6 academic references summary

theyoungluxuryconsumersinchina.pdf

Home >English homework help >Article writing homework help >6 academic references summary

Young Consumers The young luxury consumers in China Joann Ngai, Erin Cho,

Article information: To cite this document: Joann Ngai, Erin Cho, (2012) "The young luxury consumers in China", Young Consumers, Vol. 13 Issue: 3, pp.255-266, https:// doi.org/10.1108/17473611211261656 Permanent link to this document: https://doi.org/10.1108/17473611211261656

Downloaded on: 12 May 2018, At: 08:38 (PT) References: this document contains references to 36 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 9090 times since 2012*

Users who downloaded this article also downloaded: (2015),"Luxury fashion consumption and Generation Y consumers: Self, brand consciousness, and consumption motivations", Journal of Fashion Marketing and Management: An International Journal, Vol. 19 Iss 1 pp. 22-40 <a href="https://doi.org/10.1108/ JFMM-08-2013-0096">https://doi.org/10.1108/JFMM-08-2013-0096</a> (2011),"Antecedents of luxury brand purchase intention", Journal of Product & Brand Management, Vol. 20 Iss 6 pp. 457-467 <a href="https://doi.org/10.1108/10610421111166603">https://doi.org/10.1108/10610421111166603</a>

Access to this document was granted through an Emerald subscription provided by emerald-srm:460631 []

For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/ authors for more information.

About Emerald www.emeraldinsight.com Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.

Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.

*Related content and download information correct at time of download.

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

https://doi.org/10.1108/17473611211261656

The young luxury consumers in China

Joann Ngai and Erin Cho

Abstract

Purpose – The luxury market in China has grown significantly in recent years. One unique characteristic of luxury consumers in China is their youth. While exploratory in nature, this study aims to identify and offer a meaningful understanding of different segments of young luxury consumers in China.

Design/methodology/approach – The data were obtained from personal interviews with 28 respondents between 20 and 25 years of age who were recruited via a mall-interception method in three different high-end department stores in Shanghai, China.

Findings – Based on key values, motivations, and behavior patterns toward luxury consumption, the authors identify four distinct segments of young luxury consumers: the overseas pack; the self-established cool; the luxury followers; and the spirituals.

Research limitations/implications – The study is based on a small sample consisting of 28 individuals.

Practical implications – While Chinese youth may share some traits as a collective group, they also have diverse reasons and patterns for luxury consumption. The authors identify at least four distinct segments whose values, motivations and behavior toward luxury are different from one another. Companies must consider the differences that exist within this generation to effectively approach this market.

Originality/value – While exploratory, the current study is the first to identify segments in luxury consumers among young generations in China.

Keywords Young consumers, Luxury, Market segmentation, Consumer behaviour, China

Paper type Research paper

Introduction

One notable change in modern China is people’s indulgence on luxury products. With

drastic changes in economic policies, such as an open door policy, and strong economic

growth in the past ten years, the desire and appreciation for the luxury suppressed in the late

part of the twentieth century under Maoism are again wide awake and alive.

China’s craving for luxury is still going strong despite the recent economic downturns that hit

many parts of the world. Luxury consumption in traditionally important markets, such as

Europe and North America, has decreased significantly. According to the Bain report in

2009, the US luxury market was estimated to plummet 16 percent while Europe faced a

shrinkage in sales of 8 percent. Even Japan, once the biggest consumer market for luxury

goods, has experienced a drastic decline in luxury sales (Wassner, 2009). By contrast,

China’s luxury sales climbed to 30 percent of the global market share in December 2010,

and is expected to grow to 44 percent by 2020 (Branigan, 2011).

While global luxury brands have responded swiftly to this surging demand by setting up

branches in China, the learning curve has been steep (Knowledge@Wharton, 2010). The

challenges encountered can be attributed to companies’ erroneous treatment of China as

one big country. This approach has resulted in attempts to accommodate demands and

DOI 10.1108/17473611211261656 VOL. 13 NO. 3 2012, pp. 255-266, Q Emerald Group Publishing Limited, ISSN 1747-3616 j YOUNG CONSUMERS j PAGE 255

Joann Ngai is a Marketing

Researcher and Erin Cho is

an Associate Professor in

the Department of Design

and Management, Parsons,

The New School for Design,

New York, New York, USA.

Received November 2011 Revised February 2012 Accepted April 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

market characteristics at a macro level, thus ignoring the complexity and diversity within. For

example, when building promotional strategies to target China, companies tended to use

either the same plans of action used to appeal to consumers in the Western world, or

strategies that reflected broad general characteristics of Chinese consumers. The general

understanding of Chinese luxury consumers is that they are conspicuous and that the social

recognition of brands is the most important criterion for luxury shopping (Lu, 2008). This is

due to the fact that Chinese consumers’ buying decisions are most affected by Confucian

values, which include collectiveness, harmonious interactions among in-group members,

respect, and superiority (Wong and Ahuvia, 1998). Hung et al. (2011) have also argued that

achievement vanity plays a significant role in Chinese consumer’s purchasing decision.

Chinese consumers therefore tend to see that the buying luxury is a way to show that they are

successful and a way to elevate their social status. Hence, the brands that have worldwide

recognition are likely to succeed in the Chinese market.

Recently, however, Chinese consumers are becoming more knowledgeable about brands,

and their preferences are shifting towards brands that satisfy individual needs (Zhou and

Wu, 2006). Wiedmann et al. (2009) argued that it is not sufficient to understand luxury

consumption only in terms of socially oriented motives and the motivation to impress others.

