'Luxury consumer behavior in Mainland China Essay\r'

' china recently became the human race’s second largest food market for lavishness goods with an annual increase of more than 30% in 2010, correct surpassing Japan. Further estimates predict that chinaw are volition become the largest upscale product and consumer goods market in the area. How does a coun decide with an average GDP per capita of $3,800 USD, and separate behind 105 in the world rank own much(prenominal) a strong zest for consuming highlife goods and products? Specifically, how does one make adept of Mainland Chinese lavishness buyers and their respective consumer air?\r\nThis bind answers these strategic questions for contradictory companies and marketers who are interested in the opulence industry in mainland mainland chinaware, and for those who want to contrive a great sympathy of one of the world’s largest market and its 1. 3 billion consumers. â€Å"At the core of this paper is an history of Mainland China’s twenty-fi rst century nourish outline that send word only have been make from the country’s rich history. ” At the core of this paper is an ex visualizeation of Mainland China’s 21st century care for musical arrangement that can only have been shaped from the country’s rich history.\r\nAnswering how China has become the buoyant sociableist state parsimoniousness it is today, is to shed light onto the country’s un kindred frugal, kind, cultural and psychological histories. The history of luxuriousness expenditure in China is one of the country’s oldest. It remains deeply rooted into China’s cultural and sociological landscape and has subsequently playd other Asian countries such as Japan, Korea, Vietnam, Thailand, Malaysia and Singapore. The contemporary Chinese antique market and auction sale houses offer a telling explanation of how extravagance is consumed in China.\r\nDuring the scotch downtown, collections of Chinese antiqu ities were interchange at Christie’s auction house for far more than their estimated pass judgment. In 2009, a 12th-century B. C. bronze vessel from the Hesperian Zhou Dynasty sold for over 14 clock its estimated cheer. These antique collectors are, in large part, Chinese or Asian. Collecting an expensive, noned antique is viewed in a similar venous blood vessel to compress a luxury good. To own an artifact at home was tantamount in immensity to that displayed by museums around the world that also housed past Chinese art collections.\r\nIn sharp contrast, during China’s Cultural Revolution from 1966 to 1976, tradition and Chinese cultural heritage was viewed negatively as roughlything boring, worthless, and divisive. record and heritage were destroyed in favor of raw coupleizing ideology. The Cultural Revolution created a cultural void, and those affected would go on to be known as the ‘lost generation’. Currently in their 50s, some membe rs of the ‘lost generation’ have attained sunrise(prenominal) riches. They partake in the purchasing of luxury goods, and a great deal lack subtlety.\r\nThey are ostentatious and inherently possess a skewed view of what is conventional or accessiblely accepted, subsequently explaining for very extravagant behavior. A few examples include the rebuilding of the Chateau de Maison Laffitte of genus Paris in a suburb of Beijing, or one soaked man’s endeavors to build an exact duplicate of the U. S. President’s White House in a rural area of Anhui province. The underlying pieceation is the Mainland Chinese desire to mimic emblems of power from westboundern culture.\r\nâ€Å"Today, the Mainland Chinese consumer’s 21st century abide by remains is comprised of lead salient parts: the handed-down Chinese value carcass persists, the collective Chinese value brass ( controlling), and the Western value system which is often regarded like a trend . ” As the West represents advanced technology, super powers and modern determine, the majority of Mainland Chinese passk to pursue these set the best they can. wherefore the pursuit of Western values can be said to have a strong influence on the Chinese consumer value system.\r\nToday, the Mainland Chinese consumer’s 21st century value system is comprised of three salient parts: the traditional Chinese value system persists, the socialist Chinese value system (dominant), and the Western value system which is often regarded like a trend. The updated Chinese socialist value system of Deng’s clean up and opening policy brings modernity, wealth, effect and succeeder, spell the Western values bring ain liberty, post-modernism, also modernity, achievement and success. Together, the Chinese consumer’s 21st century value system is a unquestionable melting pot; strong values of modernity, wealth and success are dominant.\r\nThus, the pursuit of modernity , wealth and success remains the key in explaining luxury consumer behavior in Mainland China. From this explanation of the dominant set of values within Chinese society, it is hardly surprising to examine that Mainland China’s car gross revenue in 2009 averaged 13 million, even exceeding car sales in the U. S.. Additionally, sales for German car manufacturing business Mercedes Benz went up 77%. Deng’s Open reform policy in 1978 allowed for individuals to pursue wealth by means of various means. Economic development transformed the social structure from a model that was horizontally equal to that of vertical extension and growth.