China's conspicuous consumption trend has unique local traits

Is Chinese brand attitude different to Western brand attitude? I think it depends on the category. Online brands like Baidu Inc and Facebook are prized for their functionality and innovativeness rather than the social status they confer.

But clothing and accessory brands are more sensitive to our social identity. Value brands appeal to price-sensitive consumers in China, as they do in Britain. And luxury brands have status appeal - or do they?

According to BrandZ's Top 50 Most Valuable Chinese Brands 2012, ambitious people in China have few symbols available - other than luxury items - to demonstrate their success. But Western consumers generally focus on the reasons for a brand's distinctiveness and the fit of its attributes to the consumer's taste.

Nespresso is a luxury coffee brand that appeals to the coffee connoisseur: the appeal is not primarily based on conveying status but Nespresso's club members do want to be made to feel special. Similarly, fine wines are appreciated by connoisseurs who have developed a discriminating taste in their enjoyment of the wine itself, instead of gaining status by appreciation of a particular wine house.

In the West, "conspicuous consumption" was associated with brands that were considered to be unnecessary for ordinary consumption but were often used as signals of status and wealth for the new middle classes that emerged around 1950. However, it would not be correct to assume that all Western consumers of luxury brands are motivated by the opportunity to show off their spending power.

Indeed, many would be embarrassed to make such a display as it would actually demean their status before others. Those Western consumers who do show off their luxury brands risk being regarded as insecure status-seekers.

It is therefore not surprising that the rapidly growing middle classes in China are following the same trend toward conspicuous consumption that was experienced by the newly affluent and brand-conscious generations that emerged during the 20th century in the West. But there are also some unique Chinese characteristics to consider.

In Chinese culture, consumption is not just about meeting basic needs; it also involves a social need for identification, status and social recognition. According to a number of academic studies, the possession of Western luxury brands acts as a social signal of financial success and further enhances a person's mianzi (meaning face) within his or her social network.

Increased affluence has enabled greater social independence and self-expression, and consumers can express themselves through the brands they use.

Some social scientists use research data to show that social visibility has become a benchmark for consumption preferences and that hedonic values have overtaken traditional Chinese moral norms.

Explanations for this shift in values include: the family planning policy, the influence of social media, films and television, increasing social network pressures and a widening gap between a person's social identity and his/her real identity.

Despite reports of Chinese "bling" and the hedonic consumerist lifestyle, thrift and saving persists. Researchers have found that the traditional value of thrift acts as a restraint to the hedonic "pull" and there are no signs that conspicuous consumption has led to dangerous household indebtedness.

In 2011, the average US household debt was 136 percent of household income, compared with 17 percent for the Chinese.

We should beware any generalizations of consumer behavior in China, not least because there are so many diverse consumer markets and social groups. Ubiquitous media displays of hedonic values aimed at professional elites and Generation Y urbanites should not be taken as representative of the values of the Chinese people, especially the 680 million people living in rural China for whom there is virtually no consumer data available.

In my own work among students at the China Europe International Business School, there is a ready recognition that the Confucian virtues of ren, yi and li still underlie indigenous values and are prized. The extent to which Confucius is to be associated and respected with these values is a more controversial point.

A feature of Chinese indigenous values is that the motivation for their practice may have roots in the high ideals of Confucianism, but are also motivated by opportunities to strengthen guanxi (relationships) and build mianzi. Certain brands connect with these basic desires. The prevailing acceptance of traditional Chinese classical virtues based on Confucianist morality sometimes creates a tension between the hedonic values of self-interested behavior.

Within this tension there is a respect for the Confucianist tradition and especially chengxin, the virtue of honesty and trustworthiness.

The real opportunity for Chinese consumer brands is to draw values from China's rich classical tradition and innovate brand propositions that connect to these values. CapitaLand, the real estate company, had already tried to do this by employing five Confucian virtues in its 2010 advertising campaign, which carried the slogan "When we build buildings, we build people too". As the desire for more responsible brands develops, perhaps we may see consumers seeking to relate to brands that align more fully with enduring human virtues.

The author is a professor of management practice at the China Europe International Business School (CEIBS) and is director of the Center for Leadership and Responsibility at CEIBS.

(China Daily 08/10/2012 page7)