As the nation’s wealth increases and more people can afford to enjoy luxury, consumption

values tend to become more diversified and move away from social values to hedonic and

emotional values. More attention needs to be paid to the unique characteristics of Chinese

consumers shaped by their individual backgrounds. Furthermore, due to the drastic social

and economic changes China experienced in its modern history, greater differences in

values and lifestyle exist across different generational cohorts in China, especially

compared to other parts of the world (Hedrick-Wong, 2008; Hung et al., 2007). In fact, Lin

and Wang (2011) argued that Chinese consumer values are highly heterogeneous across

different generations. Also, given the sheer size of the Chinese population, one should

expect as many differences as similarities among members of a particular generational

cohort.

A distinct feature of luxury consumers in China is their youth, mostly under the age of 40. This

is contrasted with Western counterpart markets, where senior consumers dominate luxury

consumption. In particular, Chinese consumers between the ages of 20 and 30 (the

generation that grew up with the one child policy) are becoming a significant segment for

luxury consumption (Atsmon et al., 2011). Accounting for about 300 million people, these

young consumers are not only unique as a col-lective group, but they also are highly

individualistic (Moor, 2005). Even within this generational cohort, various reasons exist to

explain why young consumers buy luxury products. Yet, beyond the general descriptions of

their consumption behavior, not much is researched about them in the context of luxury

consumption. There exists a great value in understanding not only the common traits among

these young consumers but also the differences among them regarding luxury

consumption. Our study aims to offer a meaningful understanding in this regard by

identifying distinct groups of young luxury shoppers in China. While exploratory in nature,

the current study delineates four distinct sub-segments of young luxury shoppers whose

values, motivations and behavior toward luxury are different from one another. The results of

the study also provide meaningful insight regarding how to position a brand to approach

each segment identified and lend ground for further quantitative in this subject matter.

Luxury consumers in China

Many may have an impression of China as a newcomer to luxury products. However,

Chi-na’s love affair with luxury consumption began long before many people in the Western

world may realize. China’s relationship with luxury can be traced back to the Spring and

Autumn period (around 770-221BC), during which the scholar-bureaucrat class emerged as

the elite group in society (Lu, 2008). For the next 2,000 years, the scholar-bureaucrat class

held its status until the fall of China’s dynasty system. Even though concepts such as

aristocracy and royalty existed in imperial China, the scholar-bureaucrat class was highly

PAGE 256jYOUNG CONSUMERSj VOL. 13 NO. 3 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

respected for its intelligence, tastes, and wisdom. Its members were the elites and the

leisure class in society and naturally developed a lifestyle that incorporated luxury goods.

A unique aspect of the leisure class in China was that it was neither exclusive nor hereditary.

Unlike Western imperial cultures in which luxury was reserved for royalty and aristocrats by

birth, a luxurious lifestyle in imperial China could be earned by working one’s way up the

centralized examination system, Keju. Introduced in the Han dynasty (220-206BC), Keju was

systematized in the Sui dynasty (581-617AD) to allow talented people to join the rank of

scholars and bureaucrats, regardless of their social status and background (Cressey, 1929).

This system created a rigid but solid path toward a leisurely lifestyle in imperial China.

Because of this democratic system, the concept of luxury goods and lifestyle were more

widespread in imperial China than many of its Western counterparts.

The scholar-bureaucrat class enjoyed a long period of privileges and prosperity until the

Cultural Revolution in 1966, which overturned every cultural value of imperial China. During

this period, scholars were considered traitors, students were sent to reeducation camps,

and merchants were punished in an effort to build a classless so-ciety. As the elite position of

the scholar-bureaucrat class was crushed during the Cultural Revolution (1966-1976), so

were the concepts of leisure lifestyle and luxury consumption. It is important to recognize,

however, that the leisure class in China had existed for thousands of years, and that those in

it appreciated and fully understood the concept of luxury goods.

Following the years of the Cultural Revolution, China went through another radical social

change known as the Economic Reform, which was started in 1978 lead by Deng Xiaoping.

Globalization and industrializations are critical factors in reformulation of a culture (Stearns,

2001), which has also been the case for China. Economic development, in particular, exerts

a great influence in moving societies in a common direction, independent of their cultural

heritage (Inglehart and Baker, 2000). The Economic Reform restructured China’s consumer

market drastically and has again shifted the country’s view toward wealth and luxury. The

Open Door Policy (instituted around 1990), another policy introduced under the leadership

of Deng Xiaoping, opened the Chinese market to foreign traders, such as United States,

Japan, and many European countries. Due to Economic Reform, combined with the Open

Door Policy, the availability of consum-er goods experienced an exponential growth

(Doctoroff, 2005).

Also thanks to the strong economic growth in China in recent years, the purchasing power of

consumers has increased dramatically. In the McKinsey report ‘‘In-sights China,’’ the

number of wealthy households (defined as urban households with annual income in excess

of 250,000 RMB, around 36,000 USD) in China in 2008 reached 1.6 million. The number is

predicted to more than double to 4.4 million in 2015, making China the fourth in number of

wealthy households after the USA, Japan, and the UK (Atsmon et al., 2009). The number of

wealthy households in China is still expected to grow at an annual rate of 16 percent for the

next five to seven years despite the global economic downturn. For a country that was

struggling only decades ago, the numbers are staggering. As discretionary income

increases, China is wasting no time in going back to its imperial roots of luxury consumption.

In 2007, for example, retail spending in China hit 8.9 trillion yuan, an equivalent to 1.2 trillion

US dollars (China’s retail, 2008).

