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The Asia "Luxe-explosion"

The Asia "Luxe-explosion"

4 Mins
June 7, 2010

In Tokyo, 94% of women in their 20s own a Louis Vuitton bag. Hong Kong boasts more Gucci and Hermes stores than Paris. China’s passion for luxury has grown with such gusto that the Chinese consumer is already responsible for 10% of global luxe sales. And, in India, there are three-month waiting lists for the latest trendy accessories.  

In the last two decades a “luxeplosion” has been rocking Asia, carrying in its sweep not just the wealthy but also secretaries toting their Burberry bags, junior executives sporting Rolex watches, and university students strutting in Salvatore Ferragamo shoes. Luxury brands have become an everyday reality for millions of Asians—cutting across countries and income segments.

The luxury brand cult is so powerful that Asian consumers account for half of the US$80 billion global luxe industry. Europeans have more money and Americans are among the wealthiest consumers in the world, but it is Asians who are the world’s biggest consumers of luxury brands.

Asians are using luxury brands to redefine their identity and social position.

Why are millions of Asians, many of them not wealthy, rushing to buy outrageously expensive designer label bags, shoes, clothes, watches and jewellery?

The answer lies in the massive economic and social changes that have transformed Asia, in the process dismantling centuries-old ways of denoting one’s place in society. In Japan, Taiwan and South Korea, the development of export-oriented economies led to high technology industries and capital formation that would subsequently fuel economic booms in China, and now India as their economies opened up. In place of rigid social orders defined by birth, family position or profession, there is suddenly a free-for-all, in which the key criterion is how much money you have. “Asians have to show their status somehow, and luxury brands are a great way to do this,” says Jill Telford, managing director of Synovate Hong Kong. “Just look at the Asia-wide acceptance of the Mercedes-Benz as a sign that you have made it—there is nothing shameful in buying luxury brands in Asia.”

But how do you turn a sizeable bank balance (or the dream of one) into commensurate social esteem? Enter Western luxury brands with their loud logos and unmistakable sign language. Carrying a US $700 Louis Vuitton handbag signals you are from a family of decent means. Flaunt a US $10,000 Hermes Birkin and you are several notches higher.

In Asia, you are what you wear.

Many Asians of moderate means are spending their way up the social hierarchy, often in amounts out of line with their income. Office ladies in Hong Kong or junior executives in Shanghai will blow a month’s salary on a luxury purchase, even if it means living on instant noodles for a while.

The prospect of attracting wealth with a show of wealth is probably more important to younger people. A report on

the luxe industry in China by KPMG found that consumers tend to be between 20 and 40, while in western countries, typical luxe consumers are over 40. In 2005, three of the top five richest men in China were still in their 30s. Luxury brands are a modern set of symbols that Asians are wearing to redefine their identity and social position, and signal their readiness to do business. It is a way of doing things that older generations, who may have grown up wearing Mao suits or working hard to provide bare essentials, may not appreciate.

The luxe industry has adapted to the Asian psyche by tailoring its marketing strategies: visibility is a key element. Consider the “logofication” trend, where bags have instantly recognisable symbols in a continuous pattern all over the bag—Gucci G’s, Fendi F’s or the LV monogram. Twenty years ago few brands carried logo lines, but the rise of the Asian consumer has pushed almost every brand to introduce one. Coach’s spectacular success in Japan happened after it developed a distinctive signature series. Across the industry, logo lines have grown so fast that they account for up to 80% of sales for some brands.

Luxe brands are investing in building other sets of visual identification points. Besides its well-known intertwined C’s logo, Chanel has a whole symbolic language to draw upon—gold chains, quilted leather and signature tweed. In the case of Hermes’ highly sought after Birkin and Kelly bags, the distinctive shape and design of the bag has become its symbol. The waiting list in some places is as long as three years.

In Asia, you are what you wear.

Radha Chadha, the founder of Chadha Strategy, is widely recognized as one of Asia's foremost brand strategy and consumer insights experts. She is the co-author of The Cult of the Luxury Brand: Inside Asia's Love Affair with Luxury.

Radha Chadha
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