An interesting study was recently conducted by ContactLab, a UK based consulting agency, which compared shopping habits of luxury consumers (clothing, shoes and fashion accessories) in New York and Shanghai, the fashion hub of the United States and China respectively.
The study was conducted based on a survey of 922 respondents in New York and 975 respondents in Shanghai aged between 25 and 54 years old. According to the study:
- the Chinese market, seen from Shanghai, confirms its standing as a market offering enormous opportunities to companies that produce high-end products
- in the last 12 months four out of five individuals in Shanghai have bought at least one luxury item, spending on average around $1,000 (in New York around $500) on their last purchase
- one out of three users in New York (35%) as well as in Shanghai (31%) chooses to be kept informed through email communications sent by brands
- two different consumption profiles emerge: fashion buying in China is closely linked to the display of one’s own spending capacity, while the New York consumers show greater affection for brand
A separate study released by the Fung Group in late 2013 suggests that foreign players largely dominate China’s luxury apparel market.
FASH455 Global Apparel & Textile Trade and Sourcing 
I think the results of this study are interesting to analyze and also insightful. These results are a good way of visually representing some of China’s recent advancements and developments.
China is one example of a country that is in the Golden Age Stage of development in the textile complex. They are increasing their domestic supply of textiles and are now able to manufacture more fiber products than in years past. After watching the documentary in class and reviewing a different article I also learned that their factories are becoming more technologically advanced and their education levels are continuously making process starting at a young age.
With this, it is interesting how the results from this study parallel with China’s overall progress in recent years. Not only are they buying more and spending more on luxury items in comparison to people in New York, but they also have more people prospected to buy and spend in the future. It is also interesting that, generally speaking, the comparisons between what we buy here vs. what they buy in China have a very similar break down proportion wise. For example, in both countries clothing and shoes were almost equal with a slight drop in the handbags categories. Then, if you look at the graph based on prices, you can see that in both countries we spend more on clothes and handbags as opposed to shoes. Also, the proportions in both these graphs for buyers vs. prospects stay consistent throughout.
There’s a lot that can be taken away from this study. It actually makes me think back to a previous question you posed: what does China’s advancements and progress mean for students in the US who will be looking for jobs in the near future. The study proves that the people in China are living more comfortably than they were previously able to. This can be indirectly linked to other factors we have learned about China, such as their technological advancements, increasing education level, and their movement through the stages of development in the textile complex. Although this does not answer the question of how this will affect us as students, it does give us insight into the fact that China does not plan to stop developing as a country. Therefore, we should continue to observe China’s progression because although it may not have any significant impact on us right now, there’s no saying it won’t in the future.
Excellent comment! I am particularly impressed that you start to skillfully use the “theoretical tools” we’ve learnt in the class into analyzing the real world phenomenon. I agree that this is a very insightful and eye-opening study, although as a native from Shanghai, some findings are a little surprising to me. For example, I didn’t expect that majority of the respondents in Shanghai would claim they purchase luxury goods mainly for self-use purposes. On the contrary, luxury goods are often used as gift (even a way of bribery) in China (you may read this article: http://www.economist.com/news/china/21595029-communist-partys-anti-graft-campaign-has-had-surprising-impact-new-report-shows-how). But I agree with your thinking that China’s development means an opportunity for ordinary Americans. Think about this: even 30% of the Chinese become middle class, this will be a market of 500 million! If every Chinese spends one extra dollar per year on clothing, it will create additional $1.3 billion sales revenue! That’s why more and more US-based retailers are expanding quickly in China nowadays. On the other hand, consumer behaviors and market conditions in China could be very different from the one in the US. For example, while the US adopts a relatively free market economy, government in China is “at least an important player in the business”. Western companies need to be particularly careful in managing government relations in China in order to success commercially. China also creates many market access barriers in the service sector which includes retail. Truly, there are so many things to share and I look forward to seeing more students join our discussion.
I found that this study was extremely relevant and accurate when describing the differences between New York and China with regards how their economies are correlated with their spending habits. There is definitely a connection between the increased economic success of China and the opportunities to sell high-end products. Luxury brands and markets are able to thrive within this ever-growing economy. It is hard to believe that in China there is such a disparity in income, some people are making millions and others are still sustenance farming.
The article stated that in the past 12 months 4/5 buyers bought an item costing $1,000+ for themselves. This alone is an amazing indicator that expensive brands should focus on China’s emerging luxury market. Many factors such as, their increase in education, advances in technology and their export oriented part in the supply chain have contributed to this rise in the middle and upper classes.
However, there is a difference between the consumption profiles for citizens of China and for New York. A very distinct difference that comes down to “new and old money”. New York is more like old money, where they are buying brands that they know to be luxurious and reliable- almost not as show-offfy.
Whereas, China has “new money” and they link fashion buying to a display of ones own spending capacity (its expensive so I can/will buy it). That is why the luxury market has increased in China and why they are spending money on themselves rather than gifts; they want to demonstrate how much money they have and how much they can spend. Since fashion is an existential indicator of wealth, they are putting their new money and resources into buying as expensive as they can.
When looking at the first graphs on total prospects versus total buyers, I was surprised to learn that Shanghai not only had more overall prospects but had more buyers, as well. While it is well known that Asian markets are concerned with fashion (especially designer brands), the average income was only $12,000 compared to the US at $45,000. Additionally, with each purchase, Shanghai citizens spent more than US markets. Viewing the most popular brands from the Fung Group, we see a trend in high-end luxury markets – brands targeted towards upper classes with extensive amounts of discretionary income. As new studies have come out stating that by the end of 2014 China will surge ahead of the US as a leading economic power, we see a correlation in terms of spending habits.