Characteristics of young consumers in China

While different names have been used to indicate generational cohorts in China by different

authors (Hedrick-Wong, 2008; Hung et al., 2007) generational classifications are linked to

significant political and economical policies in modern China, in particular, Cultural

Revolution in 1966, and Economic Reform and One-child Policy which occurred in 1978 and

1979 respectively. The modern marketplace in China encompasses three distinct

generations: Suffering or cultural revolution generation (those currently between 50 and

65 years old who were born during the time of cultural revolution), Transitional or mobile

generation (currently around 30-49 years old who were in their early 20s’ when Economic

Reform started), One-child generation (Those who were born after Economic Reform and

VOL. 13 NO. 3 2012 jYOUNG CONSUMERSj PAGE 257

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

with One-child policy). Because of drastically different social and economic conditions in

which they grew up, these three generations are entirely different from one another. In

particular, while the first two generations lived through a period of political turmoil and

instability, the One-child generation experienced a vastly different upbringing. This cohort

represents the first decade of children born under the infamous One-child policy (1979), a

means of population control enforced by the Chinese govern-ment. This policy restricted the

number of children couples could have to one, barring exceptions such as rural couples,

ethnic minorities, and couples with no siblings, among others (Fitzpatrick, 2009).

The popular nickname for this generation is the little emperors and empresses, referring to

their status as the only child in their families. China’s One-child generation youth grew up in a

very different economic environ-ment than the older generations, especially regarding their

experiences with consumer goods. Before the 1978 Economic Reform, commodities and

consumer goods had uniform prices, and choices of products were extremely limited. With

foreign imports and venture constraints relaxed after 1978, the younger generations in China

were offered more choices in consumer goods and greater incentives to purchase them

(Chen and Feng, 2000). While older generations may be more price-conscious and less

brand oriented, China’s youngsters do not share the same views (Wassner, 2009). They are

attracted to advertised and brand name products, while their parents seek practicality in

consumer products. They also have a strong tendency for self-indulgence, personal

entertainment, and materialistic (Doctoroff, 2005; Dou et al., 2006).

As a family’s only child in a competitive society, the One child-generation has become an

complicated group of individuals. Despite the advantages of having their parents’ and

grandparents’ undivided attention, the little emperors have not enjoyed an entirely carefree

lifestyle (Yan, 2006). Many of the One-child genera-tion’s elders lost their opportunities in

education and success during the Cultural Revolution. With their dreams gone and hopes

destroyed, the parents or grandparents of the One-child generation projected their

unfulfilled goals onto their young children. Achievements and success are two concepts that

children are taught to value early in life. Thus, it is common for them to purchase and use a

product in a way to ease tension and anxiety arising from these pressures (Scelzo and

Lerman, 2009). They are also more likely to be compulsive in their spending due to the desire

to seek power and prestige (Li et al., 2009). They tend to engage in conspicuous

consumption such as purchasing luxury products. Also due to the family and competitive

pressure, it is important for them to purchase products and brands to impress their peers

(Zhao and Belk, 2007). Podoshen et al. (2011) reported that Chinese college students

exhibited a higher level of materialism and conspicuousness than American students did.

While Americans may tend to engage in conspicuous consumption based on personal

desire and taste, Chinese students are compelled to do so in order to show respect and

maintain the status in the community.

In addition to the pressure these youngsters endured from their elders, the rapid economic

development also added to their stress. The One-child generation grew up watching China

rise as a nation, and they believe that they must contribute to this advancement. While

optimistic, they also worked hard to avoid being left behind. To many Chinese parents and

children, Gao-kao or the nation-al college entrance exam (NCEE), is the single most

important test on which the future of the entire family hinges, just like Keju (Yu and Suen,

2005). Children are trained and prepared for the exam at a young age in order to gain spots

at top universities in China, a guarantee to a white-collar, upper middle class lifestyle. This

intense examination system, along with the One-child policy and a tough job market,

produced a group of ultra-competitive children who aim high. The reality might seem

stressful and cruel to young children but, nevertheless, they grew to be highly educated

youngsters who strive to succeed.

As a result of this high-level education, combined with ambitions, the One-child generation

entered the workforce with a naturally higher income than their elders, and hence they enjoy

a higher margin of disposable income than their elders. Accustomed to high expectations

and exclusive access to all resources their elders had to offer, China’s youth definitely

understand the concept of a high quality lifestyle, and many have developed a taste for

PAGE 258jYOUNG CONSUMERSj VOL. 13 NO. 3 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

luxury at a young age. Once free from the pressure of Gao-kao and finding a good job, many

youngsters seek out luxury goods to compensate for their years of stress, as well as to reflect

their grow-ing social status.

China’s young luxury consumers are, without a doubt, distinctly different from older

generations. At the same time, members of this group also are deeply divided among

themselves. While their parents grew up in a rather culturally homogenous environ-ment,

China’s youth came of age in a cultural melting pot. The world of China’s young generation is

surrounded by Japanese magazines, Korean pop music, Hollywood movie stars, and a

steady stream of foreign brands (Moor, 2005). They also are the first wave of generations

who had opportunities to be educated in foreign countries, adding to the diversity of ideals,

beliefs, and viewpoints of China’s youths. There exists a great value in understanding not

only the common traits among these young consumers but also the differences among them

regarding luxury consumption. Our study attempts to contribute to this effort via personal

interviews with young luxury consumers in China. In so doing, we conducted a qualitative

data collection via semi-structured in-depth interview. The qualitative approach was chosen

for the nature of this study is exploratory and the goal is discovery (Corbin and Strauss,

1990).

