Analysis of Chinese Luxury Market

Here is the most popular definition of luxury: Luxury, generally speaking has high income elasticity. Items with income elasticity greater than 1 can be called luxury (Samuelson; Nordhaus, 2001). But besides the financial definition, luxury also refers to a life style which can bring consumers an elegant life (Mikincey, 2013). Features of luxury include high quality, high technology, unique characteristics, special meaning of art or social science, very high price, high popularity, and great influence on fashion.

As a fast developing country, people’s life in China has been improved dramatically since 1990s, since when some of the international luxury companies began to open new sites in China and began to selling luxury to Chinese. In the recent 10 years, Chinese luxury consuming rate has been exponentially increasing and recently China has just replaced the United States of America and became the second largest luxury consuming country, and will take the place of Japan and become the largest luxury consuming country among the world soon in the future. Meanwhile, the recognition of famous brands in China has been increasing fast. Under the pressure of low economic increase in the Western counties, international luxury brands tended to focus on Chinese market and increase the popularity of luxury in China by holding exhibitions, opening online and offline stores, and some other social media events. Also, the consumer base mainly consists of young people at the age from 20 to 30 with higher education background, while in Western countries, people at age 40 to 60 are the main component of customer base (KPMG ,2008).

Based on these information, we can perform the following analysis of the Chinese luxury market. For the motivation, in order to get, or at least try to reach a higher social status, people in China would like to buy luxury as some kind of show-off. They are not buying them for their own need, but for the complement or a hold in awe from others. People seems to have a common thought that owning luxury is equivalent to having a higher social status. In order of get higher market share, luxury brand should focus on the advertisement and promotion of luxury among young people. Also, since nowadays people’s vision on luxury is still now mature, if luxury company can encourage a new and different kind of culture, standing on the frontier of new visions and new thought trends, getting rid of the pursuit of play-off and the so called “social status” but chasing some culture with profound meanings, I believe they will be successful in the future.


KPMG, 2008, Luxury lifestyle: Beyond the buzzwords

Mckinsey&Company, 2013, Luxury lifestyle: Beyond the Buzzwords

Samuelson, P. & Nordhaus, W., 2001, Microeconomics (17th ed.). McGraw-Hill.

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