By  on March 22, 2005

BEIJING — The idea of newly rich Chinese consumers ready to buy goods bearing almost any name in a bid to show off their wealth may soon be out of date, according to a recent report by the Beijing office of Ogilvy & Mather.

The report offers a comprehensive look at the Chinese luxury consumer, a key element for companies trying to understand the Chinese market and plan their brand expansions.

“In 10 to 15 years time, there will be about 100 million moderately affluent Chinese consumers,” said Ogilvy researcher Edward Bell. “This is what the race into China is all about. This is why companies are coming now. It’s all about a land grab.”

The Ogilvy report studied several aspects of Chinese consumer patterns, including views and habits of China’s “ultra-premium” customers. Through their research, they were able to identify three distinct stages of Chinese luxury consumerism.

The first stage is what the report calls “Any Status” — people who use their newfound money to buy the showiest, biggest, most expensive brands they can.

“One man we interviewed went to Hong Kong last year,” Bell said. “He couldn’t speak or read English, but he had [about $3,500] in his pocket to buy the most expensive phone he could buy.” He said people in this stage “are using money as a way to distinguish themselves.”

Though the vast majority of China’s new wealthy are still in stage one, researchers were able to clearly identify a second stage, which they called the “My Status” group.

“These people want to buy a premium brand, but they won’t buy just anything,” Bell said. “They want something that they feel represents them. We heard them saying things like ‘I don’t like other people wearing the same thing that I am.’”

The third consumer stage was called “My Experience,” made up of a highly sophisticated consumer group mainly of Chinese who had lived abroad and had a significant amount of exposure to luxury brands.

“These consumers are looking for details in their purchases,” Bell said. “They want to know the history, the background, the context of brands. It’s not all about the brand name. It’s about history and authenticity.”These findings might start changing the way some foreign companies are approaching the China market, Bell said.

“It’s really challenged the notion that to reach the new rich in China, you only have to talk about status. Clearly, you’ve also got to talk about experience as well,” he said. “There is an evolution to buying in China. If you’re going after luxury goods consumers in China, you just can’t mirror the desires of that first type of customer. Because now we can see that they’re aspiring to something else.”

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