Methodology

One of the authors of this paper conducted consumer interviews in China. The total of 30

individuals between 20 and 25 years of age were recruited via a mall-interception method in

three different high-end department stores located in Shanghai during January of 2011.

Specifically, she intercepted individuals who walked out of high-end brand shops in each

mall. Among those interviewed, 11 were male and 19 were female. The average age was 24

and all participants were either in college or college graduates. The average length of each

interview was about 20-25 minutes, and a small gift was provided at the end. The interview

was in Chinese and structured to have two parts – the first part consisted of basic

demographic and lifestyle questions, and the second part asked respondents about their

values, motivations and behavior toward luxury products. The interviews were recorded and

transcribed in Chinese later. The transcriptions were reviewed by one of the authors of this

study and two external experts from a consulting firm specializing in consumer research and

market segmentations in China. All the reviewers were fluent both in Chinese and English.

Since the goal is to identify distinct segments of young luxury consumers, the analysis was

focused on placing respondents into groups with distinct and homogeneous characteristics

in relation to luxury consumption. Specifically, the analysis was conducted in the following

order. First, reviewers examined transcriptions for words describing respondents’ values,

motivations and behavior related to their luxury consumption. Identified texts were coded

and put into tentative categories of evaluative criteria for segmentation. In so doing,

reviewers compared each text assigned to a category with those already assigned to that

category to ensure the content congruency of each category (Glaser and Strauss, 1967).

Reviewers were allowed to assign the same text to more than one category, but they were

instructed to do so in a way to maximize the content homogeneity of each category and

heterogeneity between categories (Lincoln and Guba, 1985). Each reviewer first

independently established categories based on the frequency of mention and then

discussed with each other for comparison. All three reviewers identified and agreed on

seven categories, which included status consciousness (i.e. motivation to purchase luxury

to display and communicate one’s social status), passion for luxury (i.e. enthusiasm,

excitement, and interest in purchasing luxury), quality consciousness (i.e. obtaining quality

and high workmanship as a motivation for purchasing luxury), brand recognition (i.e. product

and brand knowledge in luxury), purchasing power (i.e. affordability of luxury and price

consciousness), setting trends (i.e. motivation to be a trend leader), and impulsiveness

(i.e. impulsive tendency in purchasing luxury).

Next, reviewers examined each transcript again for the presence and extremity of its

contents according to the seven evaluative categories, using the rating scale of high,

moderate, and low. The preliminary examination indicated that all the interviewees were

VOL. 13 NO. 3 2012 jYOUNG CONSUMERSj PAGE 259

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

relatively high on status consciousness, passion for luxury, and purchasing power (affording

luxury with their own money or with their parents’ help), while they varied in relation to brand

recognition, quality consciousness, setting trends, and impulsiveness. Thus, the grouping of

transcripts was based largely on the latter four dimensions. All three reviewers identified four

distinct groups of consumers and the agreement between reviewers in-group assignment

was about 93 percent. There were disagreements on two of the 30 transcripts among

reviewers, and these two were excluded for this reason. The four distinct groups were

labeled:

1. the overseas pack;

2. the self-established cool;

3. the luxury followers; and

4. the spirituals.

We then reviewed the transcripts again to identify the general demographic and lifestyle

characteristics of members for each group, and to delineate additional characteristics of

luxury consumption specific to each group.

Discussions and implications

The overseas pack

Six out of 28 interviewees belonged to this group. They see themselves as having high

knowledge of luxury brands, a quality-conscious mind, and clear personal preferences in

brands. They are not particularly price conscious and have enough income to afford luxury

brands they favor. They also see themselves as trendsetters, and enjoy collecting and

learning about new items of the coming season directly from magazines published in UK, the

USA, and Paris. Tiffany, one of the interviewees belong to this group, expressed that ‘‘I love

luxury and prefer to buy one with my own money [. . .] My next big purchase is a Birkin bag,

not just because it is the ultimate bag, but also because it is the brand with the highest

quality. I believe I will be able to use it for a long time.’’ As indicated here, obtaining quality

workmanship appears to be the key motivation for luxury purchasing for this group. They

also indicated they would avoid brands that are too well known and popular.

In terms of demographics and lifestyle, the most distinctive characteristic of these

individuals can be described as international. They had studied or worked oversees and feel

comfortable speaking English (in fact, many used English names to refer to themselves).

They are keen on fashion trends happening in New York and Paris and read foreign fashion

magazines and fashion blogs. They indicated they would spend a large portion of their

income on fashion and travel often for work and pleasure. This segment appears to reflect

the trend in China for more and more Chinese educated abroad and subsequently returning

to China. While many of the first generation overseas scholars did not see the benefits of

moving back to their native land, the rate of repatriating students has been increasing in the

past few years as China’s economy continues to develop. Hai-gui is the term that refers to

those who have studied overseas and chose to return to China (China’s Economic, 2005).

With their overseas educational background serving as a competitive edge, this group is

perceived to be superior to their local peers in social status and income.

We also found a very interesting indication of the value characteristics of this group. While

Westerners might expect youngsters educated abroad to promote foreign ideals, this group

is surprisingly loyal to their Chinese identity. They perceive themselves not as modern

Westerners but as modern Chinese. They may be enjoying coffee from Starbucks and

driving imported automobiles, but they are the least inclined to be seen as promoters of

Western values and surprisingly patriotic in their consumption choice. Min, who studied at a

high school and a college in New York, said ‘‘I don’t want people to think that I am all

Westernized and endorse everything from Western culture, because I am not like that. In

fact, I like to see more efforts by global brands to reflect the tradition and culture here as

opposed to brining the same models that they distribute all over the world [. . .] I would love

PAGE 260jYOUNG CONSUMERSj VOL. 13 NO. 3 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

to buy a Chinese luxury. If they are equal in quality, I would choose a Chinese brands than a

global brand.’’

