Luxury brand house Gucci has opened a fashion museum in Florence, the great Italian city that was the home to the likes of Michelangelo, Machiavelli and Leonardo Da Vinci. The Gucci museum pays homage to lesser mortals like Grace Kelly, Sophia Loren and Elizabeth Taylor—or rather the bling and bags they flaunted.
But these are times of austerity in Europe. The continental plutocrats and playboys have not yet abandoned the good life, but the centre of fashion consumption—and fashionable consumption—is moving east. China is set to become the largest market in the world for luxury goods, according to a research report put out this week by Hong Kong and Shanghai Banking Corp.
The most obvious reason is that the Chinese economy is steaming ahead while much of the developed world is in the doldrums. The problem with this simple explanation of the rise of luxury consumption in China is that the country it has overtaken is Japan, which has struggled with economic stagnation for most of the past two decades.
You surely need the money to buy all that branded paraphernalia, but the age-old desire to flaunt it also has an important role to play. Social anxiety seems to be quite recession-proof, and Adam Smith had noted more than three centuries ago that even a poor labourer would take care to wear a linen shirt to church in order to reassure the rest of the community about the type of person he is. Contrary to popular perception, luxury consumption is rooted in tribalism rather than the desire for individual expression.
Maybe that is why Asia is such a fertile territory for luxury brands, now that there are enough people in this part of the world with the incomes to spend on overpriced goods. India is coming up as a big market as well. The fact that India offers better protection against counterfeiters puts it at an advantage against China, though the lack of retail infrastructure (or special requirements such as marinas in the case of yachts) is a clear negative.
Moralists may seethe at such ostentatious consumption in the midst of poverty: Gucci in the land of Gandhi, so to say. Actually, it is just a harmless way to signal to others about the type of person you are.
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