SHANGHAI, China — China’s luxury consumers have been dissected and discussed time and again by global retail brands aiming to tap their growing spending power. But the Western media’s misportrayal of luxury customers in this country has left businesses susceptible to a raft of misconceptions. Here are the five most common stereotypes, debunked.
1. Chinese consumers don’t understand quality
China is notorious as both a manufacturer and consumer of inexpensive, low-quality goods, not to mention counterfeit products. The United Nations estimates that 70 percent of all counterfeits seized globally originate in China, while the United States Customs and Border Protection reports that 87 percent of the counterfeit goods it seizes come from China. And from New York’s Canal Street to Shanghai’s Qi Pu Road (literally translated as ‘Cheap Road’), Chinese-made knockoffs and grey-market goods have flooded street markets around the world. This state of affairs has painted China as a land with little regard for intellectual property or quality.
But, in reality, China’s counterfeit culture has made the country’s luxury consumers even more conscious of quality than their counterparts elsewhere in the world. They are much more aware of the difference between an authentic bag and a fake. And, in a telling sign, Chinese luxury consumers buy a large percentage of their luxury goods while traveling abroad. With heavy luxury taxes at home, price plays a major role in this calculation, as does the storytelling power of a product purchased in New York, London or Paris. But also important is the fact that a product purchased abroad in Europe or the United States is much more likely to be authentic. Indeed, in a land of counterfeits, quality is an important differentiator and Chinese luxury consumers try hard to ensure that what they buy is the real deal in terms of materials and craftsmanship.
2. Chinese consumers don’t have individual style
Most simply put, style is the collision of fashion and the self. Chinese society generally emphasises the whole over the individual, so most Chinese consumers have traditionally been much less concerned with cultivating their own individual identities than their counterparts in Europe and the United States.
But this is changing. The rise of the Internet and social media has enabled millions of Chinese consumers to find their individual voices — and, by extension, the proliferation of personal style blogs has made them more confident about developing and expressing individual style. Meanwhile, stores like Lane Crawford, 10 Corso Como and the new multi-brand boutique MHT (Mian Hua Tian) are providing an ever-expanding range of luxury products to choose from and consumers are increasingly willing to experiment. What’s more, in a country where speech is heavily regulated, many Chinese have realised that they can speak through their style and say things that may otherwise be taboo or censored.
3. Chinese consumers lack an education on luxury brands
Due to the relatively recent entry of Western luxury brands into the Chinese market, perhaps it’s no surprise that many believe that Chinese luxury consumers lack an education on these brands. It’s certainly true that Chinese consumers are hungry for information on luxury brands and the products they sell — and, before purchasing, Chinese consumers conduct more brand research across a greater number of touch points, online and off, than those in Europe and the United States. So, if anything, Chinese consumers, who, in recent years, have been bombarded with “educational” messages from luxury brands, might know these brands even better than their Western counterparts.
4. Chinese consumers are driven by social status and want big brands
Any emerging country with large numbers of newly wealthy citizens and a traditional social hierarchy can be expected to display more conspicuous consumption than a mature market. But in China, desire for heavily-branded luxury products has cooled off quickly for a number of reasons. President Xi Jinping’s anti-corruption campaign has had a dampening effect on conspicuous luxury consumption overall. But even more powerful has been the rapid rate at which the Chinese luxury consumer has matured. According to a study by McKinsey, a global consulting firm, 66 percent of Chinese luxury consumers “prefer luxury items that are low-key and understated” compared to 50 percent in 2010.
5. Chinese consumers prefer foreign brands
Many people in China still believe that Western brands produce superior products to domestic brands for reasons ranging from heritage to quality. But as the glitz and glam of big foreign brands begins to wear off and Chinese brands gain traction, offering products with attributes — from size and fit to materials and functionality — that are more in-tune with what Chinese consumers need, these same consumers are likely to reorient themselves towards homegrown brands. After all, as the country progresses at a rapid rate, there is growing pride in being Chinese. Hermès has already capitalised on this by launching Shang Xia, a label conceived at the intersection of Chinese cultural heritage and 21st century design, while retail operations like Dong Liang Studio, founded by Charles Wang and Nan La, and Hung Huang’s Brand New China have built on the idea that Chinese brands can resonate not only abroad, but with local luxury consumers.