These findings have revealed valuable information on how this consumer segment should be

approached. As indicated, the overseas pack places the most emphasis on quality,

craftsmanship, and products’ values, as opposed to brand names, compared to other

groups. In their personal interviews, this particular group of individuals echoes greatly the

statement, ‘‘Product quality is the most important aspect of luxury goods.’’ For example,

Joyce, one of the subjects interviewed, expressed that she prides herself on her ability to

select quality products that are worth the high price tags. With high aspirations in life, these

individuals seek luxury products that reflect their rising status. This group is frustrated with

the Chinese stereotype created through Westerners’ eyes. They do not need to express their

importance by purchasing logo-oriented products. Instead, they opt for subtle designs that

tell meaningful stories about the brand.

To approach this target, therefore, a luxury brand should stress authenticity, timelessness,

workmanship, and exclusivity of a brand in their communication strategies. Displaying

images and artifacts of heritage, such as the approach taken by Louis Vuitton featuring its

original travel bags in both stores and advertisements, can effectively appeal to this group. A

luxury brand with a strong heritage may also bring forth its long-lasting iconic status and

timelessness in the communication strategy. For example, the bottle design of Chanel No. 5

has not changed much since it was introduced in 1920. Its ads featuring a photo of Marilyn

Monroe holding the No. 5 bottle is an efficient way to communicate with this group as it

illustrates the kinds of brand quality that this group values. Another strategy to underscore a

brand’s authenticity and quality is to provide consumers an opportunity to experience what a

brand is made of and what it stands for. For example, a brand can designates a space in its

store where it displays materials and components for its products and demonstrate

meticulous processes of product construction to demonstrate the quality and craftsmanship

of the brand.

It is also important to pay attention to this group’s strong affiliations and loyalty to the Chinese

culture. Many companies have discovered the concept of ‘‘Chinese cool’’ and started

creating products with connections to the Chinese culture. In 2010, for example, Hermes

introduced its new brand based on Chinese culture led by a team of top Chinese designers,

ShangXia. This is the first time that a global luxury powerhouse created a separate line for

Chinese consumers to appeal to those who seek luxury with Chinese looks and feel.

However, it is important to recognize that this group will not be enticed by products that

simply incorporate Chinese cultural elements. Chinese icons and elements are not enough

to create an emotional connection with members of the overseas pack. Companies must dig

deeper to create products that resonate with the collective memory of the Chinese youth

generation.

The self-established cool

Seven of the 28 interviewees belong to this group. In comparison with other groups, they are

generally younger and most of them are still attending universities. They exhibit a moderate

level of brand recognition and quality consciousness. While they have relatively weak

purchasing power of their own, they are able to afford the luxury with their parents’ help.

Setting trends and being unique are most important when it comes to luxury products. They

have a high level of passion for luxury products, but their intentions behind luxury purchases

differ from others. Their assessments of luxury products are not based entirely on the quality

or trendiness of the item. Instead, members of this group evaluate brands based on how well

an item fits into his or her self-established unique identity. Moreover, they have a high need to

discover the next cool thing, instead of following trends blindly. For example, Liu, one of the

interviewees, prides herself on being an expert in vintage clothing (she has a personal blog

on related topics). She emphasized that even though she is interested in fashion and luxury

trends, she is eager to establish her own trends. For her, a vintage Chanel bag carries much

more value than a brand new one because she enjoys the thrill of discovering products and

making them ‘‘cool’’ again. Member of this group also are highly interested in finding the

VOL. 13 NO. 3 2012 jYOUNG CONSUMERSj PAGE 261

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

truth about a product: its heritage, functionality, and its story. They are not hesitant to be the

tastemakers, and they are not afraid to go against the masses as long as an item has the

potential to be cool.

All in all, we find this group to most notably value ‘‘setting trends through self-expression.’’

They appear to be most keen about establishing themselves as unique individuals and have

high need to reinvent themselves constantly or reinforce their self-identity. Allison, one of the

respondents in this group, indicated that ‘‘I enjoy the thrill of discovering something new and

cool. I don’t really read fashion magazines to follow trends, but I read them to be inspired. I

liked to buy quirky pieces that will make me stand out.’’ Interestingly, however, as much as

these young people value individuality and self-expression, they also have a strong need to

identify with tribes and communities. They are ‘‘individuals within a col-lective group.’’ Those

who belong to this group often mentioned Internet social networking sites such as Douban

as places for them to be individually unique within a community network. In fact, Douban,

China’s most popular online community among youth, had more than 10 million registered

users as of September 2009 (38). It is a community for ‘‘artistic youth,’’ comprised mostly of

university students and graduates. Like other online forums, Douban is a place for

discussions and exchange of information on books, music, movies, and trends. Like their

Western peers, most young people in China own their online ‘‘space’’ in shapes of forums,

blogs, avatars, etc. As a place to exchange ideals and information, the Internet has become

the most important space for this group of youths to establish their identity.

