Fear of a Chinese Luxury Consumer Market

One of the biggest financial news stories right now is China’s economic boom and the rise of the Chinese luxury consumer.

In 2011, the international accountancy firm Ernst & Young reported that China was the world’s biggest IPO market. This was due in large part to the Hong Kong Stock Exchange, which raised more than US$50 billion. That’s up 162% from 2009. Compare that to the far weaker U.S. and U.K. IPO markets (US$40 billion and US$12 billion, respectively) which are still struggling to recover from, in the U.S., a sporadic market and decelerating growth and, in the U.K., an ongoing debt crisis in the Eurozone.  It’s no wonder, then, that luxury fashion companies Prada, Salvatore Ferragamo, Jimmy Choo, and Coach have all opted to launch their IPOs in the Hong Kong Stock Exchange or that a broad range of companies across the fashion spectrum from Gucci, Louis Vuitton, Burberry, Hermes, and Hugo Boss to the Gap and Levi’s have been opening hundreds of stores across China since 2009. The Gap’s plan to close over 150 stores in the U.S. by 2013 while tripling the number of their stores in China is a telling account of these times.  And if we needed any more evidence of the significance of the Chinese fashion consumer (who Ralph Lauren COO Roger Farah calls “the world’s most important luxury customers”), consider that some European and American brands have begun creating exclusive lines “infused,” as the Los Angeles Times recently put it, “with Asian sensibilities in look, feel and size.”  For Prada’s first-ever runway show in China, for example, Muccia Prada recreated her cotton dresses with radzmire silk and a liberal amount of sequins—WWD describes them as being “coated” in sequins.  Further strengthening China’s position in the luxury market is the steady, albeit slow, expansion of e-commerce in China (expected to exceed US$3.1 billion over the next two years).

While China remains a poor country with an average annual per capita consumption of US$2,500 (the U.S. per capita average is US$30,000), China’s rising number of millionaires (1.1 million)  and the Internet-enabled diffusion of Western fashion consumer culture are quickly transforming this communist nation into what The New York Times has called “The Shoppers’ Republic of China.” Today, young Chinese mostly between 20 and 30 years old are buying luxury fashion and micro-blogging about it on Sina Weibo (China’s version of Twitter) where fashion tips are one of the most popular trending topics. To be sure, Chinese luxury consumers are not all moneyed. Many, like 22 year-old Lu Jing who earns $943 per month at her advertising job, live on instant noodles and public transportation for months in order to save for a $3200 Louis Vuitton handbag. Nonetheless, we’re witnessing a remarkable historical shift in China’s relationship to global fashion. Once “the world’s factory,” in Asian American fashion scholar Thuy Linh N. Tu’s words, China is now poised to be the world’s mall.

China may be saving the Western fashion industry but not everyone is especially gracious about this prospect. In a Style Council discussion in the current issue of Bon Magazine, fashion consultant and stylist for Charles Anastase Valentine Fillol-Cordier is especially prickly about Chinese luxury consumers: “you can’t pretend to have lots of taste if you’re simply buying all that shit and spending tons of money.”  A fashion journalist from the Forbes website is just as condemnatory. “Conspicuous consumption [is] left to the cash-rich Chinese and their penchant for Chanel.” Robert Bergman, president of Bergman Associates luxury branding and advertising company adds, “it’s no longer fashionable to make sure everyone knows what brand you carry or wear from meters away.”  Similarly unfavorable portrayals of the Chinese luxury consumer as having more money than taste are increasingly commonplace in fashion media.

Conspicuous consumption—a style of consuming highly visible status objects—is neither exclusive to China nor fully explains the motivations of Chinese luxury consumers. Studies conducted by public relations firm Ruder Finn Asia and the market research institution Albatross Global Solutions found that for most Chinese luxury consumers “‘self-oriented triggers’ such as pampering themselves” is the primary reason for their purchases. In other words, Chinese consumers’ reason for shopping is an all-American one: retail therapy. So why are Chinese luxury consumers being singled out in the fashion media—a backlash that’s especially odd in light of the significance of China’s new role in the global fashion economy?

