Posted on 12/24/2001 9:42:23 AM PST by super175
As consumers around the world curb spending amid the downturn, China's appetite for luxury items is growing, according to retailers of upmarket products.
China's super-rich are sparing little expense this Christmas, which is seen as a warm-up to Lunar New Year celebrations in February.
Everything from Western beer, to Dior bags costing 3,000 yuan (HK$2,800) and 700,000 yuan BMW cars, is selling fast.
"An increasingly large part of the population don't mind spending if they find the right product. We find that price will not be an issue," said Michel Grunberg, senior vice-president with Estee Lauder's Asia-Pacific operations. "China is a small market in terms of numbers, but consumer spending has never declined in China."
Western multinationals such as the beer-to-entertainment giant Anheuser Busch have reported steady growth in China since the mid-1990s, interrupted only by the 1997-98 Asian economic crisis.
"There's something new and big happening in the Chinese psyche. It's quality-of-life improvements," said Philip Davis, Anheuser Busch Asia's managing director, who is in charge of a US$170 billion (HK1.3 trillion) capital investment that produced 140 million litres of beer last year.
It is the same story for Annecannelle Gergaud, a Christian Dior clothing retail manager in Shanghai. "Sales are always going up in China," she said.
According to a 1999 Government survey, China's richest three per cent earn more than 500,000 yuan a year, and the top 0.8 per cent earn more than one million yuan. The average Beijing salary is still only slightly above 1,000 yuan a month.
Foreign luxuries sell at foreign prices and sometimes higher because of taxes.
Peter Zhang shies away from putting himself in the very top bracket, but the stock market investor and owner of a Wangfujing cafe and two beverage stores in Beijing and Los Angeles can relate to their tastes. He owns a Citroen, smokes British cigarettes and has a home in Beijing.
When most wealthy Chinese buy one nice thing, their entire inventory suddenly needs to measure up, he said. "If you have a good horse, you need a good saddle."
But the rush for luxury goods is not just reserved for the super-rich. White-collar workers aged between 18 and 45 and earning 3,000 to 5,000 yuan a month are also a significant part of the high-end market.
These consumers can spend 500 to 600 yuan a month on fashion merchandise, said Patrick Lee, a China general manager with Louis Vuitton Moet Hennessy.
Fashion-conscious women buy make-up costing 400 yuan and Christian Dior bags for 1,290 yuan. Skin-care products account for more than 70 per cent of its sales in China.
Women earning at least 5,000 yuan a month care first about clothes, then cosmetics because "you need to dress well and need to feel good", said Mr Grunberg.
Cars, in some cases driven by chauffeurs, are another must-have. As of November this year, BMW had sold 4,633 cars in China, including Hong Kong, up 72 per cent on last year.
"China is one of the best developing countries worldwide. Also, the future development is forecast by experts to be very bright," said Guenther Seemann, managing director of BMW's seven-year-old China operation.
"Therefore the Chinese customers are right in being confident in the Chinese economy. People who work hard also have the right to enjoy the fruits of their hard work. Success breeds success."
Rich Chinese consumers still ask merchants smart questions, compare prices and try to bargain, company managers say. But these customs seldom stop a sale.
"Consumers have a brighter future, better job opportunities, a chance to get rich, so they can spend freely," Mr Lee said.
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