The young luxury consumers in China

Joann Ngai and Erin Cho

Joann Ngai is a Marketing Researcher and Erin Cho is an Associate Professor in the Department of Design and Management, Parsons, The New School for Design, New York, New York, USA.

Abstract Purpose The luxury market in China has grown signicantly in recent years. One unique characteristic of luxury consumers in China is their youth. While exploratory in nature, this study aims to identify and offer a meaningful understanding of different segments of young luxury consumers in China. Design/methodology/approach The data were obtained from personal interviews with 28 respondents between 20 and 25 years of age who were recruited via a mall-interception method in three different high-end department stores in Shanghai, China. Findings Based on key values, motivations, and behavior patterns toward luxury consumption, the authors identify four distinct segments of young luxury consumers: the overseas pack; the self-established cool; the luxury followers; and the spirituals. Research limitations/implications The study is based on a small sample consisting of 28 individuals. Practical implications While Chinese youth may share some traits as a collective group, they also have diverse reasons and patterns for luxury consumption. The authors identify at least four distinct segments whose values, motivations and behavior toward luxury are different from one another. Companies must consider the differences that exist within this generation to effectively approach this market. Originality/value While exploratory, the current study is the rst to identify segments in luxury consumers among young generations in China. Keywords Young consumers, Luxury, Market segmentation, Consumer behaviour, China Paper type Research paper

Introduction
One notable change in modern China is peoples indulgence on luxury products. With drastic changes in economic policies, such as an open door policy, and strong economic growth in the past ten years, the desire and appreciation for the luxury suppressed in the late part of the twentieth century under Maoism are again wide awake and alive. Chinas craving for luxury is still going strong despite the recent economic downturns that hit many parts of the world. Luxury consumption in traditionally important markets, such as Europe and North America, has decreased signicantly. According to the Bain report in 2009, the US luxury market was estimated to plummet 16 percent while Europe faced a shrinkage in sales of 8 percent. Even Japan, once the biggest consumer market for luxury goods, has experienced a drastic decline in luxury sales (Wassner, 2009). By contrast, Chinas luxury sales climbed to 30 percent of the global market share in December 2010, and is expected to grow to 44 percent by 2020 (Branigan, 2011). While global luxury brands have responded swiftly to this surging demand by setting up branches in China, the learning curve has been steep (Knowledge@Wharton, 2010). The challenges encountered can be attributed to companies erroneous treatment of China as one big country. This approach has resulted in attempts to accommodate demands and

Received November 2011 Revised February 2012 Accepted April 2012

DOI 10.1108/17473611211261656

VOL. 13 NO. 3 2012, pp. 255-266, Q Emerald Group Publishing Limited, ISSN 1747-3616

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market characteristics at a macro level, thus ignoring the complexity and diversity within. For example, when building promotional strategies to target China, companies tended to use either the same plans of action used to appeal to consumers in the Western world, or strategies that reected broad general characteristics of Chinese consumers. The general understanding of Chinese luxury consumers is that they are conspicuous and that the social recognition of brands is the most important criterion for luxury shopping (Lu, 2008). This is due to the fact that Chinese consumers buying decisions are most affected by Confucian values, which include collectiveness, harmonious interactions among in-group members, respect, and superiority (Wong and Ahuvia, 1998). Hung et al. (2011) have also argued that achievement vanity plays a signicant role in Chinese consumers purchasing decision. Chinese consumers therefore tend to see that the buying luxury is a way to show that they are successful and a way to elevate their social status. Hence, the brands that have worldwide recognition are likely to succeed in the Chinese market. Recently, however, Chinese consumers are becoming more knowledgeable about brands, and their preferences are shifting towards brands that satisfy individual needs (Zhou and Wu, 2006). Wiedmann et al. (2009) argued that it is not sufcient to understand luxury consumption only in terms of socially oriented motives and the motivation to impress others. As the nations wealth increases and more people can afford to enjoy luxury, consumption values tend to become more diversied and move away from social values to hedonic and emotional values. More attention needs to be paid to the unique characteristics of Chinese consumers shaped by their individual backgrounds. Furthermore, due to the drastic social and economic changes China experienced in its modern history, greater differences in values and lifestyle exist across different generational cohorts in China, especially compared to other parts of the world (Hedrick-Wong, 2008; Hung et al., 2007). In fact, Lin and Wang (2011) argued that Chinese consumer values are highly heterogeneous across different generations. Also, given the sheer size of the Chinese population, one should expect as many differences as similarities among members of a particular generational cohort. A distinct feature of luxury consumers in China is their youth, mostly under the age of 40. This is contrasted with Western counterpart markets, where senior consumers dominate luxury consumption. In particular, Chinese consumers between the ages of 20 and 30 (the generation that grew up with the one child policy) are becoming a signicant segment for luxury consumption (Atsmon et al., 2011). Accounting for about 300 million people, these young consumers are not only unique as a col-lective group, but they also are highly individualistic (Moor, 2005). Even within this generational cohort, various reasons exist to explain why young consumers buy luxury products. Yet, beyond the general descriptions of their consumption behavior, not much is researched about them in the context of luxury consumption. There exists a great value in understanding not only the common traits among these young consumers but also the differences among them regarding luxury consumption. Our study aims to offer a meaningful understanding in this regard by identifying distinct groups of young luxury shoppers in China. While exploratory in nature, the current study delineates four distinct sub-segments of young luxury shoppers whose values, motivations and behavior toward luxury are different from one another. The results of the study also provide meaningful insight regarding how to position a brand to approach each segment identied and lend ground for further quantitative in this subject matter.