\r\nNow, after three decades of inexistence from 1950 to 1980, social classes have reemerged. During the following three decades from 1980s to 2010, social wealth change magnitude by an average 10% of growth each year. The Mainland Chinese consumer saw go financial opportunity and became increasingly wealthy. Financial and life success and achievements naturally became a way for muckle to distinguish themselves from others. It became de rigueur to openly display a somebody’s individual success, and luxury goods and designer stigmatizes in effect communicated status and wealth.\r\nHowever, at the core of this new wealth and status was the honest pursuit of dampen reenforcement conditions. Better living conditions meant for higher gauge products and upscale brands. Therefore, international luxury brands perfectly fulfilled the needs of Mainland Chinese consumers from all angles †cultural, social, and economic †attributing for a more modern, powerful, and self-confident approach to life. â€Å"At the core of this new appoint wealth and status was the honest pursuit of better living conditions. Better living conditions meant for higher quality products and upscale brands.\r\n” In Mainland China, one may see a person carrying an authentic Louis Vuitton bag while riding a crowded, public bus someplace in the rural countryside. Luxury goods are consumed on a mass level, and are not confine to a select few. The central cause for an increased consumption of luxury products results from the country’s socialist value system. During the transitional period from a dainty planned system to a market-driven economy, consumers inherently contain the idea of equality. Government authorities also try to maintain and communicate that equality in Mainland China is crucial to national identity.\r\nBased on pixilated economic development and a newfound consumer boldness towards the future’s potential, Mainland Chinese consumers believe that they are, in essence, the same as each other. Even if they cannot cave in a luxury brand item today, they ordain save up several months of savings to lastly have it. It is important to note that all Chinese luxury consumers do not aim to lay down off. There is a homogenous identity and behavioral patterns that come with new we alth. However, only focusing on this collective homogenous identity, and not pay oversight on the battles would cause a marketing plan to fail.\r\nThe Mainland Chinese market is large and sophisticated plentiful to use multi-criteria methods to understanding its various crossroaded aspects, such as psychographic, geographic and demographic aspects. Psychographically, consumers are antithetical from socio-psychological and cultural attitudes towards luxury point of views. These psychographic variables segment in the market into four groups known as luxury lovers, luxury followers, luxury intellectuals and luxury laggards with three dimensions harmonise to the different psychographic aspects: collectivism-individualism, analytical-impulsive thinking, conspicuousness-functionality for luxury goods.\r\nGeographically, the regional differences in China (in terms of climates, cultural customs and languages) are vary; they are the equivalent to the collective differences found pass im Europe. China can also be dual-lane into four large regions: North, South, East and West. Cities within a given region can be elevate classified into tiered cities according to city’s level of economic development. Demographically, the factors classify naturally consumers into traditional groups.\r\nFor the purposes of this paper, the research ideal used is meaningful for correction as the income levels are controlled at ten times the national average income. This ensures luxury consumption because of the sample’s disposable income level and the easy affordability of luxury goods. Age is also controlled in the range of 25 to 45 years of age in crop to be sure that the sample belongs to members of Mainland China’s new generation, avoiding the inclusion of members from the ‘lost generation’ entirely.\r\n tout ensemble sample participants were educated at the university level and have an undergraduate degree. The psychographic segmentation of C hinese luxury consumers as luxury lovers, luxury followers, luxury intellectuals and luxury laggards cross with geographic factors to show the regional distribution difference of the four groups in various parts of the Mainland Chinese market. The results can be found in card I and Table II. Table I: Psychographic sectionalization of Chinese Luxury Consumers Table II: Chinese Luxury Consumer Segmentation Geographical Distribution in\r\nChina The segmentation proves the heterogeneity of Chinese luxury consumers although conspicuousness is dominant for luxury lovers and followers, representing 31. 2% of the total market in first tier cities. Still, conspicuousness is very macroscopic and serves as motivation specially among ‘first movers’ for purchasing new products. First movers are often pictured by the media as opinion leaders, and are they are tactfully used to influence the market. However, intellectuals and laggards focusing on functionality and individualism ar e still the main dominant groups for luxury consumers in China even in first tier cities.