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July 28, 2014

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New trend: luxury buying cloaked in moral virtue

LUXURY in China is no longer simply about possession, status or exclusivity. Rather, it is about what the consumer stands for.

Once upon a time, everyone wanted to own a Hugo Boss product. Then it was Rolex, Burberry, LV and the list goes on. Today, China’s shopping malls are saturated with luxury brands, and luxury consumption has become commonplace. As a result, luxury can no longer be defined simply by exclusivity. Consumers are demanding an innovative, new approach.

Luxury in China today is increasingly about the ability to mix styles and blend collections, and to fashion personalized statements. In the future, personal statements will be increasingly understated.

Less will be more. We are already seeing luxury brands downplay the iconography that made them successful, with discreet patterns and smaller logos. The success of independent luxury brands and handcrafted products are further evidence that consumers want luxury to return to what it was always supposed to be: niche and special.

Luxury has become as much about the person as the brand. The hotel industry has discovered luxury as experience — the journey as much as the destination. The same will be true of the automotive sector, which will become less about the car than the drive.

Of course, consumers have always taken great pains to deflect any suggestion of ostentation by claiming that this form of consumption was appropriate or even necessary for their position or title. Their need has been to avoid being judged as crass, uncultured, venal or corrupt, yet within these parameters, ostentation has been proudly on display. Yet, as soon as ostentation ceases to be a taboo, it also ceases to be desirable.

Luxury in China today, is increasingly about vision. It is not about seeing so much as being seen to see. The explosive rise in high-end camera purchases and photography is a case in point. The apparatus functions primarily to frame subjectivity.

Details are another case in point. The demise of the luxury overstatement is paralleled by a new appreciation for intricate design and striking, artistic simplicity. In luxury autos, consumers now find perfect stitching and bodywork lines as appealing as big engines and oversized chassis.

One of the most popular terms to emerge in the mainstream during 2013 was tuhao. The word comprises two characters: one meaning “soil or earth;” the other meaning “grandeur.”  The term has become a parody for fusions of rustic roots with crass ambition and gaudy expression.

The Chinese have always had derogatory terms for the rich and unsophisticated. Tuhao evinces a new capacity for Chinese to laugh at themselves.

For consumers in China’s higher-tier cities, tuhao represents a tongue-in-cheek satire of China’s breakneck pursuit of material affluence in the get-rich-quick era. It also heralds a future where face-driven materialism will be less obviously paramount in consumption.

Related trends can be seen in volunteerism, charity and philanthropy, and in corporate social responsibility and environmentalism.

Here are three things brands can do to stake a claim in this evolving, complex future for luxury in China.

Give it a story

In the future, meaningfulness will matter more than the size of the statement. Consumers will crave a story to ground their personal appreciation of a brand. This means that authenticity, heritage, provenance and uniqueness will be absolutely key. Brands must find ways to bring consumers into the brand narrative.

Digital forums are amongst the most obvious channels, but it could equally be about group memberships and shared activities around the brand. In Beijing, we find consumers who have set up a BMW drivers’ association. Membership isn’t just about VIP ownership but about car sharing and weekend drives to Inner Mongolia.

The group visits orphanages and retirement houses, and even drove to the earthquake site in Sichuan to visit victims who are still rebuilding their lives. The association isn’t about BMW as we know it. Consumers have written themselves and their ideals into the brand and fashioned the brand meaning anew.

Give it an ethos

In the future, luxury will say more about what you do with your money than how much you have. The difference between “big” and “great” is one of social and moral ideals. Ethics are back in vogue in China in a way that plays well with the state’s current crackdown on excessive gifting and banqueting.

Luxury brands can stay ahead of these evolving consumer sensibilities by emphasizing morality and sacrifice as much as elitism. Brands that can weave an ethical story into their product stand to be particularly successful. Give consumers a chance to do good when making luxury purchases and sales should rocket. A purchase becomes legitimate due to its contribution to society.

Make it Chinese

Consumers overwhelmingly seem to believe luxury is European in origin and have very specific ideas about luxury provenance: Switzerland for watches, Germany for cars, Italy for shoes. However, in the future, China will not necessarily think of its own products and designs as cheap or inferior. Chinese pride has become a factor in luxury consumption, and consumers of the future will appreciate overseas players who find ways to pay homage to Chinese cultural status. Shanghai Tang is a great example of a luxury brand that has harnessed traditional Chinese aesthetics to forge a delicate balance between the mythical past and the globalized future.

In the final analysis, Chinese consumers’ expectations of luxury are evolving. Luxury was rooted in the rigid structure of power in the Confucian family, in anxieties about China’s role in the world during the “open door” era, and in the status-seeking behavior that new money brings. Now the concept of luxury is expanding to include more “spiritual” pursuits.

Possession, display and covetousness increasingly appear vulgar and common. Luxury market watchers can expect to see the main areas of growth come in high-end, experience-oriented products that offer greater scope for personal choice and expression and that give consumers the opportunity to pursue higher moral virtues.


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