Luxury consumers in China

Many may have an impression of China as a newcomer to luxury products. However, Chi-nas love affair with luxury consumption began long before many people in the Western world may realize. Chinas relationship with luxury can be traced back to the Spring and Autumn period (around 770-221BC ), during which the scholar-bureaucrat class emerged as the elite group in society (Lu, 2008). For the next 2,000 years, the scholar-bureaucrat class held its status until the fall of Chinas dynasty system. Even though concepts such as aristocracy and royalty existed in imperial China, the scholar-bureaucrat class was highly

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respected for its intelligence, tastes, and wisdom. Its members were the elites and the leisure class in society and naturally developed a lifestyle that incorporated luxury goods. A unique aspect of the leisure class in China was that it was neither exclusive nor hereditary. Unlike Western imperial cultures in which luxury was reserved for royalty and aristocrats by birth, a luxurious lifestyle in imperial China could be earned by working ones way up the centralized examination system, Keju. Introduced in the Han dynasty (220-206BC ), Keju was systematized in the Sui dynasty (581-617AD ) to allow talented people to join the rank of scholars and bureaucrats, regardless of their social status and background (Cressey, 1929). This system created a rigid but solid path toward a leisurely lifestyle in imperial China. Because of this democratic system, the concept of luxury goods and lifestyle were more widespread in imperial China than many of its Western counterparts. The scholar-bureaucrat class enjoyed a long period of privileges and prosperity until the Cultural Revolution in 1966, which overturned every cultural value of imperial China. During this period, scholars were considered traitors, students were sent to reeducation camps, and merchants were punished in an effort to build a classless so-ciety. As the elite position of the scholar-bureaucrat class was crushed during the Cultural Revolution (1966-1976), so were the concepts of leisure lifestyle and luxury consumption. It is important to recognize, however, that the leisure class in China had existed for thousands of years, and that those in it appreciated and fully understood the concept of luxury goods. Following the years of the Cultural Revolution, China went through another radical social change known as the Economic Reform, which was started in 1978 lead by Deng Xiaoping. Globalization and industrializations are critical factors in reformulation of a culture (Stearns, 2001), which has also been the case for China. Economic development, in particular, exerts a great inuence in moving societies in a common direction, independent of their cultural heritage (Inglehart and Baker, 2000). The Economic Reform restructured Chinas consumer market drastically and has again shifted the countrys view toward wealth and luxury. The Open Door Policy (instituted around 1990), another policy introduced under the leadership of Deng Xiaoping, opened the Chinese market to foreign traders, such as United States, Japan, and many European countries. Due to Economic Reform, combined with the Open Door Policy, the availability of consum-er goods experienced an exponential growth (Doctoroff, 2005). Also thanks to the strong economic growth in China in recent years, the purchasing power of consumers has increased dramatically. In the McKinsey report In-sights China, the number of wealthy households (dened as urban households with annual income in excess of 250,000 RMB, around 36,000 USD) in China in 2008 reached 1.6 million. The number is predicted to more than double to 4.4 million in 2015, making China the fourth in number of wealthy households after the USA, Japan, and the UK (Atsmon et al., 2009). The number of wealthy households in China is still expected to grow at an annual rate of 16 percent for the next ve to seven years despite the global economic downturn. For a country that was struggling only decades ago, the numbers are staggering. As discretionary income increases, China is wasting no time in going back to its imperial roots of luxury consumption. In 2007, for example, retail spending in China hit 8.9 trillion yuan, an equivalent to 1.2 trillion US dollars (Chinas retail, 2008).