In terms of approaching this segment, our results would indicate that finding the right

platform is most vital which includes the Internet and innovative retail technologies. The

typical form of online distribution for foreign luxury brands in China has been a third part

e-commerce, such as Meici.com, offering significant discounts to allure price sensitive

consumers. However, this is not an effective strategy to attract self-established cool. To

them, actual buying and using luxury is half of the equation as they enjoy the process of

discovering and engaging in information exchanges about luxury. Burberry has been the

forefront in an effort to satisfy such needs. Burberry offers a company-managed web site

translated in Chinese which distributes not only product but also the information about the

brand including the ‘‘Art of the Trench’’ and videos of its runway shows. Its store in China is

equipped with the latest digital technology, such as touchscreens that display special

collections and other brand-related entertainment contents.

It is also important to note that this group relies on their communities or tribes for reliable

information. They enjoy the thrill of identifying the next cool thing themselves. The information

offered by a brand should be relevant and interesting enough to spark the conversation and

meaningful elaboration among peers. A marketing strategy to facilitate this aspect may

include offering an opportunity for co-creation with consumers. Unlike the other groups, the

self-established cool find thrill in direct experiences and encouraging these individuals to be

involved in the creative process will resonate with their sense of self-importance. For this

group, cocreation reflects how much a brand respects their individual voices. A good

example of such an approach can be that by sneakers brand Converse. It was the first brand

to recognize the ‘‘indie music’’ community within China. Converse signed two underground

bands and hosted a concert that carried the spirit of a road trip. The tour bus traveled

5,000kms to different cities around China, hosting concerts along its way. By immersing

themselves into the indie music culture, Converse instantly shortened the distance between

their target audience and the brand itself. Even though Converse is not perceived as a

premium luxury brand, the marketing technique in this example can be borrowed by luxury

companies.

The luxury followers

Ten of the 28 interviewees were identified as belonging to this group. The most distinct

characteristic of the Luxury Followers is that they have a high level of passion for luxury

products and high status consciousness but they relatively lack the motivation or courage to

be trendsetters. Rather, they follow trends in magazines or initiated by other trendsetters to

make purchase decisions. They are concerned mostly about the public recognition and

PAGE 262jYOUNG CONSUMERSj VOL. 13 NO. 3 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

social status of brands. They are collectivists who are enthusiastic about luxury products,

but are reluctant to adopt a trend until after it has been accepted by the majority. In personal

inter-views, many from this group expressed the sentiment, ‘‘I am easily influenced by

advertisements, and often times, seeing famous celebrities holding a certain bag is enough

for me to want it [. . . How fancy my friends think about the brand and the item is one of the

strongest consideration for my choice ’’ In fact, members of this group are less

knowledgeable about, and hence less adventurous in choosing, luxury brands. Thus, they

are highly responsive to the opinion of so-called luxury experts, such as celebrities, and

similarly value what their peers have to say about a certain brand. Another distinct aspect of

luxury followers is that they often are impulsive in luxury purchases and are most responsive

to sales promotions, such as discounts, free trials, or tester products. Chan, one interviewee,

mentioned that ‘‘when I see a brand that is well-advertised or in style on sales, I just have to

have it. I may be too quick to seize the opportunity; sometimes, it gets me in a way of

overspending.’’

They are also less inclined to ‘‘seek the truth’’ like the previous groups, and are content as

long as they are buying brands that are recognized within their community. In fact, their

luxury consumption reflected the most the sentiment governed by collectivism, one of the

core values of Confucianism. Emphasis on obligations between emperor and subject,

parent and child, husband and wife, siblings, and friends has resulted in the ‘‘Chinese

valuing in-group harmony’’ (40). To them, luxury purchases reflect not only personal choices

but also one’s social status, family, and educational background. They are also attracted to

major trends instead of subcultures.

The overall sentiment from this group generally reflects the findings from previous studies on

Chinese youth, namely that they are brand conscious, self-indulgence, and receptive to

advertising. In fact, this group is likely to be most responsive to a traditional way of

advertising via media, magazine, and celebrity endorsements. Promotional approaches

emphasizing the social status, recognition, and acceptance by the public appeared to work

well with this group. The status of Chinese youth is often demonstrated through

group-affiliation. Thus, an effective way to communicate the brand value of social

recognition and acceptance is to feature young people hanging out as a group wearing the

brand. Also, Luxury followers would be most interested in acquiring popular models of a

brand with the logo displayed ostentatiously on a product. We also find that many of the

luxury followers are members of online networking sites. This group’s participation in

networking sites is more passive compared to other groups regarding the information

exchange about luxury. That is, luxury followers assume the role of content receivers rather

than content contributors. As much as they value opinions from their peers, they also seem

receptive to the opinions from experts. Promoting brands via blogs run by celebrities and

fashion experts could be an effective way to increase brand awareness and desire when

targeting this group.

The spirituals

Five out of 28 interviewees belong to this group. They are high in quality consciousness and

brand recognition, but they seem less keen on being trendsetters. Overall, they are cautious

regarding their purchases and impulsiveness is relatively low in comparison to other groups.

The distinct lifestyle characteristic of the spirituals appeared to be the pursuit of the

‘‘meaning of life.’’ Three out of five interviewees in this group indicated having volunteered in

activities that advocate social and environmental issues in China. This value appears to

influence the way they perceive luxury products and their purchase preferences. They

expressed an interest in luxury items that send a ‘‘deeper message’’ and to which they can

connect emotionally. They would be willing to spend more on luxury items that last longer to

promote sustainable consumption. They believe in making small differences in daily life, and

improving the quality of life for the people. There are, in fact, increasing indications that the

youth of China are able to have the ‘‘luxury’’ of caring about things outside their own living

conditions. Social responsibility and environmental consciousness seem to have become

the new ‘‘cool’’ trends among Chinese youth. The year 2008 reflected the serious side of

China’s younger generation. From the Beijing Olympics to the Sichuan earthquake,

VOL. 13 NO. 3 2012 jYOUNG CONSUMERSj PAGE 263

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

members of this generation showed the world they have graduated from being only the little

emperor generation. Over 1 million youth volunteered at the Olympics, and the amount of

college students queuing up to donate blood exceeded hospital capacity (Brown, G.,

Partners, 2010).