\r\nWhy are luxury’s main consumers still quiet and mercenary about their attitude towards luxury goods? â€Å"After the sign conception of international luxury brands in China, the distinctive feature of Mainland Chinese consumers wore off as they began to seriously abide the psychological discomfort associated with the absence of a Chinese luxury brand. ” The conservative conspicuousness is coming from the cultural and psychological contradiction: 1) the admiration of ancient China’s luxury lifestyle influences the luxury pursuit today.\r\nCurrently, luxury brands are widely available from many foreign countries, such as France, Italy, and Switzerland. After the initial introduction of international luxury brands in China, the curiosity of Mainland Chinese consumers wore off as they began to seriously confront the psychological discomfort associated with the absence o f a Chinese luxury brand. Why was there no Chinese brand capable of carrying out the essence of luxury found in ancient Chinese culture? 2) Chinese tradition encourages people to be benign and to not have an extravagant life.\r\nExercising self-control and statecraft are seen as the proper way for a person to behave in society. This virtue of self-control and discreetness is also the socially accepted norm by the Chinese socialist value system. Therefore, frugality and discreetness received two confirmations from two value systems (tradition and socialist) in comparison to modernity, wealth and achievement values, which were corroborate twice by socialist and western value systems. As a result, the internal psychological values within the 21st century value system of Mainland China are conflicted.\r\nThis conflict is reflected in the attitudes and behaviors of its consumers, especially in regard to the luxury market, and accounts for the following: an unsure attitude towards l uxury consumption and psychological racquet after purchasing. An exception is gift giving or special product categories. â€Å"The conflict of having a centralise power structure versus liberty and an receptiveness of the market creates individual wealth while control the mental synthesis of wealth and status. ” materialistic conspicuousness can also be understood by the unique socialist system within Mainland China’s market-drive economy.\r\nThe conflict of having a centralized power structure versus liberty and an openness of the market creates individual wealth while limiting the expression of wealth and status. Those consumers who are typically found in politics or a presidency related environment are said to be luxury intellectuals. In this setting, wealth should not be overtly expressed or shown off to others. Products that are discreetly designed, such as ties, scarves, business suits, or handbags without logos are most popular. Alternatively, if an indiv idual alfresco of politics consumes luxury products, it is most likely that he or she is a luxury lover or follower.\r\n(Please see Table III) Table III: The Conservative Conspicuousness of Chinese Luxury Consumers The potential for luxury industries to attain in the Mainland Chinese market is high. With steady economic development, more information on luxury goods quickly available online and offline, the increasing relevance of e-commerce, and a greater awareness for a higher quality of life, consumerism leave behind propel to the center of this dynamic market. As consumers get more savvy and sophisticated, the Mainland Chinese market will, in due time, be much more trying and complicated to operate.\r\nAbout the author capital of South Dakota Xiao LU is Assistant Professor of marketplaceing at drill of Management of Fudan University in Shanghai. He specializes in luxury consumer behavior study, luxury brand management and discriminating retailing. His theories about Chine se consumer formed the fundamental understanding for international brands towards this market and largely adopted by successful upscale brands. Before he joins Fudan University, he received his PhD in marketing from ESSEC Paris where he is visiting professor of LVMH Chair and of its Asian campus in Singapore.\r\nLu is author of â€Å"elite group China, Luxury Consumer port in China” and co-author of â€Å"Luxury China, Market Opportunities and Potentials”. He can be reached at xiaolu@fudan. edu. cn.\r\nReferences • Michel cavalier and Pierre Xiao Lu, Luxury China, Market Opportunities and Potentials, Wiley and sons, 2010 • Jacques Gernet, Le Monde Chinois, Paris: Armand Colin, 1999 • Alexandra Peers, What’s Still Recession-Proof, The Wall Street Journal, folk 24, 2009 • Pierre Xiao Lu, Elite China, Luxury Consumer Behavior in China, Wiley and Sons, 2008 • China car sales top U. S. by Gilles Guillaume, Reuters, January 11, 2010 â⠂¬Â¢Ã¢â‚¬Â¢ http://www. reuters.\r\ncom/article/idUSTRE60A1BQ20100111 • Mercedes-Benz says 2009 China sales up 77 percent, Reuters, January 11, 2010 •• http://www. reuters. com/article/idUSTRE60B0EY20100112 • Pierre Bordieux, Distinction: A brotherly Critique of the Judgment of Taste, London: Routledge, 1984 • Pierre Xiao Lu, Elite China, Luxury Consumer Behavior in China, Wiley and Sons, 2008 • Michel Chevalier and Pierre Xiao Lu, Luxury China, Market Opportunities and Potentials, Wiley and sons, 2010 • Pierre Xiao Lu and Benard Pras, profile Mass Affluent Luxury Goods Consumers in China: a Psychographic Approach, Thunderbird International Business Review, forthcoming.\r\n'