Characteristics of young consumers in China

While different names have been used to indicate generational cohorts in China by different authors (Hedrick-Wong, 2008; Hung et al., 2007) generational classications are linked to signicant political and economical policies in modern China, in particular, Cultural Revolution in 1966, and Economic Reform and One-child Policy which occurred in 1978 and 1979 respectively. The modern marketplace in China encompasses three distinct generations: Suffering or cultural revolution generation (those currently between 50 and 65 years old who were born during the time of cultural revolution), Transitional or mobile generation (currently around 30-49 years old who were in their early 20s when Economic Reform started), One-child generation (Those who were born after Economic Reform and

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with One-child policy). Because of drastically different social and economic conditions in which they grew up, these three generations are entirely different from one another. In particular, while the rst two generations lived through a period of political turmoil and instability, the One-child generation experienced a vastly different upbringing. This cohort represents the rst decade of children born under the infamous One-child policy (1979), a means of population control enforced by the Chinese govern-ment. This policy restricted the number of children couples could have to one, barring exceptions such as rural couples, ethnic minorities, and couples with no siblings, among others (Fitzpatrick, 2009). The popular nickname for this generation is the little emperors and empresses, referring to their status as the only child in their families. Chinas One-child generation youth grew up in a very different economic environ-ment than the older generations, especially regarding their experiences with consumer goods. Before the 1978 Economic Reform, commodities and consumer goods had uniform prices, and choices of products were extremely limited. With foreign imports and venture constraints relaxed after 1978, the younger generations in China were offered more choices in consumer goods and greater incentives to purchase them (Chen and Feng, 2000). While older generations may be more price-conscious and less brand oriented, Chinas youngsters do not share the same views (Wassner, 2009). They are attracted to advertised and brand name products, while their parents seek practicality in consumer products. They also have a strong tendency for self-indulgence, personal entertainment, and materialistic (Doctoroff, 2005; Dou et al., 2006). As a familys only child in a competitive society, the One child-generation has become an complicated group of individuals. Despite the advantages of having their parents and grandparents undivided attention, the little emperors have not enjoyed an entirely carefree lifestyle (Yan, 2006). Many of the One-child genera-tions elders lost their opportunities in education and success during the Cultural Revolution. With their dreams gone and hopes destroyed, the parents or grandparents of the One-child generation projected their unfullled goals onto their young children. Achievements and success are two concepts that children are taught to value early in life. Thus, it is common for them to purchase and use a product in a way to ease tension and anxiety arising from these pressures (Scelzo and Lerman, 2009). They are also more likely to be compulsive in their spending due to the desire to seek power and prestige (Li et al., 2009). They tend to engage in conspicuous consumption such as purchasing luxury products. Also due to the family and competitive pressure, it is important for them to purchase products and brands to impress their peers (Zhao and Belk, 2007). Podoshen et al. (2011) reported that Chinese college students exhibited a higher level of materialism and conspicuousness than American students did. While Americans may tend to engage in conspicuous consumption based on personal desire and taste, Chinese students are compelled to do so in order to show respect and maintain the status in the community. In addition to the pressure these youngsters endured from their elders, the rapid economic development also added to their stress. The One-child generation grew up watching China rise as a nation, and they believe that they must contribute to this advancement. While optimistic, they also worked hard to avoid being left behind. To many Chinese parents and children, Gao-kao or the nation-al college entrance exam (NCEE), is the single most important test on which the future of the entire family hinges, just like Keju (Yu and Suen, 2005). Children are trained and prepared for the exam at a young age in order to gain spots at top universities in China, a guarantee to a white-collar, upper middle class lifestyle. This intense examination system, along with the One-child policy and a tough job market, produced a group of ultra-competitive children who aim high. The reality might seem stressful and cruel to young children but, nevertheless, they grew to be highly educated youngsters who strive to succeed. As a result of this high-level education, combined with ambitions, the One-child generation entered the workforce with a naturally higher income than their elders, and hence they enjoy a higher margin of disposable income than their elders. Accustomed to high expectations and exclusive access to all resources their elders had to offer, Chinas youth denitely understand the concept of a high quality lifestyle, and many have developed a taste for

