The Influence of Luxury Brand

The Influence of Luxury Brand Attitudes on Chinese Young People's Purchasing Behavior
Introduction
The world is dynamic, and people's lifestyles are changing. There has been a unique dynamism in China's young people's lifestyles, giving some good development opportunities to luxury companies to grow and expand in China (Rovai, 2016). Luxury goods are special and often have a higher experience value in quality, prices, and brand (Faccioli, 2021). Despite their high price values, luxury goods follow the law of value with a high ratio of brand image and buying value. This means that the primary function of these luxury goods is to satisfy the consumer experience and needs instead of transferring value (Zhang, 2017). Luxury goods are different, and various people have different tastes and motivations in choosing the lifestyle to live based on their cultural backgrounds (Wang, 2011, p. 346). This section reviews the literature review of three primary research areas: the motive and culture behind Chinese luxury consumption, the Chinese luxury market, and attitudes towards luxury brands. However, it is crucial to first analyze the luxury market industry and luxury brand consumers, and the young chinse luxury market consumers.
Analysis of Luxury Market Industry and Luxury Brand Consumers
The luxury market industry is dynamic like other sectors. In the 19th century, the luxury goods markets targeted the elite, wealthy and powerful society members, but the trend changed in the 20th century when the luxury markets began targeting anybody who could afford luxury products (Ott, 2018, p. 108). The 20th-century luxury consumption trend improved exponentially in the 21st century. A 2016 global market report shows that the luxury market grew by 7% in 2012 (Bain and Company, 2016). The report also showed that the Chinese luxury market made negative progress in 2015 but appeared to improve in 2016. Most Chinese spent more on oversea purchases from their neighbors Japan, South Korea, Australia, and Europe, with external spending increasing by 200% (Hung et al., 2021). Bain and Company (2016) attribute this to the price dynamics in the different luxury markets.
The COVID-19 pandemic affected the growth of the luxury market globally. Luxury market segments led by personal luxury products, luxury cars, and hospitality luxury, accounting for 80% of the luxury market, were affected. In a 2021 luxury market report by Bain and Company, D'Arpizio et al. (2021) reported that these market decline caused by the pandemic began to grow in 2021 by 13-15%, which is equivalent to €1.14 trillion, but that was still 9-11% behind the 2019 market value for these luxury products. These data show that the luxury market has recorded overall positive growth over time and does not discriminate against countries or regions. Luxury consumers in developing areas depend more on oversea shopping to get the brands of the luxury product they want. For example, most African countries do not have car manufacturing industries and rely on Japan and other automobile manufacturing countries. This is similar in China for globally established industries but not of Chinese origin. Zhang (2019, p. 19) argues that most luxury companies have tapped on these open opportunities by opening flagship stores in these countries.
The Chinese luxury market is making tremendous improvements globally. A 2019 McKinsey and Company luxury market report shows the Chinese luxury market is taking over half the global luxury market and that its consumers are likely to contribute approximately two-thirds of the worldwide growth in luxury spending (Luan et al., 2019, p. 4). The report projects that the Chinese luxury market spending will double from 770 billion RMB to 1.2 trillion RMB in 2025, translating to around 65% of the global growth between 2018 and 2025 (Luan et al., 2019, p. 5). The report has attributed this growth to the younger generation born post-1980s. They are at the peak of their lives, working decent jobs, most of whom have saved enough money to spend on luxury and comfortable lives. This generation of luxury consumers are actively consuming the products because they believe it marks their socioeconomic status in cities, earning them a class (Naumova et al., 2019, p 5-7)
An earlier report by McKinsey and Company (2017) showed that developing countries are the dominant consumers of personal luxury products, but the economic recession has led to a decrease in the demand for luxury goods by these consumers (Bu et al., 2017). According to the same report, the rising middle class has seized the chance and taken over the luxury market in developing economies. Between 2011 and 2016, the luxury market in developing economies recorded a 4 % growth reaching a global new value of $302 as consumers from developing countries increased their consumption of jewelry, designer handbags, clothes, and watches (Bu et al., 2017).
