If you think of China as the world’s manufacturer with low-cost labor, think again. As its economy continues to grow, a burgeoning and increasingly affluent middle class of consumers is rapidly emerging. According to Chinese Academy of Social Science, the number of the households that has achieved middle class status reached 250 million in 2005, mostly in coastal urban areas.
These urban elites are attracted by the western lifestyle. As they become more sophisticated, they seek out the higher-end design aesthetic of western brands that has traditionally been unavailable from cost-conscious local designers and manufactures.
Walking on the streets of Shanghai, it’s not rare to see European luxury labels like Burberry, Louis Vuitton, and MaxMara all over the place. There are some brands I have never seen in the US, such as Bentley and Harry Winston. Chinese are very status-conscious people. The new rich know what prestigious brands they want and they want their status known, whether it’s Rolls Royce for car, Dunhill for shirt, or Cartier for jewelry.
When Chinese Vogue was launched last August, its print run of 300,000 copies sold out almost immediately. Recently, US giant homemaking lifestyle magazine Better Homes and Gardens has partnered with one of China’s biggest print media companies to launch a Chinese edition, with a mix of American and China-specific content to target consumer and advertising markets.
The urban elites are role models with a lifestyle sought by hundreds of millions of Chinese. It’s estimated that another 300 – 400 million consumers from second tier cities will be joining the middle class in the next two decades or so. China will soon become, if not already, the world’s largest market for new purchases of eveything from cosmetics to computers to automobiles. It would be interesting to see what impact it will have on the world economy.