Luxury the Chinese Way

The Emergence of a New Competitive Scenario

S. Rovai

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9781137537737
• eBook ISBN: 9781137537751
• Topic: Business
• Subtopic: Financial Services
• Index: Business

China's love for luxury is not a phenomenon brought on by the contemporary luxury market, but has been a part of Chinese culture and history for generations. The Chinese luxury industry is again re-emerging along modern cultural and socio-economic contexts, and is taking the market by storm. Luxury the Chinese Way identifies the main strengths and opportunities associated with the Chinese luxury market, explains the influence of 'Chinese characteristics' on its development and mode of operations, and reflects on the challenges associated with diverse consumption orientations. Using references from the fields and real-life data, this book provides a comprehensive overview on China's innovation in luxury, and is an important contribution to the study of the phenomenon that is the global luxury industry.

Part I

The Luxury Industry and the Chinese Sociocultural Context in Transition

1

The Birth of Luxury in China and Trends since Imperial Times

The concept of luxury is not new to civilization, nor is it to the Chinese. In the West, the concept of luxury can be traced back to Ancient Greece. The social stratification of Greek civilization was specifically divided into multiple layers of classes, within which was embedded an upper class to which the abundance and exclusivity of luxury was not new. The upper classes, composed of aristocrats and pharaohs, were used to living in lavish surroundings decorated with precious materials and wearing fine fabrics and intricate gold and silver jewellery dripping with jewels, thus highlighting their identity and social status. Even in death and its related ceremonies, Ancient Egyptians believed that only if it was preserved would the soul survive forever. For the same reason they conserved mummies in pyramids, they buried gold, silver, and jewellery with them in order to ensure they would be kept in the magnificence and exclusivity they had experienced in life after their regeneration. Of course, this service was only for the benefit of the elites, such as the pharaohs and their wives and families. Some of the Egyptian traditions are present in contemporary China in the culture and habits of minority groups. In several minority groups, brides are required to wear all the gold possessed by the family throughout their wedding ceremony, without taking into consideration modern fashion standards.

From the same perspective, if we go back to the classical era in China, we can find similar cultural values and norms strictly associated with exclusivity and privilege. Under the principles of Confucianism, an elite group of privileged philosophers, intellectuals, and bureaucrats were part of the emperor’s circle. This exclusive class lived a life immersed in luxury. This required the availability of refined high-quality products, so gifts traded between royal courts – a common practice at the time – were often encouraged to be of fine fabric and design (Degen, 2009). Ancient China’s search for a luxury lifestyle, that we also find nowadays, stopped during the modern Maoist period. China’s development has been regarded as a paradox. During the 11th and 12th centuries, China was considered to be a superior civilization, more progressive than Europe, and was, until the 18th century, still regarded as being on a par with Europe. However, the nation diverged from this path for economic and political reasons, and fell behind in terms of advancement (Stockwell, 2003; Fairbank and Goldman, 2006).

Luxury orientation and consumption is not a new phenomenon in China. Chinese “supremacy” in luxury manufacturing and creation can be traced back for centuries. At the time of the British Empire, Lord Macartney, appointed Great Britain’s first envoy to China, was commissioned in 1793 by the government to take exquisite gifts to the Qianlong Emperor and persuade him to open an embassy in Beijing. In the West at the end of the 18th century, these gifts were considered to be symbols of refined manufacturing, superior civilization, and exclusive design (Watt, 2000). However, the Emperor’s response was surprising: the “Middle Kingdom” was not in need of any of these goods. China was clearly indicating its supremacy in trade and manufacturing, as well as its level of sophistication and orientation towards the type of goods produced locally. The importance of China’s trade was specifically associated with the type of exports that were not only related to basic textiles and products, but also to non-mass-consumption commodities such as porcelain, refined silk and textiles, and jewellery; namely, luxury products.

This incident was a clear sign of the increasing importance and role that luxury goods would have in China from an economic and cultural perspective; it also leads us to look more carefully at the goods themselves – their characteristics, qualities, and aesthetics. As a result of the practice of the exchange of gifts and its influence on trading, gift exchange became a cultural practice and a very diffused ritual in Eastern countries, as evidenced by Hicks (1969) in A Theory of Economic History.

Rulers would receive international missions bringing gifts and keep those items considered to be significant to their country and culture. Of course, as the practice of giving meant the exchange of gifts, royalty and emperors sent their own presents, followed by specific requests for those exquisite pieces they would appreciate in return. The gift-exchange practice was a remarkable source of international trade. These gifts possessed a “unique” value related to the geographical distance and to the exclusive aesthetic appeal of special quality goods. Such high-quality luxury goods represented one of the first significant forms of globalization of luxury goods in the economic history of Eastern and Western world regions.

