The X factor in China’s burgeoning luxury consumption is the country’s one-child generation — a group of people who tend to be highly individualistic and perceive luxury goods as a way to set themselves apart.
The population policy, in place in China’s cities for 30 years, has created a value system among these millions of only-children that is “more self-indulgent and self-interested” than the more communal ways of their predecessors, said Patti Pao, president and founder of strategic consultant Pao Principle and author of a new “China Luxury Panel” report.
“The one-child generation will have a huge influence,” said Pao, who was born in the U.S. after her parents fled Mainland China for Taiwan when the communists took power in 1949. Theirs is often a sensibility inclined to “bring on the Balenciaga, bring on the Yves Saint Laurent,” she added, in contrast to the rising tide of young adults globally who are clamoring for the fast-fashion, designer one-offs of stores such as H&M and Zara, and the cheap chic of players like Uniqlo.
Young adults reared by mothers and fathers who were “prodigious savers,” the urban Chinese in their 20s and 30s are receiving some funds from their parents — cash flow that is propelling luxury spending, said Michael Silverstein, a senior partner and managing director at The Boston Consulting Group, who visited Beijing and Shanghai in the summer. “The vast majority of luxury goods [in China], around 75 percent, are purchased by people under 40,” he said. “This is a young movement.”
This youthful appetite is not lost on the world’s major luxury brands, pioneers in China such as Louis Vuitton, Lanvin, Hermès, Gucci, Chanel, Prada, Cartier and Tiffany & Co. “The desire to differentiate among ‘one-childs’ will spur new merchandising and marketing efforts,” Pao forecast. “Much of the luxury [consumption] flow goes to Hong Kong, now,” rather than to the Mainland.
Roughly 300 million affluent and wealthy Chinese — including many of the 37.9 million in this cohort born since 1979 — are considered the most likely consumers of luxury in a population of 1.35 billion. The majority of this group is between 20 and 40 years old, while their counterparts in the U.S., Japan and Europe are mainly people acquiring luxuries much later in life, ages 40 to 70.
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