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luxury at a young age. Once free from the pressure of Gao-kao and nding a good job, many youngsters seek out luxury goods to compensate for their years of stress, as well as to reect their grow-ing social status. Chinas young luxury consumers are, without a doubt, distinctly different from older generations. At the same time, members of this group also are deeply divided among themselves. While their parents grew up in a rather culturally homogenous environ-ment, Chinas youth came of age in a cultural melting pot. The world of Chinas young generation is surrounded by Japanese magazines, Korean pop music, Hollywood movie stars, and a steady stream of foreign brands (Moor, 2005). They also are the rst wave of generations who had opportunities to be educated in foreign countries, adding to the diversity of ideals, beliefs, and viewpoints of Chinas youths. There exists a great value in understanding not only the common traits among these young consumers but also the differences among them regarding luxury consumption. Our study attempts to contribute to this effort via personal interviews with young luxury consumers in China. In so doing, we conducted a qualitative data collection via semi-structured in-depth interview. The qualitative approach was chosen for the nature of this study is exploratory and the goal is discovery (Corbin and Strauss, 1990).

Methodology
One of the authors of this paper conducted consumer interviews in China. The total of 30 individuals between 20 and 25 years of age were recruited via a mall-interception method in three different high-end department stores located in Shanghai during January of 2011. Specically, she intercepted individuals who walked out of high-end brand shops in each mall. Among those interviewed, 11 were male and 19 were female. The average age was 24 and all participants were either in college or college graduates. The average length of each interview was about 20-25 minutes, and a small gift was provided at the end. The interview was in Chinese and structured to have two parts the rst part consisted of basic demographic and lifestyle questions, and the second part asked respondents about their values, motivations and behavior toward luxury products. The interviews were recorded and transcribed in Chinese later. The transcriptions were reviewed by one of the authors of this study and two external experts from a consulting rm specializing in consumer research and market segmentations in China. All the reviewers were uent both in Chinese and English. Since the goal is to identify distinct segments of young luxury consumers, the analysis was focused on placing respondents into groups with distinct and homogeneous characteristics in relation to luxury consumption. Specically, the analysis was conducted in the following order. First, reviewers examined transcriptions for words describing respondents values, motivations and behavior related to their luxury consumption. Identied texts were coded and put into tentative categories of evaluative criteria for segmentation. In so doing, reviewers compared each text assigned to a category with those already assigned to that category to ensure the content congruency of each category (Glaser and Strauss, 1967). Reviewers were allowed to assign the same text to more than one category, but they were instructed to do so in a way to maximize the content homogeneity of each category and heterogeneity between categories (Lincoln and Guba, 1985). Each reviewer rst independently established categories based on the frequency of mention and then discussed with each other for comparison. All three reviewers identied and agreed on seven categories, which included status consciousness (i.e. motivation to purchase luxury to display and communicate ones social status), passion for luxury (i.e. enthusiasm, excitement, and interest in purchasing luxury), quality consciousness (i.e. obtaining quality and high workmanship as a motivation for purchasing luxury), brand recognition (i.e. product and brand knowledge in luxury), purchasing power (i.e. affordability of luxury and price consciousness), setting trends (i.e. motivation to be a trend leader), and impulsiveness (i.e. impulsive tendency in purchasing luxury). Next, reviewers examined each transcript again for the presence and extremity of its contents according to the seven evaluative categories, using the rating scale of high, moderate, and low. The preliminary examination indicated that all the interviewees were

