Robert Gao

Why is China obsessed with luxury brands? 

Robert Gao

Why is China obsessed with luxury brands? 

Status-conscious shoppers continue to covet Hermès, Chanel, Dior and Louis Vuitton, and experts say it is due to the absence of traditions and rapid urbanisation.

Desmond Shum's controversial new book, Red Roulette, claims that China's luxury boom is due to shoppers' search for "identity" in the absence of religions and traditions eroded by the CCP.

Experts argue that rapid urbanisation and consumerism did more to fuel China's obsession with luxury goods, as mature buyers use brands such as Hermès, Chanel and Dior to project worldliness.

There is no doubt that China is the global centre of the luxury industry.

The country's luxury market will reach 816 billion yuan ($115 billion) by 2025. This is a quarter of the global total, according to a February report by accounting firm PwC.

By comparison, the United States and Europe could each account for 22 per cent and 23 per cent of the global luxury market by 2025, according to the PwC report.

It is such an important market that even Bernard Arnault - the CEO of French luxury conglomerate LVMH and the world's richest man - plans to visit the country this month after its shares plunged.

Traditions provide identity. As the CCP destroys Chinese traditions, luxury brands are making sure of it.

Behind the country's luxury boom is Chinese shoppers' search for "identity" in the absence of traditions, says Desmond Shum, author of a controversial book entitled Red Roulette, An Insider's Story of Wealth, Power, Corruption and Vengeance in Today's China.

In a lengthy tweet, Shum - whose rich-to-poor story "has catapulted him into China's billionaire class", according to the book review - said he had spoken to an unnamed "leading authority on the global luxury industry" who shared his thoughts on China's love affair with all things luxury.

"He said China is the most fertile ground for luxury brands. Because the CCP has destroyed traditions and religions in China, and the Chinese are socially competitive and status-conscious," Shum wrote. "Traditions provide identity. As the CCP has destroyed Chinese traditions, luxury brands step in to provide it," he further wrote, quoting the anonymous expert. "That bag tells themselves and the society around them who they are."

Shum and his publisher, Simon & Schuster, did not respond to a request for comment, so we don't know who his anonymous source is, but we did speak to several other luxury experts about the relationship between the CCP's destruction of Chinese traditions and its luxury boom.

These [Chinese] feared that the policy was going to change overnight, so they were incredibly eager to turn their hard-earned money into products as quickly as possible Karl Gerth, University of California

Chinese consumer culture is a "melting pot" of values

"Chinese consumer culture has been shaped by a melting pot of values," wrote Pierre Xiao Lu, a professor at Shanghai's Fudan University specialising in luxury marketing research, in a 2011 Wharton report.

During the post-reform period, the country's flat socialist structure "suddenly opened up vertically," Lu wrote.

This was especially evident in the 1980s, when China decided that a "much easier and faster way to develop the economy was to move the rural population to the cities," said Karl Gerth, a professor of history at the University of California, San Diego.

In his opinion, rapid urbanisation and consumerism contributed more to the rise of luxury in China than the lack of religion. "For people living in cities, it's harder to communicate to others who you are. You are no longer part of a clan that knows exactly who your family is. So you have to communicate it to others in another way: another way is through the consumption of mass-produced branded goods".

The authors are responsible for the choice and presentation of the facts contained in this document and for the opinions expressed therein, which are not necessarily those of Tourism and Society Think Tank and do not commit the Organization, and should not be attributed to TSTT or its members.

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