Can China Produce its Own Luxury Brand?

5 Apr

Can China Produce its Own Luxury Brand?

            Given that Chinese consumers are now the largest luxury consumption group in the world, accounting for a quarter of consumption worldwide, surpassing Japan, it is interesting to consider the potential for the growing market to produce its own domestic luxury brands. Amongst the factors to consider include what it means to produce a luxury brand, and it is crucial to understand China’s culture as well as what drives such purchases by luxury hungry middle class consumers. After all, whether the production of a homegrown luxury brand would succeed in the market depends very much on the response from consumers.

The attention garnered from the first lady wearing a black coat by a local designer due to its contrast from Chinese consumers’ fixation with luxury brands, most notably foreign luxury brands, was just the tint of the iceberg of twenty-first century leisure consumption in China. The idea of a “Made in China” luxury brand should not be seen as entirely novel, looking at how brands such as Mary Ching, Shang Xia and Ue Leather have emerged, aspiring to not only combat the counterfeit stigma, but also expand overseas. Infusing Chinese elements, Chinese luxury brands do stand to have their own unique selling point. With plans to expand in Paris and currently having 35% non-Chinese customers, Shang Xia has the potential for success, representing the rise of high-end brands. However notably, Chinese brands that have met with commercial success like Shang Xia and Shanghai Tang, have been Hermes-backed and Richemont-owned respectively. Without the support by major international partners, market resistance has been the result of public perception and the Chinese Leisure consumer mentality.

With an increase in minimum wages and raised value of the RMB, China has stepped up from being the world’s factory. Optimistically, “Made in China” means something different now than it did 10 years ago. South China in particular is no longer the mass-produced low-cost center. However it has been proven difficult to shake off the old stigma. Due to the country being infamous for counterfeit goods, there remains the general consensus that only cheap, substandard, immitations are to be found. The alarming need to combat counterfeit culture can be derived from discriminatory decisions made by foreign brands such as Vera Wang and Dolce & Gabbana in the past to protect copyright concerns. Hence, the shift from prioritizing quantity to quality needs to be projected from the brand’s image for it to be recognized by the public. Historically, China boasted quality and craftsmanship, rare, high-quality silk, ceramic, porcelain and cashmere, attracting Western merchants. Europe currently dominates as the home of luxury brands but perhaps Chinese Luxury Brands are on their way to restoring old imperial ways in a modern context.

The rising number of Chinese fashion designers demonstrates that the country is not scarce of innovative collections, rather short of influential branding and met with resistance in the market. Status lies behind the psychology of a Chinese consumer and luxury brands from Europe and the U.S. have been positioned in one’s mind. For China to cultivate its own luxury brands, it needs to usher its way into the Chinese mentality, before paving way for international acceptance. Being a Chinese brand should in fact establish a privileged relationship between its Chinese consumers as understanding its cultural background should enable a greater connection. Furthermore, Chinese consumers are high influential, having been forecasted to eventually constitute half of the global luxury market.

Arguably, the view of Chinese society primarily stems from having been repressed in the past, therefore now associating the allure and the glamour of owning world-renowned French and Italian products, to define their economic rise. It shapes the image of themselves that they wish to portray. The motivation behind Chinese consumers for purchasing luxury goods can be found to be rooted in relatively complex Confucian values, lying at the core of influencing consumer behaviour, which in turn manifests consumer behaviour of today’s leisure class. Beneath this socio-economic matter lies the demand of “collective consciousness”, social recognition and glory. Consequently, there is a greater focus on the labels than on the products. Perhaps this attributed to the cause as to why Valextra, despite being an Italian label worshiped by style connoisseurs, did poorly in Hong Kong. Since ancient times when people strived to be selected as scholar-bureaucrats through a series of state-organized examinations, Chinese society has stressed on the importance of respect to elevate them socially. Conspicuous consumption has yielded quick results. In addition, within a family-orientated society, luxury has a way of negating the need for being of privileged family heritage, taking an immediate effect in propelling one’s society effect.

In contrast to the west where luxury brands operate solely on a horizontal dimension, the Chinese market operates on both horizontal and vertical dimensions. While the former places an emphasis on unique personal style in improving yourself, spenders on a vertical dimension use it as a means of demonstrating knowledge, values, culture and virtue. Thousands of years of rigid society have affected the mindset of Chinese citizens, with people acknowledging the difference of low and high.

Nevertheless, looking at these complex Chinese behaviours and aspirations, it would perhaps be overly simplistic and presumptuous to assume that everyone is solely seeking status and society’s approval. Some consumers have established that they are wealthy and affluent, having bought many branded products and are now branching out to local brands. There is an interesting level of curiosity as consumers approach the next stage of sophistication – individualism. Going away from mass luxury brands in an attempt to express originality creates room for local luxury brands to captivate interest.

It can be construed that branding remains a fundamental vehicle for success against the challenges, namely public perception of China as the home of counterfeit goods and the psychology behind Chinese leisure consumers, to form China’s own global brand. The A.T. Kearney Luxury Compass which was designed to access a brand’s potential to become truly luxury, takes into account internal factors such as how the company creates its products, long-term vision and strategy, and well known savoir faire and craftsmanship, as well as external factors like a specialized selling approach to VIP clients, iconic products and style and a truly exclusive assortment.

Since embracing globalization, the Chinese have started to develop some brand awareness. With its accelerated economy, China has the potential to thrive in building its own luxury brand industry but it would take time for it to project the image it wants in the eyes of domestic and global consumers alike.


[1] Chinese make 25% of world’s luxury buys: http://money.cnn.com/2012/09/06/news/economy/china-luxury/index.html

[2] Global Luxury Brands cash in on more Chinese mainland travelers: http://edition.cnn.com/2013/01/22/business/mainland-chinese-travelers-luxury-brands

[3] China’s First Lady wears black trench coat, everyone goes nuts for black trench coats: http://jezebel.com/5992285/chinese-first-lady-peng-liyuan-wears-a-black-trench-coat-everyone-goes-nuts-for-black-trench-coats

[4] Foreign Brands struggle to trust consumers due to China’s counterfeit culture: http://www.ibtimes.com/foreign-brands-struggle-trust-consumers-due-chinas-counterfeit-culture-1161623

[5] What do wealthy Chinese women want?: http://www.cnbc.com/id/49447069

[6] Elite China: Luxury Consumer Behavior in China by Pierre Xiao Lu (John Wiley & Sons (Asia) Pte,Ltd.) (2008)

[8] The rise of Chinese luxury brands: http://www.youtube.com/watch?v=JFb4AIV3OiE

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