China Leads the Way in Luxury Spending

[beijingwalker]

China Leads the Way in Luxury Spending
Jan 9, 2012 7:13 AM
Los Angeles Times
by Alison Cavatore

China is quickly taking over the luxury market, buying more than practically any other country when it comes to extremely expensive high-end items, including cars.

Although previously known by many as the counterfeiting center of the world, China is now one of the most promising nations for many high-end companies. Luxury companies such as Gucci, Bottega Veneta and Prada all have seen increases in their sales in China and some even are planning on opening more stores in the near future, despite a still shaky economy in many nations.

Wealthy Chinese individuals are now becoming known for their love of everything high-end fashion, from Burberry scarves to Rolls-Royce cars. McKinsey & Co. consulting firm estimate that China will soon overtake Japan as the leading market for expensive products. And even though luxury sales figures are already significant in China, some believe it may actually be understated because so many Chinese people do their luxury shopping in other countries to avoid paying China’s higher luxury-goods taxes.

Previously, affluent individuals in China tended to keep their wealthy more private – driving black Mercedes or black Audi – whereas now they tend to drive more flashy cars, less concerned with demonstrating their financial status.

One thing that is kept to a minimum when it comes to opulence in China is, ironically, the word “luxury”. In Chinese, luxury is “shechi” and it is banned from advertising and company names because the government feels that high-end products are only obtainable to a select few and they do not want to “create unharmonious feelings among the people.”

In general, the majority of Chinese buyers of luxury goods are young adults according to a Shanghai-based research institute. In fact, in China, wealthy people are generally 15 years younger than the wealthy in the West. Many are second-generation young people who inherited money or who receive money and luxury goods from their parents. Another difference between Western millionaires and Chinese millionaires is that as often as Chinese millionaires purchase luxury goods for themselves, they also purchase items as gifts for others.