Trading in luxury goods before East met West was a simpler form of exchange, with a primitive form of globalization focusing on the collection of exquisite goods and substances found along the Silk Road, such as silk and cashmere, jades and sapphires (Bayly, 2004). Archaeologists argue that the search for refined, exquisite, unique goods and manufacturing can be traced back into a remote BC era. Countless evidences of this trade have been found in the Mediterranean Sea and in the Egyptian pyramids.

Through the centuries, the “luxury heritage” disappeared and the role of quality manufacturing seemed to have its centre in Asia, in particular in the Middle Kingdom, where refined ceramics, perfumed balsams, and exquisite fabrics were handcrafted and later shipped to the Mediterranean basin and the British Empire. Besides unique body ornaments, flamboyant household ceramics, and fashionable apparel, “innovative” food and wine, and scented teas were also on the list of the most “sought after” goods that were created in and traded from China.

The Ming and Qing emperors also clearly showed a growing orientation towards a refinement of lifestyle and need to live in luxury with exquisite and unique luxury goods that were handcrafted for trade but which they also desired to integrate in their own lifestyle. During the Imperial period, Chinese emperors lived a life of everyday luxury, in which imperial clothes were made of precious silk, refined with golden embroidery, and adorned with various types of gems, such as pearls, jade, lapis lazuli, and turquoise, amongst the others (Rawski, 1998). Traditional China has a long and rich history rooted in the luxury trade, dating back to the Imperial age. Imperial China dates from 221 BC to 1840, and, during this era, while there was much political instability due to wars, the empire thrived economically, particularly during the golden age of Qin and Han rule. Even in the most remote historical periods, luxury orientation was present in food and wine habits and choices. The philosopher Xunzi (313–238 BC) reported that daily luxury meals in China included music and also exclusive, delicate, and unusual food from remote regions. Household luxury goods, such as porcelain, had limited importance for the local Chinese lifestyle, but their impact on Europe was appealing and even created a unique style in design that dominated the end of the 17th century, “the Chinese period” (Ho, 1994; Loewe and Shaughnessy, 1999; Di Cosmo, 2002).

Trade dealt largely with “luxury goods such as silk, pearls, and jade” (Morton and Lewis, 2005, p. 27), with porcelain amongst the most popular, and prospered, with particular demand for Chinese silk across Central Asia and the Indian Ocean, and even as far as the extent of the former Roman Empire via the critical Silk Road (Morton and Lewis, 2005).

In the search to discover the origins of the Chinese luxury lifestyle, China is seen to have a much longer history of luxury consumption by its upper class than the rest of the world, as can be traced through historical artefacts and relics displayed in numerous Chinese and non-Chinese museums, such as ceramics, porcelain, patterned silks, and embroidered fabrics. Traditional Chinese society, organized and aligned according to the Confucian credo, was built around an elite class of scholar-bureaucrats. In addition to supporting the emperor in managing the country, these scholar-bureaucrats were selected from among the most talented young people by a national examination system, and obtained tremendous fortune and power through their educational and cultural accomplishments. The scholar-bureaucrats were at the top of Confucian social ranking, followed by the farmers, artisans, and, last of all, the despised merchants. The scholar-bureaucrats of ancient China, according to Lu (2008), understood the beauty of life and in their leisure time enjoyed classical gardens, lacquered ware, faience and porcelain, gold and jewellery, house decoration and stationery, furniture, clear spirits, and gastronomic delights. Many scholar-bureaucrats were also renowned artists, painters, and calligraphers, and their works can still be appreciated in both private collections and public exhibitions in China and abroad. The quest for luxury brands in China, explains Lu (2008), is the combination of a traditional pursuit of fine art and craftsman-ship, and a pursuit of modernity as represented by the Western luxury industry. He points out that the lifestyle of the ancient elite still remains in the mind of the Chinese people. This explains why rapidly increasing numbers of affluent Chinese consumers demand imported Western luxury brands, but also represents an opportunity for aspiring Chinese luxury brands to recall the lifestyle of their ancestors from China’s long and splendid past.

