Luxury Market in China Is Fast-Growing (and Confusing)

P.T. Black From Shanghai

By Published on .

China is in love with luxury. The obsession is hard to miss; just check out the trendy gear at Shanghai's recent Formula One Grand Prix. But like everything else in China, luxury can be confusing.

China's world of luxury is expanding quickly. Smaller global brands are entering the market, from jewel houses to boutique watchmakers. Megabrands are facing competition from idiosyncratic rivals.
P.T. Black
P.T. Black is a partner in Jigsaw International, a Shanghai boutique lifestle-research agency that looks at the direction of change in China.

This increase in the range of luxury goods is matched by their spread across the nation. Second-tier cities such as Shenyang and Chengdu are becoming luxury-shopping hubs for their regions. That means more provincials heading downtown to pick up bags for their friends. The internet is the wild card here -- a wealthy businesswoman in far-flung Yunnan is increasingly likely to look online before heading to her local LV. As one brand manager told me, "It's so difficult because China is simultaneously a developing market and a developed one -- and I never know which of these worlds the customer is walking in from."

The age of buyers is also changing. The stereotypical Chinese luxury shopper is a middle-age official who saunters in with a sack of cash and buys fistfuls of watches. But luxury shoppers are also educated, young, white-collar workers who save to splurge.

They focus on key purchases that signal they understand trends. Young people mix and match their luxury purchases, blending a European bag with local shoes and a flashy watch, possibly fake.

Hip kids are also incorporating luxury brands into casual gear. One magazine editor explained it to me: "Chinese street culture will never be like America's, because Americans see a conflict between being youthfully casual and enjoying luxury. We are more like the Japanese, who mix luxury brands in with our other styles. There's no reason why Converse can't match with Dior. "

Hipsters have their own high-end brands, such as Billionaire Boys Club, which just opened a shop in Hong Kong. Piracy has already introduced these brands to the market, and it is a challenge to persuade people to buy the real thing.

China's luxury market looks likely to keep growing in all directions. More niche brands for sophisticated urbanites. More up-to-date offerings for people in and around second-tier cities. More interest from young people, yuppies and hipsters. It's no wonder those flights from Paris and Tokyo are so crowded.
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