Luxury consumer behavior in Mainland China Essay

China recently became the world’s second largest market for luxury goods with an annual increase of more than 30% in 2010, even surpassing Japan. Further estimates predict that China will become the largest upscale product and consumer goods market in the world. How does a country with an average GDP per capita of $3,800 USD, and classified behind 105 in the world ranking possess such a strong propensity for consuming luxury goods and products? Specifically, how does one make sense of Mainland Chinese luxury buyers and their respective consumer behavior? This article answers these strategic questions for foreign companies and marketers who are interested in the luxury industry in China, and for those who want to develop a greater understanding of one of the world’s largest market and its 1. 3 billion consumers. â€Å"At the core of this paper is an explanation of Mainland China’s 21st century value system that can only have been shaped from the country’s rich history. † At the core of this paper is an explanation of Mainland China’s 21st century value system that can only have been shaped from the country’s rich history. Answering how China has become the buoyant socialist state economy it is today, is to shed light onto the country’s various economic, social, cultural and psychological histories. The history of luxury consumption in China is one of the country’s oldest. It remains deeply rooted into China’s cultural and sociological landscape and has subsequently influenced other Asian countries such as Japan, Korea, Vietnam, Thailand, Malaysia and Singapore. The contemporary Chinese antique market and auction houses offer a telling explanation of how luxury is consumed in China. During the economic downtown, collections of Chinese antiquities were sold at Christie’s auction house for far more than their estimated value. In 2009, a 12th-century B. C. bronze vessel from the Western Zhou Dynasty sold for over 14 times its estimated value. These antique collectors are, in large part, Chinese or Asian. Collecting an expensive, storied antique is viewed in a similar vein to purchasing a luxury good. To own an artifact at home was tantamount in grandeur to that displayed by museums around the world that also housed ancient Chinese art collections. In sharp contrast, during China’s Cultural Revolution from 1966 to 1976, tradition and Chinese cultural heritage was viewed negatively as something boring, worthless, and divisive. History and heritage were destroyed in favor of new equalizing ideology. The Cultural Revolution created a cultural void, and those affected would go on to be known as the ‘lost generation’. Currently in their 50s, some members of the ‘lost generation’ have attained new wealth. They partake in the purchasing of luxury goods, and often lack subtlety. They are ostentatious and inherently possess a skewed view of what is traditional or socially accepted, subsequently explaining for very extravagant behavior. A few examples include the rebuilding of the Chateau de Maison Laffitte of Paris in a suburb of Beijing, or one wealthy man’s endeavors to build an exact replica of the U. S. President’s White House in a rural area of Anhui province. The underlying theme is the Mainland Chinese desire to mimic emblems of power from Western culture. â€Å"Today, the Mainland Chinese consumer’s 21st century value system is comprised of three salient parts: the traditional Chinese value system persists, the socialist Chinese value system (dominant), and the Western value system which is often regarded like a trend. † As the West represents advanced technology, super powers and modern values, the majority of Mainland Chinese seek to pursue these values the best they can. Therefore the pursuit of Western values can be said to have a strong influence on the Chinese consumer value system. Today, the Mainland Chinese consumer’s 21st century value system is comprised of three salient parts: the traditional Chinese value system persists, the socialist Chinese value system (dominant), and the Western value system which is often regarded like a trend. The updated Chinese socialist value system of Deng’s reform and opening policy brings modernity, wealth, achievement and success, while the Western values bring personal liberty, post-modernism, also modernity, achievement and success. Together, the Chinese consumer’s 21st century value system is a veritable melting pot; strong values of modernity, wealth and success are dominant. Thus, the pursuit of modernity, wealth and success remains the key in explaining luxury consumer behavior in Mainland China. From this explanation of the dominant set of values within Chinese society, it is hardly surprising to discover that Mainland China’s car sales in 2009 averaged 13 million, even exceeding car sales in the U. S.. Additionally, sales for German car manufacturer Mercedes Benz went up 77%. Deng’s Open reform policy in 1978 allowed for individuals to pursue wealth through various means. Economic development transformed the social structure from a model that was horizontally equal to that of vertical extension and growth. Now, after three decades of inexistence from 1950 to 1980, social classes have