By Ma Rongji
Vanity as a disease of unhealthy consumerism.
(Ecns.cn)--This year KPMG, one of the top 4 accounting firms in the world, announced that China will soon surpass Japan to become the leading consumer of luxury products in the world. According to HSBC's forecast, it could happen as early as this year, and conservative estimates have it happening before 2015.
Not everything is as bright as it seems though, and all the acclaim may be for not. The last time China passed Japan in one aspect of the economic forum was in 2010 when China's GDP surpassed Japan to become the second largest economy in the world. Although true, that does not take into account per capita GDP, and the wealth disparity that is currently causing great social problems for China.
You do not need to be an economist to know that the Chinese love their designer products and gold jewelry. The affection for luxury goods is so prevalent that the British media has even coined a term, "the Beijing pound," which refers to Chinese people who go to England and spend insane amounts of money buying everything and anything.
The crown for luxury consumption once belonged to Europe, and then the United States and Japan before finally coming to China – the first developing nation to hold the crown. But let's not forget, luxury items have only been widely available in China for 10 years. China itself hasn't even been a market economy for 20 years. As the country jumps straight into leading the world in luxurious consumption, the race to common prosperity is still unfinished.
1995 marked the first time Forbes listed Chinese billionaires, and it became a landmark event as people in China began to flaunt their wealth as opposed to being ashamed and hiding ones riches. After China joined the WTO in 2001, foreign luxury brands had an open door to enter the Chinese market, and it has been non-stop since. On the eve of the Shanghai Expo in April 2010, on the same day two Louis Vuitton flagship stores opened in Shanghai – a first in the 150 year history of the luxury retailer.
The picture being painted slowly begins to reveal the vanity of Chinese people. Social equality and fighting for the common good are no longer the norm, but found only in chance encounters.
The mix for society is like a violent chemical reaction, with the result being an ever-widening gap between the rich and poor, corruption, and abounding social implications. Once you've had a taste of luxury though, you can never go back. Luxury items have always been synonymous with comfort, and they are now too becoming synonymous with China.
168,000 (RMB) designer bags and 100,000 (RMB) watches may look good on the surface, but when they are in the hands of a Red Cross "official" and government workers, the surface tends to become a bit bumpy.
To live a life of luxury you need to have an appetite for wealth, social status, and the lifestyle means to make it all happen. As opposed to Western countries where these three mix in an "organic way," in China a person may have wealth, but no social status. This is not normal for luxury markets across the world, and is why in China the race for luxury goods is coming with negative social effects.
At the same time though, it's not the luxury goods themselves that need to change, but the negative societal impacts stemming from the goods that need to be addressed.
