Luxury Product In China

China will become the world’s largest luxury market by next year, accounting for 20% of total luxury consumption, according to global management and consulting firm McKinsey & Company. In 2013 China became the world’s largest art market and it drives global high-end growth in various sectors from fashion to automobiles to wines.

Chinese consumers represent the top and fastest growing country for luxury, this nation spends abroad more than three times what they spend locally on luxury goods. The price difference between luxury products sold in China and the ones sold abroad is the main reason why wealthy Chinese shop their luxury goods overseas.

Rising middle-class households have annual incomes of at least €110,000 in developed markets and

The society overall regulate what would be considered as an exclusive product. But the upper class create the desire for the goods as also how it should look like to become a willing for this class. (Heine, 2012)

Luxury product characteristics

What kind of attribute must a product have to be considered a luxury good?

K. Heine defined six characteristics that determine a luxury product.

Symbolism

Most mass-market products have the sole purpose of being functional, luxury products exceed their functionality by evoking emotions within the consumer and the symbolic meaning refers also to human values and lifestyles (Vigneron & Johnson, 2004). For that reason a luxury a brand personality was adapted to address customers. The five dimensions of this brand personality are modernity, prestige, sensuality, understatement and eccentricity. The brand stands for “the best from the best for the best”. (Heine, 2012)

Price

The brand offers products, which belong to the most expensive products of their category (Heine, 2012). For instance if you need a handbag, you can get one for 20€ at H&M, which fulfills its function of carrying your things. You could also go to Chanel and get a bag with the same functionality for

(Heine, 2012)

Chinese middle class

Over 36 years ago, in China existed three social classes: workers, peasants and intellectuals. Generally there were either poor or rich groups of people.

But everything changed in 1978, when Chinese government opened the country to the world and makes a reformation. The national leader, Deng Xiaoping with his team decided to focus on development of the country and put an end to the battle between the two income classes.

Before 1978, private businesses were strictly forbidden. Moreover anyone who was trying to survive by selling an apple for instance to the “black” market, was declared as a “capitalist” with a following punishment.

Starting from 1978 government annulled many restrictions. Since then people were able to open the businesses and hire workers. Foreign capital started to flow in the country. Small and medium sized businesses started developing very fast. The existence of the numerous new jobs created the need for a greater variety of specialists, including lawyers and accountants.

Basically, after the release of China from the old system, the country created the possibility to achieve the economic interests of a growing