Economy

Wealthy falling in love with luxury

By Chen Jia (China Daily)
Updated: 2011-04-19 08:44

China poised to overtake Japan as top high-end market in 2015

BEIJING - When you live a carefree life, with credit cards paid by your husband and a single child taken care of by your parents, what are you going to do with your extra money?

The answer from Cui Tiantian, a young Chinese born in the 1980s, is to indulge herself through in expensive tastes.

The 28-year-old, living in Qingdao in East China's Shandong province, once read a must-have list of 100 luxury goods for women in a lifestyle magazine, and immediately decided to make a list of her own.

Working for her father's company, she now reads fashion magazines and makes her luxury-shopping list to kill most of her time at the office.

Earlier this year, she used her year-end bonus on a Louis Vuitton bag. "I felt so good when I was told it was a limited edition," she told China Daily.

"My happiest moment is to delete one item off my list," she said.

She is among an increasing number of Chinese youth from rich families who are now the main group of VIP members of luxury brands.

"The luxury consumption market is gradually moving eastward from the United States, Europe and Japan to the Middle East, Russia, India and China," said Zhao Jun, the program manager of China Luxury Summit.

China surpassed the United States to become the second-largest luxury consuming market in 2009, with purchases worth $9.4 billion, according to a report by the Chinese Academy of Social Sciences.

"China will overtake Japan as the largest luxury market in the world in 2015," he said.

And this could come earlier than expected after Japan was hit by an earthquake and tsunami last month and is still trying to control the nuclear crisis.

"Nobody wants to buy luxury goods after disasters," a staff member at the Shanghai office of Mikimoto, a famous Japanese jewelry brand, was quoted by International Finance News as saying.

According to media reports, many international luxury brands are planning to expand in China to make up for their losses in Japan.

Zhao said that many of the luxury brands have been tapping the market of second-tier cities in China, such as Hangzhou, Chengdu, Dalian, Chongqing and Wuxi, in addition to Beijing, Shanghai and Guangzhou.

Local high-end shopping malls that have developed quickly in recent years have helped those luxury brands to reach consumers in those cities. The mall operators also wanted to land these big names and often offered attractive terms, he said.

"In the future, more Chinese luxury goods shoppers will shop not far from their home," Zhao said. In the past, however, 60 percent of luxury goods bought by Chinese were purchased overseas.

Moreover, Chinese luxury consumers are looking to products beyond clothes and jewelry.

Industry observers said the rich in China are beginning to show an interest in buying sport cars, private jets and yachts, and they care more about the shopping experience than before.

Earlier this month, more than 250 rich people from across the country flew on a fleet of private jets to Sanya on Hainan Island. They were then transported in a parade of chauffeured BMWs, including the four-door version of the M3 and the 5-series Gran Turismo.

They were there to attend a luxury goods show where nearly 150 exhibitors brought yachts, private jets and other luxury toys to China.

Though the show set an entrance fee of 180 yuan ($28), many of those coming by private jet were invited by the exhibiting brands as "jet VIPs".

"Rich Chinese will no longer be satisfied ordering a limited edition of a luxury bag. They are learning how to play in a more fashionable way. They are becoming much more concerned about the consumer experience and after-sale service for luxuries," Zhao said.

However, rich Chinese should learn to keep a low profile until society holds a more open attitude toward wealth, experts said.

The obsession with luxury brands has raised criticism in recent years, as millions of people are scraping by to earn their daily living expenses.

"The rich people have less political or social influence in China, and it takes time for society to prepare psychologically for the appearance of the super rich," said Zhao Ping, an economist at the Chinese Academy of International Trade and Economic Cooperation.

China Daily

(China Daily 04/19/2011 page14)