reemerged. During the following three decades from 1980s to 2010, social wealth increased by an average 10% of growth each year. The Mainland Chinese consumer saw better financial opportunity and became increasingly wealthy. Financial and career success and achievements naturally became a way for people to distinguish themselves from others. It became de rigueur to openly display a person’s individual success, and luxury goods and designer brands effectively communicated status and wealth. However, at the core of this newfound wealth and status was the honest pursuit of better living conditions. Better living conditions meant for higher quality products and upscale brands. Therefore, international luxury brands perfectly fulfilled the needs of Mainland Chinese consumers from all angles – cultural, social, and economic – attributing for a more modern, powerful, and self-confident approach to life. â€Å"At the core of this newfound wealth and status was the honest pursuit of better living conditions. Better living conditions meant for higher quality products and upscale brands. † In Mainland China, one may see a person carrying an authentic Louis Vuitton bag while riding a crowded, public bus somewhere in the rural countryside. Luxury goods are consumed on a mass level, and are not confined to a select few. The central cause for an increased consumption of luxury products results from the country’s socialist value system. During the transitional period from a pure planned system to a market-driven economy, consumers inherently retained the idea of equality. Government authorities also try to maintain and communicate that equality in Mainland China is crucial to national identity. Based on steady economic development and a newfound consumer confidence towards the future’s potential, Mainland Chinese consumers believe that they are, in essence, the same as each other. Even if they cannot afford a luxury brand item today, they will save up several months of savings to eventually have it. It is important to note that all Chinese luxury consumers do not aim to show off. There is a homogenous identity and behavioral patterns that come with new wealth. However, only focusing on this collective homogenous identity, and not pay attention on the differences would cause a marketing plan to fail. The Mainland Chinese market is large and sophisticated enough to use multi-criteria methods to understanding its various crossed aspects, such as psychographic, geographic and demographic aspects. Psychographically, consumers are different from socio-psychological and cultural attitudes towards luxury point of views. These psychographic variables segment in the market into four groups known as luxury lovers, luxury followers, luxury intellectuals and luxury laggards with three dimensions according to the different psychographic aspects: collectivism-individualism, analytical-impulsive thinking, conspicuousness-functionality for luxury goods. Geographically, the regional differences in China (in terms of climates, cultural customs and languages) are varied; they are the equivalent to the collective differences found throughout Europe. China can also be divided into four large regions: North, South, East and West. Cities within a given region can be further classified into tiered cities according to city’s level of economic development. Demographically, the factors classify naturally consumers into traditional groups. For the purposes of this paper, the research sample used is meaningful for study as the income levels are controlled at ten times the national average income. This ensures luxury consumption because of the sample’s disposable income level and the easy affordability of luxury goods. Age is also controlled in the range of 25 to 45 years of age in order to be sure that the sample belongs to members of Mainland China’s new generation, avoiding the inclusion of members from the ‘lost generation’ entirely. All sample participants were educated at the university level and possessed an undergraduate degree. The psychographic segmentation of Chinese luxury consumers as luxury lovers, luxury followers, luxury intellectuals and luxury laggards cross with geographic factors to show the regional distribution difference of the four groups in various parts of the Mainland Chinese market. The results can be found in Table I and Table II. Table I: Psychographic Segmentation of Chinese Luxury Consumers Table II: Chinese Luxury Consumer Segmentation Geographical Distribution in China The segmentation proves the heterogeneity of Chinese luxury consumers although conspicuousness is dominant for luxury lovers and followers, representing 31. 