As I discussed in a previous post, Beijing recently banned advertising in the capital that promotes hedonism or used the word luxury. However, according to a report by Reuters yesterday, this doesn’t appear to have affected a surge in home-grown luxury brands, thought to be driven by a desire from Chinese consumers to seek out goods that emphasise their culture.

Western luxury brands have on the whole experienced strong sales from the Chinese market in recent years, with consumers buying into the perceived heritage and exclusivity that the brands represent. However, with China expected to be the world’s biggest luxury market within five years, Chinese culture and preference cannot be ignored. More than 100 second-tier cities have populations with more than 1 million people and consumers in these cities have both the buying power of their tier-one peers and an interest in luxury brands, according to a report by PricewaterhouseCoopers.

Hermes last year launched its China-focused label Shang Xia, and the trend is set to continue.

That’s not to say sales of Western luxury brands in China will decline, according to Reuters, Sunny Wong, managing director of Hong Kong-based Trinity Ltd, said: “Luxury means heritage and it takes generations to build heritage. The Chinese customers want heritage brands — they want the story, they want the history.” It seems Wong is referring to Lambda personality types, who are likely to make choices based on how it will help them stand out, and how a decision benchmarks them against others. Western luxury brands are still very much a status symbol in China.

While focus for Western brands has traditionally revolved around marketing, now it is turning to the products themselves, presenting a new challenge for Western luxury brands.

In my previous blog post, I talked about China’s young luxury population and the Chinese consumer pyramid. We also looked at how Tom Doctoroff’s ‘Confucian Conflict’ model of Chinese mentality parallels with my own Theta-Lambda theory on luxury consumption.

Acknowledging the fact that of course not everyone can fall neatly into one category and certainly, I am not saying one should be completely Theta or Lambda. What is still peculiar but altogether fascinating here though is the fact that Chinese consumers, if not all, but majority of them have this Theta-Lambda duality ingrained within their consumer consciousness. If we look at the study below, it might perhaps shed some more light on this:

Added Value did an interesting study where they had two variables which defined where a country was placed in terms of luxury. One axis was from maintaining to transforming lives, and the other was from inner to outer motivation. And in the transforming and inner motivation you have Japan, then you have the UK, which is about maintaining inner motivation, the US is in maintaining and outer motivation, and China in transforming and outer motivation. So Japan is about confidence – ‘don’t be shown up’, the UK is about pleasure and knowing, USA is showing you know/status and China is about showing and status but also moving forward in society.

Here we can see that the UK has a more Theta-like tendency; being more comfortable in the sphere of knowing and belonging with others, whilst the USA possesses more of a Lambda tendency; more motivated by externally displaying knowledge and status. China’s showing and status is a Lambda quality; showing off what you have achieved and differentiating yourself by being one of the few to be on top of the pyramid. However, status to the Chinese can also be interpreted as fitting in, belonging with your fellow peers. As Doctoroff puts it, you can’t be blatant in your ambitions, you can’t ‘crash through the gates’ because there are rules to observe and follow. You can say this is the Chinese way of being a Lambda but in the fashion of a Theta. It is then not surprising that what makes a ‘luxury’ brand in China are its benefits externalized.

Luxury, says Doctoroff is a tool, a means to an end and because the luxury segmentation in China is so diverse, it becomes a more important tool than ever. This again goes back to idea of the Chinese’ ‘Confucian Conflict’, of wanting to ‘play in the game.’ This statistic by TNS shows this difference in perception of luxury goods:

According to TNS, 64% of Chinese think luxury brands denote success, and only 1% think they denote superficiality.

In China, luxury brands are synonymous with success, yet they do not share in the western fear of fake luxury taking sales away. Instead, a brand that is copied substantiates the brand’s luxury status. However, because luxury goods are synonymous with success, it becomes even harder for someone to pull off wearing a fake.

Anybody that has the money to buy a luxury brand would not be caught dead with a fake.

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Chinese can tell very quickly if something is real; it would be a huge loss of face to be discovered with a fake.