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relatively high on status consciousness, passion for luxury, and purchasing power (affording luxury with their own money or with their parents help), while they varied in relation to brand recognition, quality consciousness, setting trends, and impulsiveness. Thus, the grouping of transcripts was based largely on the latter four dimensions. All three reviewers identied four distinct groups of consumers and the agreement between reviewers in-group assignment was about 93 percent. There were disagreements on two of the 30 transcripts among reviewers, and these two were excluded for this reason. The four distinct groups were labeled: 1. the overseas pack; 2. the self-established cool; 3. the luxury followers; and 4. the spirituals. We then reviewed the transcripts again to identify the general demographic and lifestyle characteristics of members for each group, and to delineate additional characteristics of luxury consumption specic to each group.

Discussions and implications

The overseas pack Six out of 28 interviewees belonged to this group. They see themselves as having high knowledge of luxury brands, a quality-conscious mind, and clear personal preferences in brands. They are not particularly price conscious and have enough income to afford luxury brands they favor. They also see themselves as trendsetters, and enjoy collecting and learning about new items of the coming season directly from magazines published in UK, the USA, and Paris. Tiffany, one of the interviewees belong to this group, expressed that I love luxury and prefer to buy one with my own money [. . .] My next big purchase is a Birkin bag, not just because it is the ultimate bag, but also because it is the brand with the highest quality. I believe I will be able to use it for a long time. As indicated here, obtaining quality workmanship appears to be the key motivation for luxury purchasing for this group. They also indicated they would avoid brands that are too well known and popular. In terms of demographics and lifestyle, the most distinctive characteristic of these individuals can be described as international. They had studied or worked oversees and feel comfortable speaking English (in fact, many used English names to refer to themselves). They are keen on fashion trends happening in New York and Paris and read foreign fashion magazines and fashion blogs. They indicated they would spend a large portion of their income on fashion and travel often for work and pleasure. This segment appears to reect the trend in China for more and more Chinese educated abroad and subsequently returning to China. While many of the rst generation overseas scholars did not see the benets of moving back to their native land, the rate of repatriating students has been increasing in the past few years as Chinas economy continues to develop. Hai-gui is the term that refers to those who have studied overseas and chose to return to China (Chinas Economic, 2005). With their overseas educational background serving as a competitive edge, this group is perceived to be superior to their local peers in social status and income. We also found a very interesting indication of the value characteristics of this group. While Westerners might expect youngsters educated abroad to promote foreign ideals, this group is surprisingly loyal to their Chinese identity. They perceive themselves not as modern Westerners but as modern Chinese. They may be enjoying coffee from Starbucks and driving imported automobiles, but they are the least inclined to be seen as promoters of Western values and surprisingly patriotic in their consumption choice. Min, who studied at a high school and a college in New York, said I dont want people to think that I am all Westernized and endorse everything from Western culture, because I am not like that. In fact, I like to see more efforts by global brands to reect the tradition and culture here as opposed to brining the same models that they distribute all over the world [. . .] I would love

