※ Shopping King, No Shortage of Money
Once again, Chinese nouveau riche have retained the title of "Shopping King of France," according to a recent report released by Global Refund. In 2010, Chinese tourists spent a total of 650 million euros (approximately 6.13 billion yuan) on tax-free goods in France. For a time, this news caused a stir. From casual street discussions to mainstream media commentary, opinions were mixed—some praised while others criticized, with envy and resentment widespread.
Analyzing the reasons behind this phenomenon, the mainstream interpretations or analyses generally fall into three categories: first, it highlights the significant wealth gap in China, where the newly rich flaunt their accumulated wealth without hesitation, while the poor struggle increasingly to make ends meet. Second, it also demonstrates that surpassing Japan in GDP is no small feat, as China's wealthy class has countered claims of GDP inflation through their actual spending behavior. Third, they are driven by high domestic prices. A report from the Ministry of Commerce shows that in 20 categories of luxury goods such as watches, luggage, clothing, alcohol, and electronics, domestic market prices are 51% higher than in the U.S. and 72% higher than in France, due to high domestic distribution costs and tax burdens.
It is difficult to say whether these interpretations are right or wrong, but we can see that none of them answer one crucial question: why do these nouveau riche flock so eagerly toward European and American brands? Especially toward those so-called luxury brands, which they seem to have an obsessive passion for?
Recently, a global luxury market report jointly released by the renowned international consulting firm Bain & Company and the Italian Luxury Goods Producers Association showed that if the purchasing power of Chinese consumers overseas is taken into account, China has surpassed Japan to become the second-largest luxury goods consumer after the United States. Bain estimates that China will still be the fastest-growing country in sales volume this year. At constant exchange rates, its luxury sales are expected to increase by 25%, reaching 11.5 billion euros.
All of this clearly indicates that the Chinese really "don't lack money"! However, beneath this "extravagance" of Chinese consumers, we witness an embarrassing reality: on one hand, ordinary European and American brands and luxury brands are experiencing strong growth domestically and internationally, being crazily pursued by the Chinese, with buying luxury goods akin to buying carrots and cabbage; on the other hand, domestic brands are gradually being abandoned by the highest-quality premium consumer groups, who consider domestic brands not even as good as "carrots and cabbage."
※ Secrets of Luxury Brands
Most people criticize the phenomenon of Chinese traveling abroad in groups to splurge on luxury goods as a rising trend of ostentation among the second-generation rich, using it to prove "wealth and status" and highlighting irrational consumption. This criticism may appear righteous and dignified at first glance, but it is somewhat biased because we have no right to restrict anyone's free and legitimate consumption rights. If they have the money to enjoy and consume luxury goods within their means, it is their individual freedom to allocate resources as they see fit. Instead, what we should focus on is why this group of high-end, quality consumers has such immense purchasing power that flows outward? Why do they have such a preference for EU luxury brands?!
We know that European and American brands use substantial capital as their market weapon and strong brand culture as their competitive advantage, forming relatively monopolistic positions in many domestic industries. Whether it’s daily consumer goods closely related to our lives, automobiles, high-end cosmetics, fashion, jewelry, or other luxury goods sectors, European and American brands have successfully captured the most premium domestic markets.
In conclusion, the final possibility might be that they won’t get beaten or scolded.