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Luxury Products Make Inroads

For Beijing, November is a time when a hundred brands are blossoming a hundred bright-colored luxury brands. Oriental Plaza, visited by 200,000 customers daily during weekends, opened a new arcade to showcase the world's high-end consumer items.


Just a week later, an international jewelry show is being staged, where foreign merchants are for the first time allowed to directly cut wholesale and retail deals with their Chinese counterparts. The show only changed its name to "international" in 2003.


In Shanghai, as the official Xinhua News Agency reported, the world's third largest Christian Dior center opened around the same time. Prior to its upgrading, the center was already generating 11 million yuan (US$1.3 million) in annual sales -- management hopes to increase this to over 15 million yuan (US$1.8 million).


This is not only a feature of Beijing and Shanghai; much of the mainland is being targeted, with cities bombarded by the world's most expensive brands, from fashion to jewelry to cars.


The world's fastest growing advertising industry is bringing more international brands into the daily language and lives of young urban people.


Of course, all this is not yet matched by consumer spending comparable to that in developed nations, so could China overtake one consumer power after another in the world, as it did in general trade?


Since it was a planned economy some 20 years ago, when even food items were rationed, comprehensive and consistent consumer surveys have yet to be established. Most in recent years have been conducted by the urban survey department of the National Bureau of Statistics (NBS). But these are tailored for macroeconomic decision-making and too broad to reflect much of significance to specific sectors.


A recent NBS survey shows that urban households making 200,000 yuan (US$24,096) to over 1 million yuan (US$120,000) per year make up 22 percent of the nation's entire urban population, but this doesn't necessarily reflect wealthier people's tendency to have multiple sources of income.


Chinese internet services recently quoted a Morgan Stanley analyst as saying that the actual number of individuals who can afford some luxury spending is around 1 percent of the mainland population, or around 13 million although the figure could quickly rise to 100 million.


These are just the broad figures. As for the rich people who really want to buy luxury items all the time, the number is understandably much smaller. According to Yue Zheng, a Shanghai-based consumer analyst, they number about 100,000 in Shanghai, and China's total luxury spending is about US$2 billion despite its admittedly fantastic growth.


Just like everything in China, too much change too quickly can mean a rough, if not truly dangerous, ride. Too much enthusiasm, once seen as a single-minded chase of the rich and powerful, may at times appear arrogant and distasteful.


In fact, like consumer societies everywhere in the world, there are plenty of people who don't like big companies and big brands, and good marketing that responds to the needs and wants of local cultures is always more successful in the long run.


(China Daily November 15, 2004)

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