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to buy a Chinese luxury. If they are equal in quality, I would choose a Chinese brands than a global brand. These ndings have revealed valuable information on how this consumer segment should be approached. As indicated, the overseas pack places the most emphasis on quality, craftsmanship, and products values, as opposed to brand names, compared to other groups. In their personal interviews, this particular group of individuals echoes greatly the statement, Product quality is the most important aspect of luxury goods. For example, Joyce, one of the subjects interviewed, expressed that she prides herself on her ability to select quality products that are worth the high price tags. With high aspirations in life, these individuals seek luxury products that reect their rising status. This group is frustrated with the Chinese stereotype created through Westerners eyes. They do not need to express their importance by purchasing logo-oriented products. Instead, they opt for subtle designs that tell meaningful stories about the brand. To approach this target, therefore, a luxury brand should stress authenticity, timelessness, workmanship, and exclusivity of a brand in their communication strategies. Displaying images and artifacts of heritage, such as the approach taken by Louis Vuitton featuring its original travel bags in both stores and advertisements, can effectively appeal to this group. A luxury brand with a strong heritage may also bring forth its long-lasting iconic status and timelessness in the communication strategy. For example, the bottle design of Chanel No. 5 has not changed much since it was introduced in 1920. Its ads featuring a photo of Marilyn Monroe holding the No. 5 bottle is an efcient way to communicate with this group as it illustrates the kinds of brand quality that this group values. Another strategy to underscore a brands authenticity and quality is to provide consumers an opportunity to experience what a brand is made of and what it stands for. For example, a brand can designates a space in its store where it displays materials and components for its products and demonstrate meticulous processes of product construction to demonstrate the quality and craftsmanship of the brand. It is also important to pay attention to this groups strong afliations and loyalty to the Chinese culture. Many companies have discovered the concept of Chinese cool and started creating products with connections to the Chinese culture. In 2010, for example, Hermes introduced its new brand based on Chinese culture led by a team of top Chinese designers, ShangXia. This is the rst time that a global luxury powerhouse created a separate line for Chinese consumers to appeal to those who seek luxury with Chinese looks and feel. However, it is important to recognize that this group will not be enticed by products that simply incorporate Chinese cultural elements. Chinese icons and elements are not enough to create an emotional connection with members of the overseas pack. Companies must dig deeper to create products that resonate with the collective memory of the Chinese youth generation. The self-established cool Seven of the 28 interviewees belong to this group. In comparison with other groups, they are generally younger and most of them are still attending universities. They exhibit a moderate level of brand recognition and quality consciousness. While they have relatively weak purchasing power of their own, they are able to afford the luxury with their parents help. Setting trends and being unique are most important when it comes to luxury products. They have a high level of passion for luxury products, but their intentions behind luxury purchases differ from others. Their assessments of luxury products are not based entirely on the quality or trendiness of the item. Instead, members of this group evaluate brands based on how well an item ts into his or her self-established unique identity. Moreover, they have a high need to discover the next cool thing, instead of following trends blindly. For example, Liu, one of the interviewees, prides herself on being an expert in vintage clothing (she has a personal blog on related topics). She emphasized that even though she is interested in fashion and luxury trends, she is eager to establish her own trends. For her, a vintage Chanel bag carries much more value than a brand new one because she enjoys the thrill of discovering products and making them cool again. Member of this group also are highly interested in nding the

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truth about a product: its heritage, functionality, and its story. They are not hesitant to be the tastemakers, and they are not afraid to go against the masses as long as an item has the potential to be cool. All in all, we nd this group to most notably value setting trends through self-expression. They appear to be most keen about establishing themselves as unique individuals and have high need to reinvent themselves constantly or reinforce their self-identity. Allison, one of the respondents in this group, indicated that I enjoy the thrill of discovering something new and cool. I dont really read fashion magazines to follow trends, but I read them to be inspired. I liked to buy quirky pieces that will make me stand out. Interestingly, however, as much as these young people value individuality and self-expression, they also have a strong need to identify with tribes and communities. They are individuals within a col-lective group. Those who belong to this group often mentioned Internet social networking sites such as Douban as places for them to be individually unique within a community network. In fact, Douban, Chinas most popular online community among youth, had more than 10 million registered users as of September 2009 (38). It is a community for artistic youth, comprised mostly of university students and graduates. Like other online forums, Douban is a place for discussions and exchange of information on books, music, movies, and trends. Like their Western peers, most young people in China own their online space in shapes of forums, blogs, avatars, etc. As a place to exchange ideals and information, the Internet has become the most important space for this group of youths to establish their identity. In terms of approaching this segment, our results would indicate that nding the right platform is most vital which includes the Internet and innovative retail technologies. The typical form of online distribution for foreign luxury brands in China has been a third part e-commerce, such as Meici.com, offering signicant discounts to allure price sensitive consumers. However, this is not an effective strategy to attract self-established cool. To them, actual buying and using luxury is half of the equation as they enjoy the process of discovering and engaging in information exchanges about luxury. Burberry has been the forefront in an effort to satisfy such needs. Burberry offers a company-managed web site translated in Chinese which distributes not only product but also the information about the brand including the Art of the Trench and videos of its runway shows. Its store in China is equipped with the latest digital technology, such as touchscreens that display special collections and other brand-related entertainment contents. It is also important to note that this group relies on their communities or tribes for reliable information. They enjoy the thrill of identifying the next cool thing themselves. The information offered by a brand should be relevant and interesting enough to spark the conversation and meaningful elaboration among peers. A marketing strategy to facilitate this aspect may include offering an opportunity for co-creation with consumers. Unlike the other groups, the self-established cool nd thrill in direct experiences and encouraging these individuals to be involved in the creative process will resonate with their sense of self-importance. For this group, cocreation reects how much a brand respects their individual voices. A good example of such an approach can be that by sneakers brand Converse. It was the rst brand to recognize the indie music community within China. Converse signed two underground bands and hosted a concert that carried the spirit of a road trip. The tour bus traveled 5,000kms to different cities around China, hosting concerts along its way. By immersing themselves into the indie music culture, Converse instantly shortened the distance between their target audience and the brand itself. Even though Converse is not perceived as a premium luxury brand, the marketing technique in this example can be borrowed by luxury companies. The luxury followers Ten of the 28 interviewees were identied as belonging to this group. The most distinct characteristic of the Luxury Followers is that they have a high level of passion for luxury products and high status consciousness but they relatively lack the motivation or courage to be trendsetters. Rather, they follow trends in magazines or initiated by other trendsetters to make purchase decisions. They are concerned mostly about the public recognition and