The seeming paradox between the fantasy and fear of the Chinese luxury consumer is understandable when we consider the social function of taste judgments. According to the French sociologist Pierre Bourdieu, judgments of taste legitimate social differences between and within social classes. Representations of the tacky Chinese luxury consumer serve to differentiate them from non-Chinese luxury fashion consumers. Criticisms of Chinese tastes (“it’s no longer fashionable to make sure everyone knows what brand you carry or wear from meters away”) and consumer behaviors (“simply buying all that shit”) suggest that Chinese luxury consumers are poseurs who are neither genuinely fashionable nor genuinely of the elite class (“cash-rich”). The association of Chinese with fakeness is not new in fashion. Images of Chinese manufacturers and street merchants selling fake merchandise are well established in the fashion imaginary despite the fact that American manufacturers like ABS Allen Schwartz and Faviana (the company promises to dress its customers “like a star”) and UK retailers like ASOS (an acronym for “As Seen On Screen”) are some of the biggest purveyors of designer copies. That fakeness is linked to Chinese retailers, manufacturers, and consumers (even those buying actual luxury goods!) and not their American and British counterparts suggests that “fake” attacks are not only tinged with classism but also racism.

The image of the tacky (and thus, fake) Chinese luxury consumer helps to contain historical fears in the West about Asian economic power. Attitudes towards China’s growing economic power and cultural influence echoes those directed at Japan not too long ago. In the 1980s, as Japan’s GDP soared and Japanese investors began acquiring highly visible and iconic American companies like Sony’s purchase of CBS and Columbia Pictures Entertainment—a kind of industrial level conspicuous consumption—many Americans viewed Japan as a predatory economy that engaged in unfair and, according to some, supernatural trading practices. Economists have shown that fears about the “Japanese invasion,” as it was portrayed in the media, were overblown. Japan’s actual economic power and practices in the 1980s were not unique in relation to other European nations. Between 1988 and 1990, there were more than 30 foreign investment mega-deals (in the US$750 million range) that involved non-Japanese companies. These deals included the takeover of Pillsbury and Burger King (both quintessential American companies) by England’s Grand Metropolitan, PLC.

While the West’s attitudes towards Japan’s rising economic power in the 1980s and its attitudes about China’s economic power in the 2000s are similar particularly in the ways that both are rooted in anxieties about the changing global and racial balance of power, there are key differences. Japan is a parliamentary democracy that openly embraces U.S. capitalist principles. China, on the other hand, is a communist country. While Japan’s economic success reaffirms the foundational principles of American style free-market capitalism, the success of China’s state-controlled capitalism contradicts them. Further, unlike Japan in the 1980s, China is not popularly perceived as financially bleeding the West; to the contrary, Western economies need China.

And this, along with the shifting racial etiquette of a post-racist age, helps to explain the last difference I want to note between the popular perception of Japan’s economic growth and China’s. Whereas Western anxiety about Japan’s economic growth and industrial development were articulated in explicit racial terms (U.S. Representative John Dingell of Michigan, a Democrat, referred to Japanese as “those little yellow people”), anxieties about China’s economic power are expressed in the non-racial language of conspicuous consumption. The tacky Chinese consumer stereotype shifts racial signification away from the body to fashion objects and behaviors. This isn’t to say that discourses about conspicuous consumption aren’t racialized. The historical associations of African Americans, Latinos, and now Asians with conspicuous consumption (“bling”) demonstrate the racial dimensions of these kinds of taste judgments. But the tacky Chinese luxury consumer stereotype is a form of coded racial discourse that articulates fakeness with racially marked bodies. At the same time, this stereotype reaffirms the whiteness of the ideal fashion subject. Or to translate into fashion code, in Bergman’s words: “The face of luxury is […] much more subtle, understated and less ostentatious.”

** This is the fuller version of the essay published in American Prospect last month.