2% of the total market in first tier cities. Still, conspicuousness is very visible and serves as motivation especially among ‘first movers’ for purchasing new products. First movers are often portrayed by the media as opinion leaders, and are they are tactfully used to influence the market. However, intellectuals and laggards focusing on functionality and individualism are still the main dominant groups for luxury consumers in China even in first tier cities. Why are luxury’s main consumers still quiet and conservative about their attitude towards luxury goods? â€Å"After the initial introduction of international luxury brands in China, the curiosity of Mainland Chinese consumers wore off as they began to seriously confront the psychological discomfort associated with the absence of a Chinese luxury brand. † The conservative conspicuousness is coming from the cultural and psychological contradiction: 1) the admiration of ancient China’s luxury lifestyle influences the luxury pursuit today. Currently, luxury brands are widely available from many foreign countries, such as France, Italy, and Switzerland. After the initial introduction of international luxury brands in China, the curiosity of Mainland Chinese consumers wore off as they began to seriously confront the psychological discomfort associated with the absence of a Chinese luxury brand. Why was there no Chinese brand capable of carrying out the essence of luxury found in ancient Chinese culture? 2) Chinese tradition encourages people to be benign and to not have an extravagant life. Exercising frugality and discreetness are seen as the proper way for a person to behave in society. This virtue of frugality and discreetness is also the socially accepted norm by the Chinese socialist value system. Therefore, frugality and discreetness received two confirmations from two value systems (tradition and socialist) in comparison to modernity, wealth and achievement values, which were confirmed twice by socialist and western value systems. As a result, the internal psychological values within the 21st century value system of Mainland China are conflicted. This conflict is reflected in the attitudes and behaviors of its consumers, especially in regard to the luxury market, and accounts for the following: an ambivalent attitude towards luxury consumption and psychological dissonance after purchasing. An exception is gift giving or special product categories. â€Å"The conflict of having a centralized power structure versus liberty and an openness of the market creates individual wealth while limiting the expression of wealth and status. † Conservative conspicuousness can also be understood by the unique socialist system within Mainland China’s market-drive economy. The conflict of having a centralized power structure versus liberty and an openness of the market creates individual wealth while limiting the expression of wealth and status. Those consumers who are typically found in politics or a government related environment are said to be luxury intellectuals. In this setting, wealth should not be overtly expressed or shown off to others. Products that are discreetly designed, such as ties, scarves, business suits, or handbags without logos are most popular. Alternatively, if an individual outside of politics consumes luxury products, it is most likely that he or she is a luxury lover or follower. (Please see Table III) Table III: The Conservative Conspicuousness of Chinese Luxury Consumers The potential for luxury industries to thrive in the Mainland Chinese market is high. With steady economic development, more information on luxury goods readily available online and offline, the increasing relevance of e-commerce, and a greater awareness for a higher quality of life, consumerism will propel to the center of this dynamic market. As consumers get more savvy and sophisticated, the Mainland Chinese market will, in due time, be much more difficult and complicated to operate. About the author Pierre Xiao LU is Assistant Professor of Marketing at School of Management of Fudan University in Shanghai. He specializes in luxury consumer behavior study, luxury brand management and selective retailing. His theories about Chinese consumer formed the fundamental understanding for international brands towards this market and largely adopted by successful upscale brands. Before he joins Fudan University, he received his PhD in marketing from ESSEC Paris where he is visiting professor of LVMH Chair and of its Asian campus in Singapore. Lu is author of â€Å"Elite China, Luxury Consumer Behavior in China† and co-author of â€Å"Luxury China, Market Opportunities and Potentials†. He can be reached at xiaolu@fudan. edu. cn. References †¢ Michel Chevalier and Pierre Xiao Lu, Luxury China, Market Opportunities and Potentials, Wiley and sons, 2010 †¢ Jacques Gernet, Le Monde Chinois, Paris: Armand Colin, 1999 †¢ Alexandra Peers, What’s Still Recession-Proof, The Wall Street Journal, September 24, 2009 †¢ Pierre Xiao Lu, Elite China, Luxury Consumer Behavior in China, Wiley and Sons, 2008 †¢ China car sales top U. S. by Gilles Guillaume, Reuters, January 11, 2010 †¢Ã¢â‚¬ ¢ http://www. reuters. com/article/idUSTRE60A1BQ20100111 †¢ Mercedes-Benz says 2009 China sales up 77 percent, Reuters, January 11, 2010 †¢Ã¢â‚¬ ¢ http://www. reuters. com/article/idUSTRE60B0EY20100112 †¢ Pierre Bordieux, Distinction: A Social Critique of the Judgment of Taste, London: Routledge, 1984 †¢ Pierre Xiao Lu, Elite China, Luxury Consumer Behavior in China, Wiley and Sons, 2008 †¢ Michel Chevalier and Pierre Xiao Lu, Luxury China, Market Opportunities and Potentials, Wiley and sons, 2010 †¢ Pierre Xiao Lu and Benard Pras, Profiling Mass Affluent Luxury Goods Consumers in China: a Psychographic Approach, Thunderbird International Business Review, forthcoming.