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social status of brands. They are collectivists who are enthusiastic about luxury products, but are reluctant to adopt a trend until after it has been accepted by the majority. In personal inter-views, many from this group expressed the sentiment, I am easily inuenced by advertisements, and often times, seeing famous celebrities holding a certain bag is enough for me to want it [. . . How fancy my friends think about the brand and the item is one of the strongest consideration for my choice In fact, members of this group are less knowledgeable about, and hence less adventurous in choosing, luxury brands. Thus, they are highly responsive to the opinion of so-called luxury experts, such as celebrities, and similarly value what their peers have to say about a certain brand. Another distinct aspect of luxury followers is that they often are impulsive in luxury purchases and are most responsive to sales promotions, such as discounts, free trials, or tester products. Chan, one interviewee, mentioned that when I see a brand that is well-advertised or in style on sales, I just have to have it. I may be too quick to seize the opportunity; sometimes, it gets me in a way of overspending. They are also less inclined to seek the truth like the previous groups, and are content as long as they are buying brands that are recognized within their community. In fact, their luxury consumption reected the most the sentiment governed by collectivism, one of the core values of Confucianism. Emphasis on obligations between emperor and subject, parent and child, husband and wife, siblings, and friends has resulted in the Chinese valuing in-group harmony (40). To them, luxury purchases reect not only personal choices but also ones social status, family, and educational background. They are also attracted to major trends instead of subcultures. The overall sentiment from this group generally reects the ndings from previous studies on Chinese youth, namely that they are brand conscious, self-indulgence, and receptive to advertising. In fact, this group is likely to be most responsive to a traditional way of advertising via media, magazine, and celebrity endorsements. Promotional approaches emphasizing the social status, recognition, and acceptance by the public appeared to work well with this group. The status of Chinese youth is often demonstrated through group-afliation. Thus, an effective way to communicate the brand value of social recognition and acceptance is to feature young people hanging out as a group wearing the brand. Also, Luxury followers would be most interested in acquiring popular models of a brand with the logo displayed ostentatiously on a product. We also nd that many of the luxury followers are members of online networking sites. This groups participation in networking sites is more passive compared to other groups regarding the information exchange about luxury. That is, luxury followers assume the role of content receivers rather than content contributors. As much as they value opinions from their peers, they also seem receptive to the opinions from experts. Promoting brands via blogs run by celebrities and fashion experts could be an effective way to increase brand awareness and desire when targeting this group. The spirituals Five out of 28 interviewees belong to this group. They are high in quality consciousness and brand recognition, but they seem less keen on being trendsetters. Overall, they are cautious regarding their purchases and impulsiveness is relatively low in comparison to other groups. The distinct lifestyle characteristic of the spirituals appeared to be the pursuit of the meaning of life. Three out of ve interviewees in this group indicated having volunteered in activities that advocate social and environmental issues in China. This value appears to inuence the way they perceive luxury products and their purchase preferences. They expressed an interest in luxury items that send a deeper message and to which they can connect emotionally. They would be willing to spend more on luxury items that last longer to promote sustainable consumption. They believe in making small differences in daily life, and improving the quality of life for the people. There are, in fact, increasing indications that the youth of China are able to have the luxury of caring about things outside their own living conditions. Social responsibility and environmental consciousness seem to have become the new cool trends among Chinese youth. The year 2008 reected the serious side of Chinas younger generation. From the Beijing Olympics to the Sichuan earthquake,

