In 2008, Patti Waldmier of the Financial Times referred to a McKinsey survey that said, “Chinese consumers are becoming more price conscious, less brand-loyal and generally harder to please.” Oh, how times have changed.
A recent Harris Poll found that, compared to eight other developed and developing countries, Chinese shoppers love shopping the most and are second to India when asked if luxury brands are important. This beats out the US, known for its consumer addiction and endless credit card debt, where only one-third of respondents said they enjoyed shopping. Somehow the Chinese, with an average income of about $4,000, love shopping so much they even managed to become Louis Vuitton’s number one customer. Holy crap.
Though you could easily walk down Shanghai’s East Nanjing Road or Beijing’s Wangfujing district and find any luxury handbag from Chanel to Hermès or brand clothing from Armani to Zara, the Chinese don’t stop there. Bloomberg Businessweek reports that more and more Chinese tourists are headed to Europe not only for the thrill of shopping like the rich and famous, but because traveling to Europe for luxury brands is cheaper than buying at home with a Chinese tariff, though this may change soon.
From Business Week:
“For mainland visitors, lower prices and bigger selection are the main draw of buying Chanel in Paris vs. Shanghai…Chanel Jumbo handbag, or bao bao in Chinese…costs more than $4,700 in China, while the Hermès Kelly…has a ticket of about $8,800. In Paris, the same bags are priced at $3,900 and $6,500, respectively.”
It’s pretty astounding how quickly the Chinese consumers have latched onto the hypnotizing magic of upscale brands, and the trend seems unremitting. But let’s take this news with a grain of salt. The shifu driving you home from the bar is probably not buying his wife a Coach purse for New Year’s, nor is a restaurant fuwuyuan spending her weekend shopping at Versace. We believe that these luxury purchases are being made by a minority of Chinese people that can afford to show off their wealth—see 20 year-old brat from last week.
Riding on the eve of the CCP’s 90th birthday, we wonder if the generation of revolutionaries ever hoped for a day when Italian and French brands paved the streets of Shanghai and where people were willing to spend a third of their income on a purse.
By Fotini Gan
Image from Live Trading News.