinese peculiarity reflects the distinctive makeup of the country's luxury goods market. Radha Chadha, a board member of a leading Shanghai-based consulting firm, says luxury goods buyers fall into three categories. One group is the really rich, another includes so-called "cool" youngsters, and the third consists of white-collar workers, especially managers.
Of course, the first two groups are big buyers of luxury products in the West. Haughty, affluent youngsters flood high-end malls in the US and Europe just as they do here - I see lots of these kids while taking strolls in my Sanlitun neighborhood.
Rich people in and outside China buy luxury products to show off their wealth and status. What sets China apart from Western countries and, by extension, accounts for the unusually high purchase of luxury goods in relation to consumer assets here, is the third major segment of the high-end product market: white-collar workers. While white-collar workers in the West, especially America, are big consumers, they typically hunt for bargains. This behavior is reflected in the success of retailers like Wal-Mart and Costco.
In contrast, white-collar workers in China often equate expensive luxury brands with high quality. As one white-collar worker quoted in a Xinhua China.org report put it: "I think a bag priced at 10,000 yuan is more suitable for me. It is better than 100 bags priced at 100 yuan each."
