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Middle Kingdom Blingdom

NMW1982

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I was in China recently for business and it is crazy to see the number of people who line up outside of luxury brands and buy absurdly over-priced goods. These are booming times for them!

http://www.economist.com/node/18184466

China's luxury boom

Feb 17th 2011 | HONG KONG | from PRINT EDITION

A tasteful golden despot statuette

MANY Chinese people still remember the days when luxury meant a short queue for the toilet at the end of the street, or a bus conductor who wasn't excessively rude. Before the economy opened up, a chic suit meant one with the label of a state-owned factory sewn ostentatiously on the sleeve. How times change.

Sales of luxury goods are exploding, despite a hefty tax on importing them. A new report by CLSA, a broker, forecasts that overall consumption in China (including boring everyday items) will rise by 11% annually over the next five years. That is very fast. But sales of luxury goods will grow more than twice as quickly, reckons CLSA: by 25% a year. No other category comes close. Even spending on education, a Chinese obsession, is projected to grow by "only" 16% annually.

China is already the largest market for Louis Vuitton, a maker of surprisingly expensive handbags, accounting for 15% of its global sales. Within three years, reckons Aaron Fischer, the report's author, China's domestic market for bling will be bigger than Japan's. By 2020 it will account for 19% of global demand for luxuries (see chart). And that is only half the story.
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For the most ostentatious Chinese consumers like to shop abroad. CLSA estimates that 55% of the luxury goods bought by Chinese people are bought outside mainland China. This is partly because of those high tariffs, which can top 30%. But it is also because counterfeiting is rife. Ask a well-heeled Chinese lady about her new handbag and she is quite likely to point out that she bought it in Paris. This tells you not only that she is rich enough to travel, but also that the bag is genuine.

If you include the baubles Chinese people buy outside China, the nation's share of the global luxury market will triple, to 44%, by 2020, predicts CLSA. The wealth of China's upper-middle class has reached an inflection point, reckons Mr Fischer. They have everything they need. Now they want a load of stuff they don't need, too.

In Hong Kong's Tsim Sha Tsui shopping district, queues of bling-hungry mainlanders stretch into the streets outside stores carrying the best-known brands. Sales of jewellery in Hong Kong rose by 29% in the year to December; sales of high-end footwear and clothing shot up by 31%. Companies that cater to show-offs have much to boast about. Richemont, the world's biggest jeweller, registered a 57% increase in Asian sales in the fourth quarter. Strip out Japan, the region's sputtering ex-star, and sales probably doubled. Hermès, a maker of fancy accessories, saw its sales in Asia climb by 45%. Burberry China was up by 30%; LVMH Asia soared by 30% outside Japan. Luxury sales in December were "spectacular", says Mr Fischer, and growth is accelerating.

In some ways the Chinese market is much like everywhere else. The same brands are popular, besides a few companies that are perceived in China to be Western but are in fact almost entirely geared toward China, such as Ports Design, a seller of posh clothes.

There are, however, substantial differences. The average Chinese millionaire is only 39, which is 15 years younger than the average elsewhere. Prosperous Chinese are less shy about flaunting their wealth than people in other countries. On the contrary, many believe they must show off to be taken seriously.

Whereas the market for luxury goods in other countries is typically dominated by women, in China the men fill the tills with nearly equal abandon. They buy both for themselves and for other men, since gifts lubricate business in China. They are often willing to pay a large premium over the list price for desired items"”many believe, for some reason, that the more something costs, the better it is.

China's growing taste for bling is a good thing not only for makers of luxury goods but also for Chinese consumers. It is a symptom of the fact that they have more to spend, that necessities no longer gobble up every spare yuan and that they can afford to add a little colour to their lives. Mao Zedong would not have approved, but his former serfs ignore his frowns and merrily fritter away the banknotes that still depict his face.
 

blahman

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I think this article really highlights the importance of 'face' in China. This 'face' idea is why Chinese parents celebrate and invite lot's of people to dinner when their child get's into a good school or land a good job. It is also why they order in great excess and with expensive menu items at said dinners. It is not so much that they show off because they are arrogant, they do that to not be looked down upon by others.
 

dragon8

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Originally Posted by blahman
I think this article really highlights the importance of 'face' in China. This 'face' idea is why Chinese parents celebrate and invite lot's of people to dinner when their child get's into a good school or land a good job. It is also why they order in great excess and with expensive menu items at said dinners. It is not so much that they show off because they are arrogant, they do that to not be looked down upon by others.

Good point. Face is very important in China
 

Harold falcon

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I wonder if this has less to do with "face" and more to do with the fact that the Chinese are newly rich, and like many newly rich people have a tendency to flaunt it in ostentatious and obnoxious ways. Give them a generation or two and I imagine it will settle down considerably.
 

Raralith

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I'm glad that they are beginning to spend that money. Maybe the Chinese will covet Alden like we do with the English!