Implementation of Integrated Performance Management Essay

Implementation of Integrated Performance Management - Essay Example TQM has a preventive approach and not a detective approach to work (Walton, 1986). It is a proactive system and not a passive one and stresses on removing the defect rather than just locating it. Deming (1986) and Walton (1986) both state that the detective systems have serious disadvantages. Firstly these are results and as such cannot help in correction of past errors. Secondly, the greater loss is that due to errors the customer will be dissatisfied. Thirdly the direct cost of defect detection and later correction or replacement is doubled. Fourthly the human cost by way of fear of performance and loss of pride in workmanship is the greatest of all (Walton 1986). All this can be avoided by following TQM process by not allowing a defective product or service to be sent from production lines. Obviously prevention is better than cure. Performance management should be understood as a tool for measuring corporate objectives and is calculable in tangible form in terms of outputs and finally deliverables to customers. The ultimate goal is to deliver total quality and 100 percent value to the end customer. (Zairi 1994) and this is the standard or benchmark of acceptable performance management that describes the optimum use of all resources. Zairi (1996) goes on to state that product life cycles are getting shorter making it imperative for organisations to turn to innovations with greater speed to remain effective in their markets. Decision making thus becomes dependant on quality assurance systems that provide the required information for these judgments. Performance management is therefore essential to evaluate the quality and to ensure acceptability by customers. According to Zairi and Youssef (1998) in the global context today competition cannot be met with cost efficiency alone. Quality plays an equally important role in assessing competitiveness. Quality is a function of (TQM) and

Discuss the main causes and effects of gun crime in the USA Essay - 2

Discuss the main causes and effects of gun crime in the USA - Essay Example Subsequently, the following paper makes an insight into most widespread causes and effects of gun violence. One if the factors the most commonly blamed for gun crimes is availability of firearms. The debate over the right of the general population to bear firearms has been among the actively and commonly debated ones. From one side, opponents of gun control argue that any law denying such right would be a violation of the Constitution that allows one to protect property and life from criminals, who would still have a gun, regardless of the prohibition. Although the following position may contain the grain of logic, it, in fact, leads to more crimes, research shows. A recent study that compared data from developed countries on gun ownership and subsequent deaths clearly concluded that more guns mean more gun-related deaths. †There was a correlation between guns per head per country and the rate of deaths with Japan being on one end of the spectrum and the US - on the other† (Boseley, 2013) Subsequently, availability and easy access to guns can be regarded as one of the essentia l causes of gun crimes in the U.S. Another possible cause of gun violence in the United States has been called social conditions that allow the existence of risk factors most commonly associated with gun violence. According to Walker (2014), one of the recent strategies that proved its effectiveness for alleviating the rates of gun crimes has been a mentoring program, focusing on the at-risk population and preventing it from the involvement in felonious situations and aggressive behavior. Success of the program in reducing crimes occurrence proves that unfavorable social conditions are associated with gun crimes. The commonly cited risk factors are unemployment, poverty, and poor education. (Walker, 2014; "Gun violence prevention,") Therefore, the low quality of life should be regarded as a predictor of gun crimes. Apart from that, it is argued that the lack

Nelson and Mr. Head in 20 years Essay Example | Topics and Well Written Essays - 1000 words

Nelson and Mr. Head in 20 years - Essay Example Nelson knows that Mr. Head is really old now and he doesn’t want him to leave this world without seeing other continents. Nelson knew that Mr. Head is old and old people create very strong associations with objects and surroundings. However, he was determined to show him Africa, the way he showed him the city and the Artificial Nigger. Nelson owns a clothing store near his house and is in good business, owns a fat bank account and has contacts that can safely ship them to Africa. The only problem is Mr. Head’s stubbornness. But Nelson is also the grandson of the same stubborn man. He is determined to drag him to another continent and show him around. One fine Tuesday morning, Mr. Head is up earlier than usual and decides to go for a little walk around his house. He grabs his stick, puts on his slippers glances over to Nelson’s room where he’s sound asleep and walks out the door. It’s winters and the morning breeze is chilling. Mr. Head buttons up his shirt to the neck and wraps his free arm around him in an unsuccessful attempt to cover him from the wind. He turns around and takes a look back at his house which is 20 odd yards away from him now and in a moment of perplexity decides to continue his morning walk. All the time he suppresses the voice in his head that it is a bad idea to leave the house in such a cold weather, but there is strange spirit within him that is pulling him forward. Maybe he wants to prove to himself that he is still a man and can take care of himself. He doesn’t want Nelson to escort him to the bathroom, to the breakfast table or to tie his shoelaces. He is feeling tired now, and very cold. His determination is giving up. He is trembling now as he frequently wipes of the mist from his glass with the sleeve of his sweater. Mr. Head is panting and the walking stick is wildly shaking now and he realizes his mistake of leaving home. He shouldn’t have left the house in

