1. Meaning of Luxury
Author: Jacky Cheung
2011 Sept

2. CHINA LUXURY MARKET OVERVIEW
China has surpassed the U.S., following Japan, as
the 2nd largest country in luxury spending
There were a total of 875,000 individuals with
personal wealth over RMB10M
• 55,000 of them with over RMB100M; 1,900 with
over RMB1B
80% of luxury goods / services purchasers aged
under 45
• Vs. Japan 19%, the U.S. 30%
Gucci Group has recorded a 42% growth in China in
2008
Source: VIP Magazine (2010 Aug)

3. AND THE MOST LIKED LUXURY BRANDS…
Category:
Hotel Category:
Apparel
Category:
Super Luxury Sport Cars
Category:
Jewelry
Category:
Luxury Sedans Category:
Accessories
Category:
Watch
Source: VIP Magazine (2010 Aug)

4. LET’S LOOK AT WHAT “LUXURY” MEANS IN WORDS...
Oxford English- Chinese Dictionary
/ n 1 [U] (regular use and enjoyment of) the best
and most expensive food and drink, clothes,
surroundings, etc
豪华; 奢华; 奢侈:

5. WHAT IS IMPLIED IF IN CHINESE?
豪 华
•person of extraordinary ability magnificent;gorgeous
•hero beautiful
•powerful and rich flashy; extravagant
bold and unconstrained; forthright splendor
奢 侈
extravagant arrogant;selfconceited
excessive excessive
exaggerate;magnify indulge
enlarge;aggravate;extend;
surpass
broaden

6. TO SUMMARIZE...
豪 华 奢 侈
Be bold, magnify & exaggerate
what you have, we don’t care
even if that is unnecessarily
excessive
And then show-it-off, tell the
world we’ve got it, even if that
could be considered arrogant

7. TO SUMMARIZE...
豪 华 奢 侈
When it comes to the culture of
LUXURY, it contradicts some
fundamental Chinese values, e.g.
be modest中庸, be in harmony和
谐 , blending in with the rest
(people, surroundings)
BUT WHY??????

8. TAKE A LOOK AT THE FUNDAMENTAL
HUMAN / CULTURAL VALUES FIRST...
ME US
Individualism Collectivism
Luxury starting point – Chinese culture starting
personal indulgence point
Luxury in China...
ME VS. THEM
The fulfillment of INDIVIDUALISTIC value / desire / vanity
with a REFERENCE / BENCHMARKING to the GROUP

9. A closer look of “Me vs. Them” in Chinese context…
THE RUBBER BAND THEORY
Totally “US” ME VS. THEM Totally “ME”
The “Rubber Band” that To “show-off” means But NOT to BREAK away,
binds a group together – how far you can STRECH detach from the group.
representing shared within this rubber band Otherwise, it is “Weird”,
“Strange”, “Ostentatious”
cultural values and
lifestyle preferences

10. THE KEY IMPLICATION…
Aspiration to own luxury is NOT only
driven by personal desire, or “self-
indulgence”, in Chinese culture, it is
just as important (if not more
important) that it is driven by
COVETOUSNESS 攀比
It is still originating from Collectivism,
but in a rather twisted manner to what
we usually expect; we move from the
need to blend in, to the desire to
stretch

11. AN AD WE SAW SHARING THE SAME INSIGHT…
“As a gift that comes with
this car...
JEALOUS EYES”
“ATTENTION FROM THE CROWD”

12. HOW IMPORTANT CAN THIS COVETOUSNESS
(COLLECTIVISM) BACKGROUND BE…？
The 2 largest markets for Luxury are both
from a strong collectivism culture – the
Japanese even scrutinize others to gauge
how much OT work they do to judge their
income and job security; a core reason for
the proliferation of those 24 hour cafes!
Next?

13. TO MARKETERS , ADVERTISERS, AND
RESEARCHERS…
It is NOT just to understand what
she wants, likes
It is just as important to
understand her FRAME OF
REFERENCE:
-What is the rubber band like
that binds the group together?
- How far could this be
stretched?

14. MARKETING NOTION #1
KNOWN but not owned
By default, luxury means exclusivity –
only a few could own / enjoy
But even though the MASS may be unable to
access the brand, it has to be WELL KNOWN
to THEM (remember the rest within the
rubber band – their peers)

15. MARKETING NOTION #1
KNOWN but not owned
DEFINITELY
LUXURIOUS!!!
Even a 5 year
old child can
name it
“Drink Louis XIII with Fan Zhi Yi (China
National Football Team Leader)”
The first time when China entered the World Cup
Finals (2002), the government and national
football team celebrated using Louis XIII, which
was widely reported in newspapers

16. MARKETING NOTION #1
KNOWN but not owned
Hear the consumer voice directly as
he comments on luxury watches
(next page)

