BusinessFeature

The Two Faces of China’s Golden Youth

The young and affluent Chinese are ultra-connected, hungry for novelty and keen on bling-bling. But there’s a new tribe among them emerging, one more ecologically minded, discreet, and searching for meaning. And major luxury brands are taking notice.

Fabio Bonavita

By Fabio Bonavita22 mai 2020

The generation born in the aftermath of China’s one-child policy (introduced in 1979) runs somewhat in parallel to what we know as “generation Y” in the West. Today, they are all grown up: twentysomethings, thirtysomethings, 40 fast approaching, they are distinctly more affluent than preceding generations, and have come to be known as China’s “Golden Youth”.  But it is a demographic that is growing more complex. "Today, the wealthy young Chinese experience greater financial pressure,” says Yuan Zou, Director of Fashion and Luxury Development in Europe for digital agency Hylink. “Their definition of success has changed. It has to do with money, but to a much lesser extent. What really matters today are influence and popularity. The priority is now a balanced life and the quality of that life.” And there is an even larger generation, with similar values, close behind. That’s why Chinese luxury magazine Jing Daily writes that this trend is set to continue: "2020 is shaping up to be an exciting and unpredictable year. The younger generation will continue to disrupt the luxury establishment, forcing the big players to change their approaches and mentalities in several ways: from exclusive to inclusive, from consumption to leisure, and from controlled to unpredictable. This will naturally require a rethinking of the way luxury brands approach their strategies in China, in terms of marketing, product and distribution." The stage is set for the first generation in China that has grown up in economic prosperity. Aware of their worth, this generation of tremendously successful entrepreneurs are quickly expanding their economic weight into new areas – real estate, art, e-commerce and  tech. And some of them are willing to splurge, even if it means momentarily forgetting the restraint advocated by the Chinese Communist Party

In 2025, China will account for 65% of growth in the luxury industry. (Pixabay)

Proudly ostentatious

The coronavirus crisis forced me to rethink what is essential to me."

Patrick Fang, director of a metalworking company in Tianjin

Patrick Fang is one of them. He is 27 years old and lives in Tianjin, a large port city in the northeast of the country. He owes his success to his family, but above all to his own business chops. “I inherited my father's metalworking business,” he explains. “From the beginning, I spotted opportunities in new markets, went for them, and within just a few years I managed to quadruple our turnover. I'm not a millionaire yet, but I will be soon." Lifestyle is a complicated topic for him, he says. “When I talk about money, it makes some people uncomfortable. But I’m all over Instagram with photos of my adventures all over the world. I love travelling in business class and plundering the boutiques in Paris and the high-end stores in New York or Tokyo. When I’m outside of my own country, I'm very extravagant." His latest extravagant purchase? A pony to compete in snow polo competitions. But his proudest achievement, he says, was his participation in the "xuanfu tiaozhan" challenge, better known as the #fallingstarschallenge. The goal is simple: to be photographed lying on your stomach on a mountain of luxury products. Throwing in a glimpse of the wing of a private jet or the porthole of a yacht in the background will get you more likes (participants of more modest means generally have to make do with a corner of the door of, say, a muscle car).

In search of meaning

Until the coronavirus pandemic, the #fallingstarschallenge was all the rage on social media, exacerbating the narcissism of a new bourgeoisie driven by a need for recognition. While this generation, raised on decadent shopping sprees and heady K-pop tunes, do exist, they are gradually making room for another tribe living at the opposite end of over-consumption. Olivia Lee, marketing director of a luxury pastry shop in Hong Kong, is one of them. "I received my first Louis Vuitton bag when I was in my twenties,” she explains. “Since then, I've accumulated pieces of jewelry from Chopard and Bulgari, and Chanel and Valentino purses. But then, over the years, as I matured, I started questioning myself. And there came a point when the frenzy just got to be a bit too much for me. Today I think more about the environmental impact of my purchases. I'm more interested in handcrafted pieces from small local shops.”