A 2021 report published by Delloite ranks global luxury brands based on their popularity and performance since 2017 (Faccioli, 2021). The report shows the first seven brands having maintained their positions over the four-year period whose data was analyzed. However, other companies have fluctuated in their global ratings. For example, Hermès International S.C.A. moved up from the 10th position displacing Chow Tai Fook Jewelry Group Limited (Faccioli, 2021). This is attributed to changes in people's preference for luxury products depending on what a company offers.
Young Chinese Luxury Market Consumers
Economic developments, the large Chinese population, and the growing number of wealthy society members have opened up China's luxury goods market for companies targeting young people aged 40 and below. Zhang (2017, p. 25) argues that the Chinese luxury market is youth-oriented and comprises consumers 40 years and below. Bain and Company's (2011) report also found the same trend where the Chinese luxury market is made of young people, unlike Western cultures where the dominant consumers of luxury products are older.
Currently, the Chinese luxury market has two categories of consumers that Luan et al. (2019) call Generation Y and Z. Generation Y were born in the 1980s, while Generation Z were born in the 1990s. In 2019, Generation Y accounted for 10.2 million consumers of luxury products in China, spending approximately 41000RMB annually on luxury goods, according to McKinsey and Company report. Generation Z is almost similar to Generation Y, only that they spend around 25000 RMB annually on luxury products (Luan et al., 2019). These two groups of consumers are unique compared to other groups because they were born during the one-child policy in China. Parents emphasized education for their children during the enforcement of this policy-making them willing to send their children to other countries like the U.S. and U.K. for education (Zhang, 2017, p. 37). This means that the generations Y and Z are well educated, confident, and ambitious, and studying in foreign countries has made them susceptible to Western cultural influence (Fort, 2022). They take the luxurious lifestyle back to China when they go for holidays or after they finish their education.
Similarly, Ng et al. (2016, p. 7) argue that Generation Y and Z are also called Millennials and Echo Boomers because they were brought up in the technology revolution and economic independence eras. This makes them willing to spend money on quality, luxurious brands, and technology products to show status, image, and class, according to Naumova et al. (2019). The two generations have grown up in wealthy environments compared to other groups. Thus, they do not consider saving or investing a priority in their lives as their parents have saved and invested for them. Therefore, the Chinese luxury market for young people is solid and elaborate. It is based primarily on personal consumption of luxury products.
Motive and culture behind Chinese luxury consumption
Cultural contexts determine luxury consumption patterns globally. The social and behavioral patterns in these cultures narrow down the luxury consumption needs of various people. Naumova et al. (2019) used the 2018 Hofstede model of national culture scientific study to cross-cultural differences in luxury goods consumption. The study found that cultures that embrace collectivism, low indulgence, masculinity, and long term are sensitive to conspicuous luxury status because they mainly perceive the social values in consuming luxury goods. In cultures that embrace high individualism, indulgence, low power distance, and masculinity, luxury goods consumers appear to perceive functional and individual values (Naumova et al., 2019, p 5-7). Zeng (2018) supports this based on findings from a study to explore the Chinese consumer's value perception of luxury goods. The study collected data from six Chinese cities and showed that demographic factors like income, age, gender, and residential city significantly influence the consumption of luxury goods. This indicates that Chinese luxury consumers are motivated individually and collectively.
In China, most people consume luxury goods to brag about their social status (Joy, 2001, p. 242). The Chinese people are strict on cultural behavior and often consume products that only conform to their cultural orientations (Naumova et al., 2019, p. 8). As such, the Chinese are likely to consume luxury goods manufactured by a Chinese company and those endorsed by Chinese celebrities (Rovai, 2016, p. 137). In cases where they consume goods from foreign countries, the Chinese people would prefer products from well-established companies with an established global image brand, as research indicates by Wang et al. (2011, p. 348), who studied the motives, attitudes toward luxury brands and the impact of these attitudes on Chinese consumer behavior. This affirmed that face value plays a significant role in Chinese culture, speaking to personal characteristics and qualities like social connections, wealth, and authority (Siu et al., 2016, p. 33).