In order to reach this segment, it is critical to recognize that their brand assessment does not

hinge on achieving self-gratification or social status. Instead, they assess a brand based on

how much it contributes to the greater good. Although they might not be as keen on luxury

products as their peers, they have had a constant exposure to brands and consumer goods

and are willing to splurge. The Spirituals are most easily connected with brands that reflect

their ideals regarding contribution to society. This offers an advantage for a luxury brand that

has established its reputation as a socially responsible company. Corporate Social

Responsibility (CSR) may be new to the Chinese compared to its western counterparts, but

has been slowly gaining attention as a way to promoting brands while doing good. In fact,

the recent survey by Albatross Global Solutions and Ruder Finn Asia, CSR may be the best

strategy in building brand loyalty (Lu, 2010). They found that CSR is an important criterion

when it comes to choosing a luxury brand especially among wealthier and more educated

consumers. In this regard, fashion companies such as Stella McCartney would resonate well

with this group of individuals. Stella McCartney always has been the leading luxury brand in

promoting sustainability by using socially responsible materials exclusively. Another

example is Bulgari’s participation in the ‘‘Save the Children’’ campaign in which the

company donates a portion of money to support a child in need. In fact, Kang, one of the

respondents in this group, noted that ‘‘I admire Stella McCartney for producing organic and

vegan products and some brands that benefits children in third world countries. I support

luxury brands fighting for causes related to the rights of animals and children.’’ As indicated

here, promoting a brand’s socially responsible business practices is an effective way to

approach this group, particularly when it is done in a way to highlight how these practices

are aligned with the group’s beliefs.

Conclusion and future studies

When pursuing opportunities in China’s youth market, luxury brands must understand the

complexity of this generation as consumers. Classifying consumers in groups that have

similarities within and difference between often helps firms’ targeting and positioning

strategies and result in better performance in designing product and promotional offerings,

establishing brand image, and generating profits. The current paper is an exploratory

attempt for providing such a classification. Our findings, however, are based on a small

sample size of interviews in a single geographic location, Shanghai. While Shanghai is one of

the most important markets for luxury consumption in China and also in the world, a future

study is needed to validate our findings with a larger data set collected at different locations

of the nation.

A future study can also investigate varying sub-cultures within the segments we identified.

Just like any youth cultures in the world, trends among Chinese youth are evolving and

changing constantly. In fact, we find that some populations of this generation are closely

following the emergence and the development of micro-cultures online. It will be interesting

to examine how the adoption of information technology and the emerging trends online may

further differentiate the way Chinese youth behave toward luxury products. Another

important aspect we find is that even though Chinese youth are receptive to Western

cultures and brands, they are not completely Westernized. Chinese traditions, like the

concept of the importance of a public self and family, are still deeply rooted within their

minds. A future study may delve into the cognitive mechanism with which young consumers

reconcile these conflicts and reflect them in their luxury consumption decisions. A study of

this kind can generate meaningful information in terms of developing effective

communication strategies for foreign luxury brands.

PAGE 264jYOUNG CONSUMERSj VOL. 13 NO. 3 2012

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

References

Atsmon, Y., Dixit, V., Leibowitz, G. and Wu, C. (2011), ‘‘Understanding China’s growing love for luxury’’,

McKinsey Consumer & Shopper Insights, McKinsey Insights China, McKinsey & Company, New York,

NY, March.

Atsmon, Y., Ding, J., Dixit, V., Maurice, I. and Suessmuth-Dyckerhoff, C. (2009), ‘‘The coming of age:

China’s new class of wealth consumers’’, McKinsey Insights China, McKinsey & Company, New York,

NY, pp. 1-28.

Branigan, T. (2011), ‘‘China’s taste for high-end fashion and luxury brands reaches new heights’’, The

Guardian, April 26, available at: www.guardian.co.uk/world/2011/apr/26/china-super-rich-demand-

luxury-brands

Brown, G., Partners (2010), ‘‘Youth trends 2010: China focus’’, available at: www.enovatechina.com

Chen, B. and Feng, Y. (2000), ‘‘Determinants of economic growth in China: private enterprise, education,

and openness’’, China Economic Review, Vol. 11 No. 1, pp. 1-15.

China Daily (2005), ‘‘China’s economic development encourages repatriation of overseas students’’,

China Daily, March 26, (accessed 10 October 2010).

China Daily (2008), ‘‘China’s retail sales of consumer goods reach 8.9 million yuan in 2007’’, China Daily

Online, 20 January, (accessed 10 October 2010).

Corbin, J.M. and Strauss, A. (1990), ‘‘Grounded theory research: procedures, canons, and evaluative

criteria’’, Qualitative Sociology, Vol. 13 No. 1, pp. 3-21.

Cressey, P.F. (1929), ‘‘The influence of the literary examination system on the development of Chinese

civilization’’, American Journal of Sociology, Vol. 35 No. 2, pp. 250-62.

Doctoroff, T. (2005), Billions: Selling to the New Chinese Consumer, Palgrave Macmillan, New York, NY.