Traditional Chinese dresses were also a symbol of refinement and exclusivity. Wealthier classes wore elegant silk shoes combined with leather during the dynastic era. During the Qing Dynasty – 1644–1911 – and the rise of the Manchu Qing Dynasty, the Manchu clothing trend was imposed on all aristocrats and scholars. Together with dresses that were exclusive in style, the queue was also imposed as a hairstyle. Furthermore, the wearing of the qipao – a body-hugging one-piece dress – was imposed on women and the changshan – a robe with a long jacket featuring a mandarin collar – on men. Following the ending of Imperial China in 1912, a new style was imposed on the mostly Han Chinese population. Men and women had to adopt different styles of dress, mainly adapted from the dynastic era. The qipao became a tight, slender dress and the changshan was transformed into a suit and trousers ensemble. These clothes were mostly manufactured using exclusive patterns and refined silk. With the coming of the People’s Republic of China and Mao Zedong in 1949, any form of exclusivity and luxury style was banned and, consequently, clothing became the frugal “Mao suit” common to both men and women. Any sign of the previous traditional luxury-oriented Chinese culture was banned, along with any jewellery, long hair, and refined fabrics, as these were considered symbols of a materialistic culture and wealthy lifestyle.

Following the fall of the last dynasty in 1912, the Chinese landscape became a battleground between the Nationalists and Communists who were vying for power. In 1949, China fell under Communist rule, headed by Mao, who formed the People’s Republic of China on principles that centred on Marxist socialist ideals. As a result, an economic model without industrialization incentives and a market isolated from international trade suppressed China’s growth and international development. There had been relevant structural changes in China between the denouement of the Qing Dynasty in 1912 and the creation of the Republic of China. The emergence of the Communist Party in 1949, after a protracted and bitter civil war, imposed the removal of private property and, as a result, led China into a phase that completely changed its socioeconomic system (Degen, 2009). The traditionalist socialist society valued modesty and frugality and banned any form of private property and capitalism.

Thirty years later, in 1978, the country saw the beginning of a new historical phase, with the progressive opening up of the Chinese market to international investment. During this phase, China benefited from the exponential growth of its “socialist” open market economy and capitalism was considered from a different perspective. Competition, profit, and success-related achievements replaced the socialist values of modesty and frugality in Chinese society.

The late 1990s saw a resurgence of the urban private sector, which allowed China, just like the phoenix, to emerge from its past ashes (Degen, 2009). The phase of transformation that followed the Cultural Revolution started in 1968 and allowed China to enter a phase of transformation and new development that culminated in the Open Door policy, implemented by Deng Xiaoping in 1978. The policy supported political reform, decentralized economic policymaking, and reformed the market based on free market ideologies, encouraging commerce and investment from and with the West. Therefore, in 1980 China was visualized as a latecomer to the worldwide market. Modern China, post restructuring and commerce liberalization, has become a key player in foreign trade. Figures supporting this show that, from 1979 to 2012, exports from China increased from USD 14 billion to USD 2.1 trillion, while imports rose from USD 18 billion to USD 1.7 trillion; the liberalization of trade encouraged international commerce and significant capital investment by foreign firms. While, in 2004, China produced less than the USA and Japan, by 2006 China had exceeded Japan as the second-largest manufacturer, and by 2010 had overtaken the previous leader, the USA, in gross value-added manufacturing considerations (Morrison, 2013).

After the reforms, international companies were attracted by the cheap cost of production in China and capitalized on it. Interest in China was primarily focused on its manufacturing benefits and, with the country competing on cost saving, quality and craftsmanship suffered. However, the wage advantage also began to be eroded as the cost of labour increased (Morrison, 2013). With the erosion in the benefit of low production costs, combined with the nation’s population size, socioeconomic changes, increased disposable income, and disposition to spend on luxury, China’s focus for international firms has changed from being the factory of the world to the market of the world.

A particular historical importance for luxury and fashion development in China in the past was represented by Beijing – initially the capital of the north of China – but also by Shanghai. Shanghai, literally “the city on the Sea”, was, until 1842, simply a fishing village. It was after the First Opium War (1839–42) that Shanghai became a strategic location, as the British named it a treaty port and transformed it into a city integrating autonomous foreign concessions, the French, British, and American being the most relevant. Compared to other colonial cities in the world, such as Hanoi or Bombay, Shanghai was distinctive. Its foreign population was definitely more genuinely international compared to those of British India or French Indochina. Among China’s foreign settlements, Shanghai was unique in its specificity; it was certainly larger and wealthier, and yet far more relevant to the home countries of its non-Chinese inhabitants. Usually, harbours did not have a dominating position with respect to their cities; this was not the case with Shanghai. The foreign element in Shanghai had also been small to begin with. However, by the beginning of the 20th century, it had grown in number and influence and completely and overpowered the city of which it was a part. Shanghai also became the dumping ground for surplus foreign products and the exit point for raw materials and other supplies from China to its home markets. In this way, Shanghai became a key city for China’s internal and international role in terms of foreign trade and relations. In its new role, Shanghai became a “melting pot” of foreign cultures, which, together with their trade, also brought their traditions and artistic imprint to architecture, fashion, and design, resulting in an interesting mix of Eastern and Western styles (Dong, 2000; Wasserstrom, 2008).