Greece Economic Crisis of 2011 and its Prospects in the EU as its Essay

Greece Economic Crisis of 2011 and its Prospects in the EU as its Member - Essay Example 306). The deficit stood at 12.8 percent of GDP instead of 3.6 percent of GDP (Akram et al. 307). Inflation also was higher than the EU average (Xafa). Greece also accumulated a large current account deficit. Consumers demanded foreign goods, which resulted in a current account deficit of $51.5 billion in 2008 (Akram et al. 309). Private debt as a result accumulated too. By the end of 2009, Greece was downgraded by most rating agencies. According to Akram et al., â€Å"in October 2009, Fitch had down shifted the Greek credibility to A- and further degraded to BBB+ by the end of December 2009. Standards & Poor’s and Moody also downgraded the Greece on the same grounds† (306). The prognosis by many was that Greece needed to leave the Euro zone (Akram et al. 306). Some even recommended that the Euro Zone should be partitioned on a north – south basis (Akram et al. 306). The trust of investors was destroyed. The government failed to impose reforms. Administration also failed to properly assess the situation in Greece prior to 2009 (Akram et al. 308). Corruption levels were high too, which placed Greece at the bottom of South Europe (Akram et al. 308). Tax evasion stood at 30 percent of GDP (Akram et al. 308). Instead of flowing into government pockets, and then being used to repay the debt, this money stayed in private hands. As a result, investors fled as Greece was downgraded. The Euro Zone was supposed to decrease exchange rate fluctuations of its member – countries. According to Mishkin, large exchange rate fluctuations damage the economy (319). They damage financial institutions and banks as fluctuations generate losses (Mishkin 319). A single, strong currency can decrease these fluctuations. The single currency is still overwhelmingly a...This paper is the best example of analysis of the economic crisis in Greece in 2011. The root causes of the crisis are identified, and possible ways of the crisis overcoming are presented. Prospect s of the EU as an integral organization are described Origins of the crisis lie in the Greek public debt. In the 1980’s and early 1990’s, interest payment on public debt comprised a large share of the state deficit). Until the end of the 1990’s, despite high levels of public debt, Greece had managed to maintain fiscal control and debt regulation, largely because of the EU membership and lower interest rates it had to pay on its debt. Greece was unable to finance its deficit without indebting itself, because of low levels of public saving since the 1980’s. As a result, most of the Greek public debt, 80 percent, ended up being owned by 2010 by foreign banks. Greece also accumulated a large current account deficit. Consumers demanded foreign goods, which resulted in a current account deficit of $51.5 billion in 2008. Private debt as a result accumulated too. By the end of 2009, Greece was downgraded by most rating agencies. The trust of investors was destroyed. The government failed to impose reforms. Administration also failed to properly assess the situation in Greece prior to 2009). Corruption levels were high too. Tax evasion stood at 30 percent of GDP. Politically, an exit by Greece could imply a disaster. The EU would not be viewed as a strong union. Investors might view it unfavorably as well, since failure to keep Greece could be viewed as a forecast for future crises among the EU members. Moreover, if Greece exits and is bailed out at a lower interest rate, other countries would find it profitable to leave as well.

