From Mao suits to Armani

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China is the perfect social laboratory in which to observe what people do when they first make money. If the rapidly surging market for luxury brands is anything to go by-in just over a decade, the Chinese have gone from zero to 10% of the $80 billion global luxury-brand market-one of the first things they do is head for the Louis Vuitton or Cartier or Zegna store. When money comes, luxury brands inevitably follow.

The reason is startling in its simplicity: In today's China, you are what you wear. While Mao tried to wipe out individual identity by garbing everyone in drab monotones, today's Chinese vigorously use luxury brands to define who they are and their place in society. In the new luxury-brand-based class system, your place is marked by the visible brands on your body. Carry a $1,000 Louis Vuitton bag, and you signal you come from a family of decent means; flaunt a $10,000 Hermes Birkin, and you are several notches higher.

The starting point is the dramatic economic rise of China. At the top, 500 "super-rich" individuals have combined wealth of $138 billion, or 6% of China's GDP, according to Hurun's China Rich List. Another 320,000 are millionaires, as per Merrill Lynch's Wealth Report. And the China Association of Branding Strategy claims 175 million people can afford luxury brands.

But making money is only one part of the equation. For social esteem, luxury brands come in with their loud logos and unmistakable sign language. They do the talking for you. That's what is behind the whole "logofication of bags" movement-instantly recognizable symbols plastered all over the bag.

With China slated to become the world's largest luxury-brand market by 2014, the opportunity for brands is unprecedented. If you are looking to tap into it, you should be asking yourself these questions: Is your brand an effective status marker? Does it instantly help show off money? Do you have a distinct "symbolic language" and are you investing in making it universally understood?

Remember, wealth, not style, is the key fashion statement in today's China.

Radha Chadha is co-author of "The cult of the luxury brand" and founder of Chadha Strategy Consulting.
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