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A sweet tooth for luxury goods

(South China Morning Post)
Updated: 2007-07-04 11:40

"What to buy and not to buy is imbued with social meaning. Consumer goods become a kind of social currency that is transacted in middle-class life."

For the mainland's emerging middle-class urbanites, you are what you consume. They own their own home and car, travel abroad, and show an unabashed preference for top brands and luxury goods.

Yang Qingshan, president of the China Brand Development and Strategy Association, said that about 13 per cent of the mainland's population, or 170 million people, bought top-tier brands.

Ms Cai, a designer whose annual household income amounts to around 400,000 yuan, said she rarely hesitated when purchasing Debauve & Gallais chocolates.

"I simply cannot put supermarket chocolates into my mouth any more. They taste too sugary and awful," she said.

"Their prices are a little staggering but, hey, I can allow myself a few hobbies and indulgences and that's what life is all about."

The mainland's newly rich are relaxed, fun-seeking and lapping up luxury goods fast. A recent report from US investment bank Goldman Sachs found the country is the world's third-largest consumer of luxury goods, accounting for 12 per cent of global sales, behind Japan's 41 per cent and 17 per cent for the US.

The report predicted that the mainland would become the world second-largest purchaser of luxury goods by 2015, commanding 29 per cent of such sales.

Debauve & Gallais director Bernard Poussin is one foreign investor who says he is "totally confident" about the mainland's luxury market.

"Larger and larger social inequalities are generating a pyramidal market structure," Mr Poussin said. "At the top, elite members of society can afford the most expensive stuff, while the bottom ranks are anxious to copy their way of life."

The chocolatier is so confident its pricey chocolates will get gobbled up by rich Beijingers, even at 4,000 yuan a kilogram, that it upgraded its World Trade Centre sales booth into a boutique the end of May, and decided to open a second shop in Beijing's Financial Street - the capital's answer to Wall Street - in October.

The family business, where techniques and recipes have been handed down through the generations, has opened six overseas shops so far, and Mr Poussin said the Beijing shops were in a key strategic position.

"China is the open door to Asian markets, our ambition is to become the reference point," he said.
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(For more biz stories, please visit Industry Updates)



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