Fashion changes in the American popular culture of the 1960s Research Paper

Fashion changes in the American popular culture of the 1960s - Research Paper Example The essay "Fashion changes in the American popular culture of the 1960s" discusses what changes happened in fashion in the America of 60th. The 1960s decade dawned the smiley face that appeared on almost everything including T-shirts. Characteristically, the smiley face gained more fame in the latter 1960s. The T-shirts and other items also had paintings of phrases of iconic events that epitomized the decade. The phrases included, â€Å"Martin Luther King†, â€Å"Civil Rights and Riots†, â€Å"The Space Race†, â€Å"Cuban Missile and Crisis†, â€Å"The Space Race† and â€Å"Vietnam. The term â€Å"hippie† derived from the word hipster. The hippies mainly represented an outgrowth from the Beat movement of the 1950s. The hippies often claimed to be aiming at freedom and re-embracing nature. They, therefore, represented an alternative interest in lifestyle as well being rebellious of the society that appeared to be repressive and conformist. Th e hippies made their clothing from natural fibers such as cotton and hemp. They also liked their clothing to be loose. Both men and women kept long hair with fussy styling, and they avoided hair products. They black trousers and turtlenecks worn by the female and male Beatniks metamorphosed into jeans and peasant blouses. Any hand-woven, hand sewn or hand knit macramà © soared in its prices. Gradually, the hippie fashion culture evolved into individuals dyeing their clothing. This colorful tie and dye fashion gain popularity almost immediately. In the fashion of the 60’s dressing appearance revolved.

Mystery of Free

Mystery of Free Will and Moral Responsibility Essay We all seem to think that we make decisions on our own and have the ability to choose from making different decisions. We do what we want to do because it seems as if we have many options to choose from to be in control of our own destiny. The basic question of the mystery of free will is that, â€Å"Are we able to really make our own decisions or are the decisions we make already predetermined (with it being inevitable of us making that certain decision)? † Our futures seem to be undetermined and have an infinite amount of possibilities of which we are able to choose freely among. Think of your life as a garden of forking paths with each path being a certain decision you make that affects your future. However, many philosophers believe that the thesis of determinism threatens this model of free will. If you may know, determinism is the theory that the universe at any point in time is entirely fixed by the state of the universe at a prior time, in combination with the laws of nature. So the reason why this threatens the ‘garden of forking paths’ model of free will is that how can we have so many options to choose when determinism has already chosen one for us? This leads us to another central issue, which is: â€Å"Can free will and determinism co-exist? † The two ways philosophers go about considering this question is either with a ‘yes, they can co-exist’ or ‘no, they cannot. ’ If you were to believe that, yes, free will and determinism can co-exist, then you would be considered a compatibilist. Answering no, free will and determinism cannot co-exist, you would be considered an incompatibalist. Peter Van Inwagen, a prominent figure in the philosophy world, created the consequence argument. In his argument, Van Inwagen explains that if determinism is true, then our acts are just a consequence of the laws of nature and events in the remote past. And since it’s not up to us what went on before we were born nor what the laws of nature are, the consequences of these things (including our present acts) are not up to us (PowerPoint 1, Slide 23). In short, he explains that if determinism were to be true then no one would ever or has ever made a choice on their own about anything. So if no one has power over the facts of the past and the laws of nature and that no one has the power of the fact that the facts of the past and laws of nature entail that only future is possible, therefore, no one has power over the facts of the future. To further demonstrate his reasoning of the consequence argument, Van Inwagen created the No Choice Principle (NCP). In this example, let ‘p’ = â€Å"Plato died long before I was born. † Let ‘q’ = â€Å"I never met Plato. † Now, if I have no choice about ‘p’ and no choice about the fact that (if ‘p’ is true, then ‘q’ is necessarily true. Therefore, I have no choice about ‘q’ (PowerPoint 1, Slide 26). How can one have a choice about something that is inevitably going to happen if one has no choice about it happening? Van Inwagen’s consequence argument is based on the NCP. Now, if determinism and free will can co-exist (Compatibilism is true) then the No Choice Principle must be false (Remember, you would have no free will and no choice of ‘q’ happening because it was never in your control to choose so). But, the NCP is not false, therefore the Compatibilism theory is not true and with this being said the free will thesis and theory of determinism cannot co-exist. I believe that free will is incompatible with determinism, but free will exists because the thesis of determinism is false. I choose this opinion because, going to back to the ‘garden of forking paths’ model, if I come across a path with three forks in it I have the ability to not take one or two of those paths and have the ability to freely choose which path I would prefer to take. I know that I have the ability to choose because I can take either 3 paths, but I only choose to take the one which I desire most. Determinists may say that I took that path because it was inevitable. Whichever of the 3 paths I took, it would be inevitable that I took it. The reason why I believe in free will and not the coexistence of both free will and determinism, and determinism itself is because there is no way to prove something of happening inevitably in every occasion. Determinists could say that just about anything was inevitable of happening, what’s their proof?