Dou, W., Wang, G. and Zhou, N. (2006), ‘‘Generational and regional differences in media consumption

patterns of Chinese Generation X consumers’’, Journal of Advertising, Vol. 35 No. 2, pp. 101-10.

Fitzpatrick, L. (2009), ‘‘A brief history of China’s one-child policy’’, Time, July 27.

Glaser, B.G. and Strauss, A.L. (1967), The Discovery of Grounded Theory: Strategies for Qualitative

Research, Aldine Publishing, Chicago, IL.

Hedrick-Wong, Y. (2008), The Future and Me: Power of the Youth Market in Asia, Wiley, Singapore.

Hung, K., Chen, A.H., Peng, N., Hackley, C. and Rungpaka, A.T. (2011), ‘‘Antecedents of luxury brand

purchase intention’’, Journal of Product & Brand Management, Vol. 20 No. 6, pp. 457-67.

Hung, K.H., Gu, F.F. and Yim, C.K. (2007), ‘‘A social institutional approach to identify generational

cohorts in China with a comparison with American consumers’’, Journal of International Business

Studies, Vol. 38, pp. 836-53.

Inglehart, R. and Baker, W.E. (2000), ‘‘Modernization, cultural change, and the persistence of traditional

values’’, American Sociological Review, Vol. 65 No. 1, pp. 19-51.

Knowledge@Wharton (2010), ‘‘All that glitters: what’s in store for China’s luxury fashion market’’,

Knowledge@Wharton, May 30.

Li, D., Jiang, Y., An, S., Shen, Z. and Jin, W. (2009), ‘‘The influence of money attitudes on young

consumers’ compulsive buying’’, Young Consumers, Vol. 10 No. 2, pp. 98-109.

Lin, X. and Wang, C.L. (2011), ‘‘The heterogeneity of Chinese consumer values: a dual structural

explanation’’, Cross Cultural Management, Vol. 17 No. 3, pp. 244-56.

Lincoln, Y.S. and Guba, E.G. (1985), Naturalistic Inquiry, Sage Publications, Beverly Hills, CA.

Lu, J. (2010), ‘‘Foreign luxury companies take note: Chinese consumers favour CSR’’, Financial Times,

July 21, available at: www.blogs.ft.com/beyond-brics/2010/07/21/67251/#axzz1njO4ixS1 (accessed

20 February 2012).

Lu, X. (2008), Elite China: Luxury Consumer Behavior in China, Wiley, Singapore.

Moor, R. (2005), ‘‘Generation Ku: individualism and China’s millennial youth’’, Ethnology, Vol. 44 No. 4,

pp. 357-76.

VOL. 13 NO. 3 2012 jYOUNG CONSUMERSj PAGE 265

D ow

nl oa

de d

by G

IH E

& L

es R

oc he

s A

t 08

:3 8

12 M

ay 2

01 8

(P T

)

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1016%2F0147-1767%2885%2990062-8&citationId=p_21

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1080%2F00913367.2006.10639230&isi=000240051900009&citationId=p_11

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1086%2F214982&citationId=p_9

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&system=10.1108%2F10610421111166603&citationId=p_15

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&system=10.1108%2F13527601011068342&citationId=p_20

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.2307%2F2657288&isi=000086377000003&citationId=p_17

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1007%2FBF00988593&citationId=p_8

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&system=10.1108%2F17473610910964688&citationId=p_19

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.2307%2F3774095&isi=000239198600004&citationId=p_24

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1016%2FS1043-951X%2899%2900014-0&isi=000165767700001&citationId=p_5

https://www.emeraldinsight.com/action/showLinks?doi=10.1108%2F17473611211261656&crossref=10.1057%2Fpalgrave.jibs.8400288&isi=000248847700009&citationId=p_16

Podoshen, J.S., Li, L. and Zang, J. (2011), ‘‘Materialism and conspicuous consumption in China: a

cross-cultural examination’’, International Journal of Consumer Studies, Vol. 35 No. 1, pp. 17-25.

Scelzo, T. and Lerman, D. (2009), ‘‘Little emperors grown up: a case study of cosmetic usage’’, Young

Consumers, Vol. 10 No. 2, pp. 110-9.

Stearns, P.N. (2001), Consumerism in World History, Routledge, London.

Wassner, B. (2009), ‘‘Young buyers challenge luxury retailers in Aisa’’, New York Times, November 17.

Wiedmann, K., Hennings, N. and Siebels, A. (2009), ‘‘Value-based segmentation of luxury consumption

behavior’’, Psychology & Marketing, Vol. 26 No. 7, pp. 625-51.

Wong, N.Y. and Ahuvia, A.C. (1998), ‘‘Personal taste and family face: luxury consumption in Confucian

and western societies’’, Psychology & Marketing, Vol. 15 No. 5, pp. 423-41.

Yan, Y. (2006), ‘‘Little emperors or frail pragmatists? China’s ’80ers generation’’, Current History, Vol. 105

No. 692, pp. 255-62.

Yu, L. and Suen, H.K. (2005), ‘‘Historical and contemporary exam-driven education fever in China’’,

KEDI Journal of Educational Policy, Vol. 2 No. 1, pp. 17-33.

Zhao, X. and Belk, R.W. (2007), ‘‘Live from shopping malls: blogs and Chinese consumer desire’’,

Advances in Consumer Research, Vol. 34, pp. 131-7.

Zhou, C. and Wu, C. (2006), ‘‘China luxury markets on the way of sophistication’’, report, Ipsos China,

November, available at: www.scribd.com/doc/53754941/China-Luxury-Markets-on-the-Way-of-

Sophistication