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| Tom Doctoroff |
Tom Doctoroff:
In the fifteen years since DeBeers entered the market, the penetration of diamond engagement rings has risen from 8 percent to 80 percent. The company achieved this by understanding that marriage is perceived differently among Chinese than Westerners. While the latter like to believe that passion and romance last forever, the former see commitment as persistent, not love as such. De Beers gave the Chinese man a tool to demonstrate his reliability.
Most Chinese consumers are still loath to purchase expensive foreign appliances because they are used only at home and the quality of local brands is acceptable. However, products that have high visibility or can be displayed have made great strides. Siemens, despite an average price premium of 40 percent versus Haier, is the second largest refrigerator brand after Haier.
The bottom line is that the product is a means to an end. The Chinese have no excuse for buying luxury goods, given their level of income, but luxury is so externalized it enables inconspicuously conspicuous consumption--that is, the ability to show off without being seen to do so. It is all about convincing consumers that the product will help them climb the social ladder. If there is a craftsmanship to selling products in China, it’s communicating how a product will help the owner solidify status while avoiding clichés.More in the Fast Company.
Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in his speakers' request form.
Tom Doctoroff is the author of the recently published book "What Chinese Want: Culture, Communism and China's Modern Consumer
". More on Tom Doctoroff and his book on Storify.
4 comments:
The main issue with luxury goods in China is the amount of tax they attract. The component parts of luxury tax - import duty, VAT and consumption tax - imposed on luxury products last year in China equated to income of some USD187.9billion in 2011. The high price of these goods in China as opposed to elsewhere now means that 80% of luxury goods purchases by Chinese nationals are now conducted outside China. Our views on this and the potential for reducing luxury tax can be read here: http://www.china-briefing.com/news/2012/06/07/luxury-tax-in-china.html
So, do you think it makes sense for a company like Apple in setting up a store in Shenzhen? People are better off when they hop over to Hong Kong.
I'm amazed about the huge investments in real estate in cities like Shanghai for luxury brands. Do these investments make sense, when it is mainly for window shopping?
A, I was too fast
http://www.china-briefing.com/news/2012/06/07/luxury-tax-in-china.html
The point being not everyone in Shenzhen can "hop over" to Hong Kong. They - and everyone else in China - needs a special permit to do so. That's why you have the apparent incongrinuity of having an Apple store in Shenzhen selling products with a luxury tax price tag, and just across the border in Hong Kong at considerably less. If you can travel to HK, then great. If not, you can hire someone to go buy it for you there - which is why Hong Kong stores like Apple, ina ddition to Gucci, Cartier and LV all have long queues outside waiting to get in.
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