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BIZCHINA / Biz Life

A sweet tooth for luxury goods

(South China Morning Post)
Updated: 2007-07-04 11:40

"What to buy and not to buy is imbued with social meaning. Consumer goods
become a kind of social currency that is transacted in middle-class life."

For the mainland's emerging middle-class urbanites, you are what you
consume. They own their own home and car, travel abroad, and show an
unabashed preference for top brands and luxury goods.

Yang Qingshan, president of the China Brand Development and Strategy
Association, said that about 13 per cent of the mainland's population, or
170 million people, bought top-tier brands.

Ms Cai, a designer whose annual household income amounts to around
400,000 yuan, said she rarely hesitated when purchasing Debauve & Gallais
chocolates.

"I simply cannot put supermarket chocolates into my mouth any more. They
taste too sugary and awful," she said.

"Their prices are a little staggering but, hey, I can allow myself a few
hobbies and indulgences and that's what life is all about."

The mainland's newly rich are relaxed, fun-seeking and lapping up luxury
goods fast. A recent report from US investment bank Goldman Sachs found
the country is the world's third-largest consumer of luxury goods,
accounting for 12 per cent of global sales, behind Japan's 41 per cent
and 17 per cent for the US.

The report predicted that the mainland would become the world
second-largest purchaser of luxury goods by 2015, commanding 29 per cent
of such sales.

Debauve & Gallais director Bernard Poussin is one foreign investor who
says he is "totally confident" about the mainland's luxury market.

"Larger and larger social inequalities are generating a pyramidal market
structure," Mr Poussin said. "At the top, elite members of society can
afford the most expensive stuff, while the bottom ranks are anxious to
copy their way of life."

The chocolatier is so confident its pricey chocolates will get gobbled up
by rich Beijingers, even at 4,000 yuan a kilogram, that it upgraded its
World Trade Centre sales booth into a boutique the end of May, and
decided to open a second shop in Beijing's Financial Street - the
capital's answer to Wall Street - in October.

The family business, where techniques and recipes have been handed down
through the generations, has opened six overseas shops so far, and Mr
Poussin said the Beijing shops were in a key strategic position.

"China is the open door to Asian markets, our ambition is to become the
reference point," he said.

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