In order for luxury brands to succeed in the Chinese market, they must have mass media exposure, must be big and omnipresent and in the right stores in the right locations. Physical presence is also important so you must have an overseas marketing department; you cannot import your content and it cannot be done digitally. Education of your luxury brand to the public is also imperative, as well as the ability to demonstrate innovation of your luxury brand. The idea of a mass media exposure on the public very much hones into Theta personalities, because it’s telling them that everyone else will have this and in following this trend, you desire to belong with this group of people. But it also appeals to the Lambda side of the Chinese consumer because it is so in your face and because the public would have been educated of this particular brand, they would know just how successful you are.

In summary, we’ve explored Doctoroff’s Chinese model of mentality, his ‘Confucian Conflict’ and found how very important it is for a luxury consumer in China to exercise this when buying luxury goods. In addition to this, we have also seen how this ‘Confucian Conflict’ comprises of essentially the same two parts as my Theta-Lambda dichotomy, but here they co-exist in a more symbiotic relationship, and what’s more, it is the majority of the China’s population who subscribe to this luxury, symbiotic mentality.

Photo: Flickr

I came across a very interesting piece by Tom Doctoroff in the Huffinton Post. Titled ‘The Confucian Consumer and Chinese luxury: FAQs’, it explores the differences of the Chinese mentality on luxury goods and how establishing a luxury brand in China should also be implemented in an approach that is reflective of this. China’s continued economic growth and effect on the global market has become so prominent that it has become a recurring theme in many of my blog posts, with looks at its effect on the diamond market, property market, auto market and even art market. Therefore, Doctoroff’s FAQ comes at an opportune time to explore the mentality behind China’s booming economy alongside my theory of the Theta-Lambda relationship.

According to Doctoroff, China’s luxury population is very young because it is a very ambitious society. The Chinese adhere to an ideology which he calls the ‘Confucian Conflict’, regimentation vs. ambition for innovation. This conflict is very similar to the Theta-Lambda persona. China’s regimentation parallels Thetas’ own importance on comfort, affiliation and belonging, while Lambdas’ search for challenge, achievement and differentiation are synonymous with China’s ambition for moving forward.

Unique to this Chinese mentality is their desire to maintain this conflict, this ying-yang balance.

Individualism in China (in the sense of society encouraging individuals to define themselves outside of that society) doesn’t really exist here. But on the other hand, ego – the demand for acknowledgement – is very powerful.

Doctoroff further says that luxury goods in China are a sign of the consumer’s intention to ‘play in the game’, to become a potential competitor for that spot at the top. What we are seeing here is a very strong Lambda trait of that need for acknowledgement.

Despite having this ‘Confucian Conflict’, Doctoroff describes what can only be a Chinese consumer pyramid. At the top you get your most elite, but to stay on top, he must have reached a high level of mastery and connoisseurship that he can ultimately demonstrate and manipulate however he wants.

An example would be Audi 8, where you’re establishing a parallel between the craftsmanship and attention to detail and ancient Chinese art. So again, it’s for somebody that has truth and ultimate mastery.

This somebody could well be a Theta because of its high emphasis on truth, unity and brilliance. Next down the pyramid are men who are moving forward whilst in the middle of their journeys. Then we have the independent women and at the widest point, we have the youth.

So for the people on top – and this gets back to the resolution of the Confucian Conflict – it’s about a need to tick competitors away who are angling from below to maintain their position at the top. It’s a way of subtly exerting power and control…So then you move into new luxury, and these are people that need to demonstrate they shine through, but always through substance – because they can never be superficial. Their complex is that they need to move up the hierarchy, but their ambitions can’t be too blatant. This is not a space where you crash through gates; rules are sacred. So it’s a way of demonstrating progress, a reassurance that new money doesn’t need to be uncouth.

Again, this model of behaviour takes parts from both Theta and Lambda personalities. You are ambitious and seeking achievement in the highest form possible, yet you are not ostentatious in the respect that you still observe social boundaries and rules for fitting in, if still only in appearance. This is very different to trends in Western culture where society encourages individualism and western marketing reflects this. It is for this reason that a western marketing approach to China’s consumers will just not work. You can’t have a ‘western individualistic messaging’ approach to a culture where individualism is not emphasized or in existence.

Photo: Flickr