Advertisement
China consumption
EconomyChina Economy

China’s consumers refuse to open their wallets. Is ‘luxury-phobia’ the problem?

Chinese households are not splashing out on luxury goods partly because they feel ‘stigmatised’ for doing so, scholar argues

2-MIN READ2-MIN
19
Listen
Customers line up to enter a Hermes store in Shanghai. To boost consumer spending, China should ensure that people buying luxury goods do not feel stigmatised, a professor at Peking University has said. Photo: Getty Images
Xinyi Wuin Beijing

As China struggles to boost consumer spending, a professor at one of the country’s top universities has argued that authorities first need to overcome a psychological barrier: a deep-seated “luxury-phobia” that has taken hold among the Chinese public.

The suggestion by Su Jian, a professor at Peking University, comes amid a debate in Chinese policy circles about how to revive the country’s sluggish demand, with retail sales slowing despite government efforts to rebalance the economy towards a consumption-led growth model.
Advertisement

For Su, the answer will partly lie in a change in attitudes: the pursuit of luxury goods “should not be stigmatised, but rather seen as a sign of social progress”, he wrote in an essay published last week.

The proposal appears to run counter to mainstream opinion in China, given the government implemented a strict austerity drive and campaign against extravagant spending last year.

The campaign has been especially restrictive within the civil service, where excessive local enforcement has at times led officials to hide their spending – shunning not just luxury goods, but even routine social acts like dining out – to avoid scrutiny.
Entrepreneurs and other wealthy individuals have also started to lie low to avoid being accused of flaunting their wealth, after the government cracked down on displays of lavish consumption on social media.

Su said consumption of luxury goods was crucial to driving innovation and unleashing the true consumption potential of China’s vast population.

Advertisement

Many products that were once accessible only to the rich have since become mass-market staples through innovation to reduce production costs – from tea in centuries past to smartphones and electric cars today, he said.

Select Voice
Select Speed
1.00x