Collaborations between the luxury sector and K-pop stars are multiplying. (DR)

More sensitive to brand messages, environmental issues and a certain search for meaning, these new-style consumers are also less captive. An ad featuring a famous face is no longer necessarily enough to trigger an actual purchase. They need more, especially as they grow accustomed to the health risks associated with the coronavirus pandemic. And that's bound to be unsettling for major brands. According to the magazine Jing Daily, ecological awareness is leading to the emergence of a new market: the rental and resale of luxury goods in China. According to a McKinsey & Company study entitled "How young Chinese consumers are reshaping global luxury", the luxury segment remains robust. Young Chinese consumers are more interested in a brand’s aspirations rather than its heritage, forcing brands to modernize their stories and launch limited edition products to make young consumers feel like VIPs. This includes promoting an atmosphere of exclusivity through an annual calendar of special events, preferably centered around art and fashion, while offering as many opportunities as possible for personalized interaction between the brand and the consumer.

Experiential Luxury

Generation Z is reshuffling the cards in the luxury market. (Unsplash)

The rise of a new tribe of more conscious consumers also partly explains the rapid development of experiential luxury in China. This is something that Olivia Lee can confirm. “I'd rather travel than buy a bag, a piece of jewelry or a pair of shoes,” she says. “And when I go to London or Paris, I don't go to the stores because the lines are always too long. Instead, I spend time discovering the local culture and making the most of other experiences available in the city by hiring a private guide to take me off the beaten track." On the subject of travel, she adds, "I'm not a great traveler yet, but I know a lot of friends who are gradually breaking away from the products. Their only desire is to discover the beauty of the planet. They would rather have wonderful memories than mountains of clothes or watches in their homes. Personally, I am still very attached to social status and logos, but I don't rule out doing the same one day. I'm still young so I have time to grow less materialistic. Obviously, the coronavirus crisis has also made me think about what really matters to me."

Olivia Lee, a 39-year-old Hong Kong woman, has gradually stepped away from material luxury. (DR)

With that in mind, it’s no wonder that China's high-end tourism figures are going through the roof. According to a study by HHtravel, wealthy Chinese travelers live mostly in the east of the country, mainly in Beijing, Guangzhou and Shenzhen. They spend an average of 18,000 euros per person per trip. The 18-to-36 age group travels abroad every three to four months and their favorite destinations are Europe, South Korea and Japan. In view of their considerable purchasing power, the tribes of China's Golden Youth are an attractive target for the luxury industry. “A wealthy young Generation Z Chinese comes from a one-child family”, Yuan Zou explains. “His parents are often entrepreneurs who have recently made a fortune. He was educated in private international schools, so he speaks English. He has travelled extensively and is familiar with luxury brands. Some Chinese brands are taking off too. I'm thinking of Bossini, Bosideng and Baleno.” And there’s more, like Shiatzy Chen, Icicle, and Chow Tai Fook – emerging competition is challenging the traditional luxury brands, and has them worried.

Doha is emerging as a major destination for luxury shopping tourism. (DR)

Golden Youth flocking to Doha

The recent political tensions in Hong Kong have driven the young wealthy Chinese to seek a new haven, and they seem to be finding it in Doha, capital of Qatar. According to the latest available figures (2018), 20,000 Chinese nationals have traveled to the Emirate, up 68% from 2017. This spectacular growth can be explained primarily by the decision of the Chinese authorities to classify Qatar among "approved destinations", meaning that Chinese tourists can feel safe travelling there. And for the wealthy tourist of any stripe, Doha certainly ticks all the boxes: very high-quality services, brand new palaces and luxury malls. Not to mention a millennia-old Islamic culture that provides China’s Golden Youth with a change of scenery, from the Museum of Islamic Art to the Souq Waqif, from and from the sights of Doha Bay to the spectacle of falconry. Lastly, Qatar has been busy cutting administrative red tape to make things even easier for wealthy tourists from China, who don’t need a visa and are free to use China UnionPay credit cards in most stores. These are all assets that should ensure a rapid rebound in luxury tourism when the coronavirus crisis is over.

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