Big brands cash in on China's bling obsession
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Private jets, elite villas, vintage wines, one-of-a-kind jewelry, and glittering watches set with colored diamonds are transforming the Chinese beach resort into a luxury hot-spot.
In Sanya City, south China's Hainan Province, a four-day event, the Hainan Rende-zvous, which kicked off on April 1, is providing Chinese luxury-hungry consumers an intimate interacting with world-class showoffs from 195 companies.
Having been flirting with the idea of owning a yacht for almost two years, a businessman, surnamed Chen, flew all the way from eastern Zhejiang Province hunting for the vessel in his dream at the Hainan Rendezvous.
A yacht priced at three million yuan (458,106.2 U.S. Dollars) caught Chen's eye.
"The price is reasonable enough for me and, more importantly, I really love the design," said Chen, excited.
A window displaying a Chopard necklace with more than 3,000 diamonds was wowing the visitors with its dazzling glamour and extremely high price.
Zhang Zhiyuan, shopkeeper of the Chopard Beijing department store, said the Swiss manufacturer has shipped 200 million yuan worth of watches and jewelry from Europe for this show.
"The sales far exceeded our expectation. We have received hundreds of customers in the last two days and some items, such as sun glasses and watches, sold very well." Zhang said.
BOOMING MARKET
Gone are the days when luxury meant owning a colored TV set or dining out at a western fast food eatery such as McDonalds; Chinese consumers are now eyeing high-end luxury goods with ever more money in their once flat pockets.
China's rapid evolution from a basic emerging market to a sophisticated economic powerhouse is ready to see the country become the world's largest luxury goods market over the next decade.
CLSA Asia-Pacific Markets, majority owned by France's Credit Agricole SA, expects China to account for as much as 44 percent of global luxury sales by 2020, up from the current 15 percent.
CLSA also predicted that overall consumption in China will rise by 11 percent annually over the next five years, while sales of luxury goods will grow more than twice as quickly, by 25 percent a year.
Louis Vuitton Malletier's biggest customers were already Chinese buyers, while China represented 18 percent of sales for Gucci, 14 percent for Bulgari and 11 percent for Hermes,said CLSA.
Capturing this vast market and tapping into expanding wallets is front and center in terms of strategy for many of the world's best known luxury brands, which are rapidly ramping up in China.
Fang Shuhua, vice president of the corporate and private jet department of Airbus, told Xinhua that China has become the fastest-growing market for Airbus' corporate jet business, and orders placed by Chinese customers make up 25 percent of the world's total.
"China's corporate jet market has a promising future and we are confident of ever more sales growth in the Chinese market." Fang said.
STATUS SYMBOL
When people are celebrating social affluence as reflected by soaring luxury consumption, some caution that the Chinese people's obsession with luxury could indicate blindness and irrationality.
Zhao Zhongxiu, professor of economics at University of International Business and Economics in China, said luxury is about an artistic way of life and there is a rich cultural connotation embedded in each of the luxury brands.
"However, many Chinese consumers who are crazy about luxury actually lack an understanding of it," Zhao said.
At a dinner table in China's east city of Wenzhou, a businessman stocked up on a whole box of Lafite to treat his clients. Over dinner, the 12 bottles of wine, with each of them costing more than 10,000 yuan, were all drank in a blink of an eye.
That is not an uncommon scene in this vibrant coastal city, with many self-made millionaires who would consume the expensive wine the way others drink beer.
The Chinese nouveau riche, who are craving recognition, are simply treating the high-priced luxury products as a status symbol, said Tong Minqiang, general manager of the Hangzhou Mansion, a high-end shopping center in Hangzhou City, east China's Zhejiang Province.
"For some rich people, luxury is nothing about style or taste, it is just a way to flaunt their wealth." Tong said.
There were 1,363 billionaires in China last year, and the number of people worth at least 10 million yuan are no fewer than 875,000, the Global Times reported on Feb.18.
Meanwhile, the market for luxury has extended far beyond China's nouveau riche as ever more white-collar workers are also demonstrating a swelling enthusiasm for luxury.
Some people with meager incomes are even going out of their way to seek designs that have a unique way of burnishing their own heritage.
To white-collar worker Zou Xiaoqing, it is not unusual for her to spend one or two-months salary on a Chanel bag or a pair of Prada shoes.
"I buy those things for myself to celebrate birthdays or to reward myself for achievements at work," said Zou, "Owning those big brands can really make me feel good. I don't think it's vanity, it's just a matter of self expression."
Tong Minqiang said China is still at an immature stage of luxury consumption, as part of the sales boom is being driven by conspicuous consumption.
This stage of immaturity is to continue for the next 10 to 15 years before the Chinese people cultivate a deeper understanding of luxury goods and, hence, adopt a more rational perspective on luxury consumption, Tong added.
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