They have everything they need. Now they want a load of stuff they don't need, too.
Story of my life
 

dragon8

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Originally Posted by harvey_birdman
I wonder if this has less to do with "face" and more to do with the fact that the Chinese are newly rich, and like many newly rich people have a tendency to flaunt it in ostentatious and obnoxious ways. Give them a generation or two and I imagine it will settle down considerably.

Decades of wearing the Mao suit and with money its like my niece in charge of the cookie jar!
 

nzqyn

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I was at Prada's Toronto boutique the other day, and a 40ish Chinese man was saying to his wife and kid (in Mandarin) "I deposited $400,000 in the bank before I came to make sure you have enough to shop". New-found wealth tends to acquire the requisite status symbols, it's only normal, however crude the taste may be in the beginning.
 

stillerfan07

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i have no idea where all the money is coming from.
i see rich asians gambling all the time at the poker tables here in vegas.
 

nzqyn

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Originally Posted by stillerfan07
i have no idea where all the money is coming from.
i see rich asians gambling all the time at the poker tables here in vegas.


I'll divide those people into two categories. The first is government officials or managers of state-run enterprises. Their money come from bribes for the assignment of government contracts (land sales, infrastructure projects, procurement, etc), most local-level officials (mayors, vice-mayors, even county chiefs) are multimillionaires, and their wives, mistresses, and kids are the people you see swarming high-end British/US boutiques. Provincial/national level officials are far richer with Swiss bank accounts and their kids are at elite US/European private schools.

The second category is business people. Because of the nature of business in China there is always illegal activities involved and business people are often willingly or unwillingly embroiled in political power struggles and they transfer their wealth abroad, and more importantly their entire families, abroad for safety concerns.
 

changy

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Originally Posted by nzqyn
I'll divide those people into two categories. The first is government officials or managers of state-run enterprises. Their money come from bribes for the assignment of government contracts (land sales, infrastructure projects, procurement, etc), most local-level officials (mayors, vice-mayors, even county chiefs) are multimillionaires, and their wives, mistresses, and kids are the people you see swarming high-end British/US boutiques. Provincial/national level officials are far richer with Swiss bank accounts and their kids are at elite US/European private schools.

The second category is business people. Because of the nature of business in China there is always illegal activities involved and business people are often willingly or unwillingly embroiled in political power struggles and they transfer their wealth abroad, and more importantly their entire families, abroad for safety concerns.


Newport beach is popular for hiding mistresses.
 

twistoffat

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I´ve dealt with the Chinese for many a year and it has both to do with wealth and face. I couldn´t believe my eyes the first time I saw them queuing patiently behind a man in a black suit holding the red rope preventing their entry to the Louis Vuitton Store. I couldn´t believe tales of young Girls spending a months Salary so they could buy a coach bag.
I personally feel alot has to do with being part of a collective when individuality is seen as a hinderance rather than a benefit. The Chinese are very proud of their traditions and these fuels the idea of a collective.
What i particularly find humerous is that they are less likely to buy fakes than in the west. They want the real deal and pay top dollar for it. LV etc cost alot more there than in Europe or the states
 

Jangofett

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Originally Posted by nzqyn
I'll divide those people into two categories. The first is government officials or managers of state-run enterprises. Their money come from bribes for the assignment of government contracts (land sales, infrastructure projects, procurement, etc), most local-level officials (mayors, vice-mayors, even county chiefs) are multimillionaires, and their wives, mistresses, and kids are the people you see swarming high-end British/US boutiques. Provincial/national level officials are far richer with Swiss bank accounts and their kids are at elite US/European private schools.

The second category is business people. Because of the nature of business in China there is always illegal activities involved and business people are often willingly or unwillingly embroiled in political power struggles and they transfer their wealth abroad, and more importantly their entire families, abroad for safety concerns.


I think what you said, although there are some truth to it, are generalisation and internet talk.

If what you say is true, almost all mainland Chinese who goes to LV to shop are crooks, sleep with crooks or are related to crooks.
 

nzqyn

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Originally Posted by changy
Newport beach is popular for hiding mistresses.

That is so true, and tons of them in Vancouver.
 

Jangofett

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Originally Posted by twistoffat
I´ve dealt with the Chinese for many a year and it has both to do with wealth and face. I couldn´t believe my eyes the first time I saw them queuing patiently behind a man in a black suit holding the red rope preventing their entry to the Louis Vuitton Store. I couldn´t believe tales of young Girls spending a months Salary so they could buy a coach bag.
I personally feel alot has to do with being part of a collective when individuality is seen as a hinderance rather than a benefit. The Chinese are very proud of their traditions and these fuels the idea of a collective.
What i particularly find humerous is that they are less likely to buy fakes than in the west. They want the real deal and pay top dollar for it. LV etc cost alot more there than in Europe or the states


Saving and spending one's monthly salary to buy a bag is no different from you saving 3 month's salary to buy a car or a bike. To them, its a matter of showing they have arrived and to them, it may even be an investment, as bizarre as it sounds.
 

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