Gifting is a significant motivation behind Chinese luxury goods consumption. Gift pricing and quality determine a person's level in the luxury hierarchy. Joy (2001) studied the gifting culture among the Chinese people using data collected through interviews. The research suggested that the Chinese have an elaborate gifting culture where they frequently buy luxury gifts for their family members to show off their socioeconomic status and wealth (Joy, 2001, p. 242). Further research shows that Chinese society uses gifting to establish guanxi, a Chinese word for personal connections, relationships, and social networks (Chi and Seock-Jin, 2017, p. 19). This is supported by Yang et al. (2011, p. 46), who studied the cultural difference between the East and the West and argued that gifts could be converted into monetary values through calculating, circulation, and comparing them, thus, classifying the gifts on a luxury scale depending on their prices and quality. Research also indicates that Chinese people like to reciprocate good for good and are highly likely to return a gift, thus creating a solid guanxi bond (Wang et al. (2011, p. 348). They believe that the quality and price values of gifts determine how much recognition and respect a person gets; thus, people always strive to get expensive gifts, sometimes beyond their means.
The Chinese luxury market
The notable Chinese economic growth has exposed many people, including young society members, to substantial wealth. Research indicates that a significant section of Chinese luxury customers are youths under 40 years old, as opposed to the western world, where the considerable majority of luxury goods consumers are older between 40 and 70 years (Ngai and Cho, 2012, p. 256). This is supported by Zhang (2017, p. 25), who studied luxury consumption motivators among Chinese people living in the U.K. and observed a similar trend regarding luxury product consumption among the young Chinese population who have embraced expensive, luxurious products from globally established brands making them have different preferences from the other society members. This trend was interrupted by the COVID-19 pandemic, but it picked up as soon as normalcy returned. Research indicates that the Chinese luxury market during COVID-19 depreciated by 20-35% in 2020 (D'Arpizio et al., 2020, p. 2). The study also predicted a bright luxury market in China post the pandemic, especially when people try to recover the lost time in consuming various luxury goods (D'Arpizio et al., 2020).
Contrary to traditional China, where lavish lifestyles are associated with corruption, contemporary Chinese people are willing to go out of their way to afford expensive and luxurious lifestyles by consuming expensive products for prestige. Most young people will compete to consume and show off the new market goods from overseas and locally. Western culture has also penetrated China, influencing young people to desire a luxurious lifestyle (Wang et al., 2011, p 347). Further research shows that wealthy Chinese members, especially young people, shop overseas, sourcing the most expensive and notable brands like Louis Vuitton, Gucci, and Prada (Fort, 2022).
The Chinese luxury market is product-driven, meaning the consumption concentrates on personal products like jewelry, cosmetics, watches, and bags. Research indicates that global brands of these products have experienced a dramatic rise in their sales in China in the past decade (Zhang, 2019, p. 53). In a study to explore overseas consumption of luxury goods, Zhang (2019) noted that people often invest their luxurious lifestyle in social things like expensive vacations. However, the Chinese luxury market is significantly cautious of counterfeit products making the Chinese markets price-cautious as they try to filter the counterfeit from original products. Godey et al. (2016, p.7) researched how social media marketing affects brand equity creation and consumer behavior towards the brand and admitted that fake products had affected the sale of luxury products as people fall prey to these cheaper products as most young people who do not have enough money to afford expensive products resort to buying the counterfeit cheaper ones. However, these counterfeit products helped create and spread awareness of authentic products making people seek authentic products (Nia and Zaichkowsky, 2000).
The adoption of one child policy and the improvement of the Chinese economy has made many Chinese parents emphasize their children's education causing many parents to resort to sending their children abroad to the U.S. and U.K. for further studies (Zhang, 2017, p. 37). The 2012 Huran Report found that 85 % of Chinese parents plan to take their children to study in foreign Universities, preferably in the U.S. and the U.K. (Hurun Report 2012). More research reinforces the western culture effect in influencing young Chinese people to imitate the culture ...