The
arrival of London fashion week has got me thinking about the market for luxury.
However I’m not so much interested in our own appetite for fine things, but
what’s going on over in China. 

The
financial press is currently buzzing with China’s luxury brand boom. It’s all
about cars and clothes. Before I started at W+K I took a short break between
jobs and travelled all across the country. Even in Beijing, sometimes
considered Shanghai’s dowdier older sister, it feels like 8 in every 10 cars is
either a BMW or an Audi.  The cars are
big, with black-glossed paintwork and blacked-out windows. The shopping malls
are big too. However unlike our Bluewater or Milton Keynes, they are blatantly
luxury. They are meccas to Jimmy Choo, Louis Vuitton and Chanel. It’s a harsh
juxtaposition against the more impoverished architectural landscape.

Whereas
in the UK we’d like to think we’re still being quite conservative with our
recession-bound pounds, in China those who can flaunt it do flaunt it. So much
so that the government has banned OOH, radio and television luxury advertising
in China, fearful of the political implications of an incredibly wealthy upper
class. They have stepped in on how people spend their money. The Beijing Administration for Industry and Commerce demanded brands
remove loaded aspirational words, like "luxury", "royal",
"supreme" and "high class" from their billboard
advertising. It seems extreme, and so is the wealth gap. Those working in
cities earn on average three times as much as those in the country. 

[A
prediction chart for China’s growth]

However
the restrictions do not seem to have hindered advertising’s overall
opportunity. In fact the first installment of the ban, OOH in 2011, was one of
luxury’s most successful years. Interestingly print is still powerful in China.
Where it may be slipping into decline in the US and Europe, Elle magazine tends
to be three times thicker in China and stuffed with luxury ads. Print caters to
the older cheque book generation, but brands are also increasingly innovative
on digital media. This article
perfectly demonstrates the younger generations consumption of luxury on mobile.
This young audience is not to be underestimated. A recent
survey by the World
Luxury Association found that China’s luxury good buyers are 25 years
younger than their U.S. counterparts, with an average age of 25 to 28.  Money is handed down in families: “Many Chinese white-collar workers in
recent generations did not get the chance to enjoy life during the hard work of
establishing their careers in a growing country. After they became successful,
they made up for lost time with their children, offering them the best material
life.”
A booming economy has also bolstered these twenty-somethings
with careers that can bring them wealth and a better education on how to invest
it. Brands
have in turn recognised how to talk to the rich kids and are taking full
advantage of online video, photographic and social content.

It’s
working. The brands are growing. This year Burberry has apparently experienced “double-digit
growth in the three months to June in Asia Pacific” and is set to open two new stores. In his article "Riding the Tiger of
Luxury" Cartier’s CEO Bernard Fornas sums up
China’s future: ‘the potential in China is so important…the tank is so big.
There are so many cities where we have not scratched the potential yet’. Essentially
it’s not just a big three scenario: Beijing, Shanghai and Hong Kong. China has
lots of big commercial cities with vast populations waking up to the desire for
luxury. On my own China trip I was struck by just how glamorous commuters were
on the subway and even when out of town, women were wearing metallic platforms
to climb a hill up to the Leshan Buddha. 

Luxury
is becoming an ingrained part of culture. Brands are also piggy backing and
directly influencing trends.  The facial
expression emoticon below is thought to be linked to Celine’s iconic handbag. 

So
long as the high-income top end of the population can continue to afford it,
the desire for
luxury shows no signs of slowing up. You have to work hard for your wealth in
China and those that get there wear their rewards with pride. The government’s
attempts at intervention seem to be largely inconsequential. It has only forced
advertisers to be more innovative and tightly targeted with their
communications. 

[Thoughts from Planning newbie Alexa]