In its glory day, Shanghai became known for the magnificence of its architecture and its innovative art and flourishing business activities in the whole of Asia. In contrast with Imperial times, when the typical refined qipao was matched with exquisite luxury garments such as silk stocking and shoes or perfumed ricepaper and wood fans, during the 20th century, due to the influence of Western culture, Shanghai women began to focus on the concept of being refined, chic, and fashionable. Women started wearing high heels, together with sexy body-sculpted qipao showing their legs, choosing their way of being beautiful, with a new concept of beauty and refinement not imposed by the emperors but inspired and adopted freely by themselves. Shanghainese showed a unique interest in refined luxury goods for fashion, cosmetics, and households. However, the innovative social approach to beauty, luxury, and fashion started by Shanghainese women was eradicated dramatically by the supremacy of the People’s Republic of China and, as previously mentioned in this chapter, with the Cultural Revolution in particular. Shanghainese women had to wait for the advent of Deng Xiaoping, opening China up to the external world again, to rebuild their concept of beauty and their appetite for fashion and luxury goods.

In relation to China’s increasing involvement in the globalization process and the consequent search for improved services and goods, Chinese accessibility to and appetite for luxury goods have grown. Despite the fact that the Chinese social structure is changing and, in recent years, has shown the appearance of new classes in addition to the upper and lower (the middle class or the so-called “new rich”), the internal structure is still highly stratified, with a large wealth gap between the wealthy upper class and the poor. However, the appearance of these “new rich” has redefined the luxury consumption scenario, as this segment of consumers has also began to “consume” the most expensive category of goods and services on the market – luxury ones – in order to show off their purchasing power and their newly acquired social status. Luxury goods and services have been in high demand in relation to their role as “visible markers” for the “new rich” to flaunt their social status.

Luxury culture has been transformed in relation to the various stages of historical, social, and economic periods. China, the awakening dragon, is already testifying to a transformation in the attitude of its shoppers towards luxury. Despite the Maoist period and its rejection of any form of the exclusive luxurious refinement that China experienced during the Imperial era, the Chinese can trace, in their glorious past, a clear awareness of what living a luxury lifestyle could represent. At the moment, with China’s economy growing so fast, Chinese consumers are already enjoying a new form of luxury, an approach principally associated with the experience from the consumers’ perspective. Top Chinese spenders still consider luxury to be associated strictly with the idea of traditional status and prestige. However, a new segment of the “new rich” has a different consumption mode and aspirations. When travelling, they decide to stay in middle-budget hotels and sometimes even consider shopping in flagship outlet stores. For these “luxury aspirers”, who consider luxury to be expressed by the number of luxury goods they possess and the for which they shop, luxury is not yet a lifestyle in which their everyday life is embedded, as it is for the upper class (Danziger, 2004). It is not easy to understand if this segment of the newly wealthy will enter a new phase and start to focus more on the luxury experience instead of luxury goods per se, as, at the moment, the cultural value of “face” is still part of the most traditional Chinese culture and heavily influences their everyday life and orientation towards luxury as social identification. However, those top spenders with rooted and well-developed luxury habits and awareness – acquired thanks to their consolidated social status and identity, as well as their appreciation of a luxury life – have already entered a second stage of the “luxury culture” by starting to be more oriented towards the “experience”, instead of simply being focused on the luxury good or garment, inheriting and reinterpreting the “luxury attitude” lived by their ancestors in their daily lives during the Imperial era.

The unique economic growth that China has shown in recent years has created an increasing amount of new wealt...

Table of contents

• Cover
• Title page
• Copyright
• Contents
• Prologue
• Preface
• Acknowledgements
• Introduction
• Part I: The Luxury Industry and the Chinese Sociocultural Context in Transition
• Part II: Chinese Customers – Insights into the New Chinese Luxury Experience
• Part III: The Emergence of the Creative Phase – From International to Chinese Brands
• Conclusion
• Notes
• References
• Index