A cause for concern: The world's second largest luxury consumer
China has become one of the world's largest consumers of luxury cars, and many luxury automakers are racing to grab a piece of the market share. The latest statistics show that while BMW Group's global vehicle sales decreased by 19 percent, compared with the same period last year, its sales in China increased by 26 percent, according to the Qilu Evening News.
When the financial crisis put a damper on European, American and Japanese demand for luxury brands, the Chinese market for luxury goods remained stable. At present China's consumption of luxury goods accounts for 25 percent of the global market, for the first time exceeding that of the United States, making China the second largest luxury consumer in the world.
Luxury is a product of wealth. Chinese extravagance on luxury goods has shocked even the wealthiest people in developed countries. While this may be a sign of increasing wealth in China, objectively speaking, we must admit that in this case, being ranked "world No. 2" is not something to be proud of.
Statistics from the World Luxury Association indicate that in 2007, China's luxury consumer population accounted for 13 percent of the total population, almost exactly matching China's distribution of wealth – often described as "20 percent of the population owning 80 percent of the (nation's) wealth." Thus, when we consider the Chinese luxury goods consumer, we need to also think about the tens of millions of underprivileged people in the country who consume less than US$1 per day. Moreover, the rapid growth of China's luxury goods consumption poses the possibility of a further enlarged gap between the rich and the poor. On the one hand, many worry about meeting food and clothing needs, while on the other hand many others live in excessive luxury. One cannot help but sigh at the inequality.
As we all know, insufficient domestic demand has always been a weak spot in China's economy. Ever since the financial crisis erupted last year, China has taken many measures to stimulate domestic demand. Luxury consumption, however, serves to increase the overseas market demand of developed countries, as luxury goods are in general produced by overseas enterprises. Therefore, jumping to the top of the list of luxury consumers, in my view, is not a good thing.
(China.org.cn translated by Zhou Jing, September 28, 2009)