70% for gifts?
Figures like these beg the question as to what exactly a country where average disposable income remains a mere 2000 Renminbi (about $309 USD) a month is doing with all this Gucci and Louis Vuitton. Answers, of course, vary.
One industry professional, who asked that her name be kept confidential, estimated that nearly 70% of Chinese mainland purchases are purchased as gifts and that the majority of these purchases are meant for male recipients, noting that the Chinese luxury market is now heavily tilted towards the male consumer.
Another Shanghai-based saleswoman named Lily noted that many of China's luxury goods outlets keep money counting and sorting machines on their premises due to the volume of paper currency that flows through their doors on a daily basis, stating that "We always have customers coming through here that carry large quantities of cash for their purchases."
Although some industry professionals have attributed this affinity for cash to the hectic lifestyles of China's business executives, who may not have time to deposit their cash in a bank before they spend it, others seem to think this may not be their only motive. The above-mentioned industry professional, for example, suggested that cash is used because "If you use a credit card, you leave a record. This just doesn’t meet the requirements for [a] 'safe' [gift]."
Additionally, another executive at the Richmond Group's Dunhill Asia branch admits to having dispelled a customer's concerns by advising them that "Dunhill [brand products] are a safe gift. They are extremely well-known, costly, and high-class."
Taken together, all this suggests that in a society where "gifts" given to key individuals are commonly used to smooth out large business transactions, the role played by the gifting of luxury goods likely exceeds their mere practical value.
The basic equipment of the rich
However, gift giving is not the only role played by luxury goods within China. Others argue that luxury goods have become a new symbol of social status ("the basic equipment of the rich," in the words of one Beijing resident). They suggest that, as China becomes wealthier, more and more Chinese people are looking to luxury goods to distinguish themselves as members of China's wealthier classes.
For example, Ouyan Kun, the World Luxury Association's Chief China Representative, notes that, "Name brands have come to constitute a complete societal marking system. Asian people use their clothing to redefine their identity and redraw the dividing lines of social class."
Similarly, marketing and consumer research experts Raha Kazakhstan and Paul Husband suggest that enthusiasm for luxury brands in China has developed into a sort of "brand fetishism," as consumers use luxury goods to demonstrate their social status. As Husband notes, "People no longer have to worry about their family background and origin. Rather, if you can make enough money, you can improve your place in society and win the esteem of others...Gucci bags are not merely a women's fashion and Armani suits and Rolex watches are not only the equipment of the rich and famous. They represent a whole new type of social class."