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members of this generation showed the world they have graduated from being only the little emperor generation. Over 1 million youth volunteered at the Olympics, and the amount of college students queuing up to donate blood exceeded hospital capacity (Brown, G., Partners, 2010). In order to reach this segment, it is critical to recognize that their brand assessment does not hinge on achieving self-gratication or social status. Instead, they assess a brand based on how much it contributes to the greater good. Although they might not be as keen on luxury products as their peers, they have had a constant exposure to brands and consumer goods and are willing to splurge. The Spirituals are most easily connected with brands that reect their ideals regarding contribution to society. This offers an advantage for a luxury brand that has established its reputation as a socially responsible company. Corporate Social Responsibility (CSR) may be new to the Chinese compared to its western counterparts, but has been slowly gaining attention as a way to promoting brands while doing good. In fact, the recent survey by Albatross Global Solutions and Ruder Finn Asia, CSR may be the best strategy in building brand loyalty (Lu, 2010). They found that CSR is an important criterion when it comes to choosing a luxury brand especially among wealthier and more educated consumers. In this regard, fashion companies such as Stella McCartney would resonate well with this group of individuals. Stella McCartney always has been the leading luxury brand in promoting sustainability by using socially responsible materials exclusively. Another example is Bulgaris participation in the Save the Children campaign in which the company donates a portion of money to support a child in need. In fact, Kang, one of the respondents in this group, noted that I admire Stella McCartney for producing organic and vegan products and some brands that benets children in third world countries. I support luxury brands ghting for causes related to the rights of animals and children. As indicated here, promoting a brands socially responsible business practices is an effective way to approach this group, particularly when it is done in a way to highlight how these practices are aligned with the groups beliefs.

Conclusion and future studies

When pursuing opportunities in Chinas youth market, luxury brands must understand the complexity of this generation as consumers. Classifying consumers in groups that have similarities within and difference between often helps rms targeting and positioning strategies and result in better performance in designing product and promotional offerings, establishing brand image, and generating prots. The current paper is an exploratory attempt for providing such a classication. Our ndings, however, are based on a small sample size of interviews in a single geographic location, Shanghai. While Shanghai is one of the most important markets for luxury consumption in China and also in the world, a future study is needed to validate our ndings with a larger data set collected at different locations of the nation. A future study can also investigate varying sub-cultures within the segments we identied. Just like any youth cultures in the world, trends among Chinese youth are evolving and changing constantly. In fact, we nd that some populations of this generation are closely following the emergence and the development of micro-cultures online. It will be interesting to examine how the adoption of information technology and the emerging trends online may further differentiate the way Chinese youth behave toward luxury products. Another important aspect we nd is that even though Chinese youth are receptive to Western cultures and brands, they are not completely Westernized. Chinese traditions, like the concept of the importance of a public self and family, are still deeply rooted within their minds. A future study may delve into the cognitive mechanism with which young consumers reconcile these conicts and reect them in their luxury consumption decisions. A study of this kind can generate meaningful information in terms of developing effective communication strategies for foreign luxury brands.

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About the authors

Joann Ngai is a graduate in Design and Management of the School of Design Strategies at Parsons, The New School for Design. She currently works as a marketing specialist in one of the major retail companies in Hong Kong. Erin Cho is an Associate Professor in Design and Management in the School of Design Strategies at Parsons, The New School for Design, in New York. She received her BA and MA from Seoul National University in Korea, and obtained her PhD degree from the University of Wisconsin-Madison, specializing in supply chain management for global sourcing. Before joining Parsons, she taught at Washington State University, the University of Wisconsin-Madison, and Columbia University. Her current research areas include design management, consumer behavior, branding, innovation, and digital communications and communities. Erin Cho is the corresponding author and can be contacted at: choje@ newschool.edu

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