Conspicuously Hidden Consumption

A lot of talk about luxury and/or middle-class consumers in China is about their conspicuous status consumption. The “I Buy, Therefore I Am” of China’s better-off…

There’s something to wonder, though.

If the middle class is the main driver of luxury consumption, and a quarter of the population, then the majority of said consumption in China seems not really so conspicuous…

For some items which are highly visible and recognizable – handbags, mobile phones, cars – brand good consumption in China is certainly noticeable. Just look at the interest in Apple’s products, for example.

The international trend towards rather more hidden, inconspicuous labels has not exactly caught on in China yet, either. – Around these (rural) parts, I often notice that when it comes to cars: They are recognizably of a brand, anyways (or so one would think). Still, quite a few cars which do not have hood ornaments anymore get them back, so that there’s one more symbol of the brand, the maker…

golden-infiniti-g37

That said, it seems that conspicuous consumption can’t be quite so pervasively conspicuous even now, or we would be seeing even more of – and maybe talking less about – it… even given the concern about the gap between rich and poor and it’s ever-greater visibility, evident in the Beijing government’s ban against ostentatious outdoor luxury advertising. (I highly recommend David Wolf’s post for a marketer’s take on that.)

One should not  forget that much of (luxury) consumption is simply concentrated in the more-developed cities, thus much more visible there.

Only because you notice a brand concentration doesn’t mean that there has to be so much of it being bought though. – Maybe it’s even the opposite, as brand stores open everywhere, malls think it brings them a special cachet… and you end up with three big Gucci stores on less than a mile of Shanghai’s Nanjing Lu. (I’m exaggerating. It was only two stores I saw there – but big ones. ;-) )

Of course, the sales numbers are the sales numbers. What’s in their background is the question, though. Assuming that high luxury good sales in China mean that all Chinese are rich is equally as wrong a conclusion as thinking that China as a developing country should have no part in modern consumer society. And only because there are examples of status consumption, it’s not a pervasive issue to be found everywhere. Thinking that you just have to come and you’ll sell is not going to do it (which is hardly my idea; I’ve heard that line many places).

It is, once again, difficult to pinpoint exactly what is happening. In this case, just why much of the middle-class’ luxury consumption is not quite so visible: to what extent is it because a part of luxury consumption are hidden “gifts” to influential people, to what extent are the economies of ernai/xiaosan (mistresses) and fuerdai (the second generation of rich people) – which appear most likely to be the people who want to flaunt their wealth – counted in there, and how much is driven by barely-middle class people trying to advance socially and economically, and thus acquire brand goods?,…

Even if you are LV, you may soon be having it difficult… as brands can also be very visible, but in all the wrong ways – as shanzhai (fakes), and with their logos appearing in the strangest places.

One thought on “Conspicuously Hidden Consumption

  1. Gerald, I think you hit it toward the end. The problem is not the ranks of middle-class with their LV bags and Hermés scarves. The real issue is China’s small but highly visible battalion of idle nouveau riche who seem to revel in flaunting their exuberant consumption and, often, their scofflaw behavior (especially when driving their expensive cars.) It is the reaction to that small group openly flouting everything for which China nominally stands, added to the illusion of pervasive wealth created by the middle class engaging in more modest “shai” behavior, (one gold Mercedes surrounded by a thousand LV-toting urbanites) that the Party fears will fan the flames of resentment.

And what's your take?