17. MARKETING NOTION #2
A STORY TO TELL – be legendary
- be it true or not (even rumors will do)
A conversation with respondent perhaps self-explanatory:
Moderator: Why LV is luxurious in your mind?”
Respondent: You know what, it is said that when they
found the sunken Titanic, the first thing they dig out
from the ruins was an LV suitcase!
Moderator: Wow!...(but so what...???)
Respondent: Even more, when they open that suitcase,
there was no single drop of water found inside
(amazing water proof function)!!!
Moderator: Wow, wow!! How did you know that?
From where have you heard of this?
Respondent: mmm....cannot remember exactly, may be
my friends, on the Internet...?
Moderator: Oh!? Is it true? Do you believe that?
Respondent: er...???? (Who cares????)

18. MARKETING NOTION #2
A STORY TO TELL – be legendary
- be it true or not (even rumors will do)
Panda Cigarette – the most expensive brand of
cigarette . Only PUBLICLY launched after 2000.
But all smokers “KNEW” this brand long before –
there was a MYTH shared by all smokers that our
great leader Mr. Deng Xiao Ping only smoked a special
cigarette that was MADE EXCLUSIVELY FOR HIM, and
that was called Panda
But NO ONE have ever seen it nor tried it before 2000.

19. MARKETING NOTION #2
A STORY TO TELL – be legendary
- be it true or not (even rumors will do)
No sexy story or story of intrigue yet? Don’t worry.
At least get yourself into a “TOP 10
Refer to a website called “China BRANDS” ranking.
Top 10 Brands” (www. China-
10.com) in which you can find -No one cares what are the evaluation criteria.
numerous top 10 brand rankings,
anything one could, and even -No one cares who conducts the evaluation behind
could not, imagine. Phones, the ranking.
laptops for sure, and even building -No one cares how you define the competitive set.
materials like concrete, electrical
wiring is also included with a
ranking of top 10 brands. All they care about is the result – “YOU ARE
NAMED AS TOP 10”

20. MARKETING NOTION #2
A STORY TO TELL – be a “Top 10”
At least in the Luxury Watch
market, these “Top 10” rankings
are highly influential to the
extent that it is a prerequisite to
consider a brand worth owning.
“We just search “Top 10 watches”
via a search engine before we
buy”

21. MARKETING NOTION #3
BE BOLD WITH YOUR PRICE
– Highest possible, even out of normal frame of reference
(remember luxury implies magnifying, excessive)
How to justify the price? Don’t worry in a culture that shares the following wisdom:
“1 cent more means 1 per cent better一分钱，一分货”
Price Value
“Cheap things can’t be good便宜没好货”
Price Value
“Expensive things have their reasons for being expensive贵的一定有它的道理”
Price Value
Where,
Price defines value,
Instead of value justifying price

22. MARKETING NOTION #3
BE BOLD WITH YOUR PRICE
An episode from the Chinese Movie
(Da Wan) to further illustrate in the
next page

23. WATCH OUT!
LOW KEY LUXURY低调的奢华
What!? I thought you just said to be as flashy,
high profile as possible!!!
Yes, yes…be patient…
Things aren’t so straight
forward, are they?
Let us explain…

24. IT ALL GOES BACK TO THEIR FRAME OF
REFERENCE, THEIR RUBBER BAND
Entry Level “Richies” As China becomes stronger and
(Personal Liquid Asset stronger economically, we also
see that the “Richies” in China
RMB1M+) nowadays can be further
stratified.
Real “Richies”
For those Entry Level “Richies “:
(Personal Liquid Asset
RMB10M+) • Their frame of reference is still the
general mass, from where they
have recently emerged.
Super” Richies” –
Billionaires • Brands with high profile amongst
the general mass is still necessary.

25. IT ALL GOES BACK TO THEIR FRAME OF
REFERENCE, THEIR RUBBER BAND
But for those Real & Super “Richies”, they have
left the general mass for a long time.
Entry Level “Richies” They start forming small social circles of
(Personal Liquid Asset RMB1M+) comparable affluence levels, i.e. their rubber
band is re-defined.
Within these particular social circles, there is
almost no barrier to attain most of the luxury
brands the seek.
Real “Richies”
(Personal Liquid Asset Consequently, those “popular” luxury brands
RMB10M+) (eg Cartier, Gucci, Audi) are just “standard”
items.
Super “Richies” – -To stretch this new rubber band, they need to
Billionaires go for those low awareness but niche, low key
brands (eg Harry Winston, Bentley) – avoid
being “me-too”.

26. Having said that, “low
awareness” only refers to the
publicity amongst the “general
mass” – it should still be
famous, high profile within the
niche circle of reference (hear
the consumer voice directly in
next page)

27. thank you