“The face of the Chinese economy has changed over the past 40 years. The face of the Chinese economy is younger, much younger. In fact, if you look at China’s top five cities, the GDP has reached such a level that the top five cities in China are equivalent to well-developed European countries’ economies,” said Wu.
Wu went on to discuss why he believes that this is an excellent period for luxury retailers in China. “Mr. Xi [Jinping, China’s president] made it very clear that the Chinese government’s objective is about people’s ‘better life.’ ‘Good life.’ Better translated, it is actually ‘beautiful and good life,’ and I think we are very lucky, as an industry, we are actually in for the same objective. We want to have people live a beautiful life. I think we are very much in line with the Chinese government’s objective, so we are in a very, very good period of development,” said Wu.
WWD’s Global Fashion and Beauty Forum was cohosted by SKP, one of China’s leading department store brands, and held in Xi’an, where the Chinese company recently opened a new luxury shopping mall. Wu noted how placing this luxury shopping center in the middle of the country, away from the bright lights of the urban east coast, was no accident. “If you look at the Chinese government’s objectives, the plan of development, there is a new, very clear roadmap for China to develop urban centers in clusters. You know that China’s high-speed rail is already developed to a point that more than 60 percent of the whole country’s cities are covered. In a few years’ time, it will be more than 80 [percent]. As you probably have read, China will be extending its high-speed rail coverage internationally.
“It’s changing the landscape that our industry is looking at because we know that retail is all about population density and the clustering of population. Urban development has a tremendous amount of relevance for what our industry will face, positively, in the coming future,” said Wu.
Wu broke down the 40 years of rapid development in China since it transitioned into a market-based economy into three phases. The elderly led first phase from 1979 to the end of the Eighties, steered by Deng Xiaoping’s trusted advisers, and then the youth-charged second phase in the Nineties, spearheaded by younger people who were more willing to take risks and gamble with their luck. Wu classifies the third phase, ongoing since 2010, as middle-aged wisdom. “This middle-aged wisdom is unprecedented because China went through a lot of revolutions. We have been developing peacefully only in the last 40 years.”
He also highlighted that China is a youth-driven market led by early adopters of new technologies. Young Chinese consumers are dominating consumption in the country. They are well-educated, many having been abroad to study and choosing to return home. They are a generation who have also grown up in a period of stability, unlike many generations before them. “This is a generation for the first time, and unprecedented probably in China, but maybe unlikely to happen in other countries, because the parents’ generation doesn’t know better, they are reverse mentoring their parents. Telling their parents what to buy and their parents agree, surrender and basically admit that they know no better.”
“This is a country with 5,000 years of history but China is younger than ever,” said Wu.