Introduction

The New Silk Road

Let China sleep, for when she wakes, she will shake the world.

—Attributed to Napoléon Bonaparte, 1816

Europeans used to crave Chinese luxury goods. So seeing Chinese buying European luxury goods could be the contradiction of an era. That contradiction could last.

Two thousand years ago, the world was economically divided between Rome and China. The Roman Empire was known to the Chinese as Daqin, meaning the ‘Great Qin', the Great other Empire to be reckoned with far away on the other side of Earth. The Han dynasty of 206 BC to AD 220 built and extended the original Silk Road1 and saw the development of wealthy merchants during what China remembers as a golden age. Roman consumers became obsessed with silk, fragrances, spices, jewellery, and anything coming from the East, really.

China was revered for the refinement and the quality of its products, and the scarcity value meant that it was acceptable to pay the equivalent of ‘top dollar' for them. As consumer spending started to weigh on the Roman finances, the Roman Senate ended up describing silk as a decadent and immoral cloth. And when the empire collapsed, the business on that Silk Road dried up.

Fast-forward to the eighteenth century: the West is still fascinated by Eastern luxury products such as tea, porcelain and, yes, silk. The British are getting ruined by paying for these goods with tons of silver and quickly find an alternative. Opium fields are cultivated in India by the British-owned East India Company2, which trades it in Canton and Macau, the two exclusive entry ports for British and Portuguese commerce into China. Opium was then banned in China, but Chinese consumers were hooked on it and soon the money flowed back from East to West and it all ended terribly with the opium wars.

The Silk Road running East to West is no longer in use for the luxury trade. Today, Chinese consumers are off of opium but on to imported Western luxury products. There is a New Silk Road that runs from the West to the East. It is a road that has not been open for long but it is a busy one and one where new lanes have been created quickly.

It is incredibly ironic that today's luxury goods are Western and Chinese consumers are buying silk scarves and “carrés”3 from French brand Hermès4 or, as history comes full circle, jewels from Bulgari and leather bags and fur coats from Fendi, two contemporary Roman icons.

The New Silk Road is catering to millions of Chinese feeding a new Bling Dynasty. Within this substantial empire, many characters stand out.

Let me introduce you to five of them.

Chinese Luxury Avatars

Spending time in China and meeting Chinese consumers abroad has shown that some stereotypical luxury consumers do actually exist. Rather than quote real people who may find it uncomfortable or rude, I have decided it was easier to present you with five avatars. These are representatives who embody the thoughts and feelings of luxury consumers coming from very distinct subsets of the Chinese culture.

Here they are. (See Figure I-1.)

Figure I-1 Five Avatars of ‘Mass Lux'

Calvin Li

Calvin is 26 and is brand obsessed, loves logos and while he's not that affluent, he wants people around him—friends, family, business partners—to know he's succeeded.

He is what the managers of Coach would call a ‘status lover', a somewhat disappearing breed of Chinese luxury consumers. He's after brands as he's eager to fit in to what he sees as modern China.

Calvin doesn't speak English and I don't speak Putonghua5 so every time we've had to chat, I brought a friend along with me for translation purposes.

Calvin works as a manager in a textile manufacturer. He lives in Jinjiang, a third-tier city6, and an hour away from Xiamen, where Calvin goes some evenings for fun.

His favorite brand is Louis Vuitton,7 but that's way too costly for him so midmarket imported brands like Calvin Klein work well. Three years ago, some Xiamen-based friends made fun of him as he was wearing suit labels outside the cuffs—these were the labels he was supposed to have cut off.

He is part of a few people in his entourage who bought brands that they thought were legit but ended up being interpretations of Western or Hong Kong–based brands: Qiaodan Sports8 (sued by Michael Jordan for using his Chinese name and a similar logo), Gio Amrami (instead of Giorgio Armani) suits and others.

Lewis Wang

Calvin's older cousin—he's 30 now—runs a property business in Xiamen,9 the city known to some as China's Saint Tropez. He is very rich by local standards. He was smart to begin with and has great business acumen and connections.

His English is not great, and some mistakes he makes are opportunities for us to spend more time talking and laughing and less time understanding each other. But he's a real entertainer and as long as he can get by, he's happy with that.

He seems fearless and clearly is enjoying life to the fullest. He's a loud man, likes a drink—and a few more—but he's a great laugh. Lewis has no inhibitions and when I think of him, it reminds me of Dr Seuss's words: ‘Be who you are and say what you feel, because those who mind don't matter, and those who matter don't mind'.10

A bit like Calvin, Lewis has ‘nouveau riche' habits, loves brands but can actually afford quite high-end kit. Unlike Calvin, he's got a passport—like 4% of Chinese (or more than 50 million in total)—and he can afford to buy a Louis Vuitton bag and has travelled in many Chinese cities. He went to Taipei late 2011, to Hong Kong for the first time last October, to Macau earlier this year and dreams of Milan and Los Angeles for his first ‘true overseas' trip.

I write ‘true overseas' as Calvin, like most Chinese, considers Taiwan, Hong Kong and Macau part of China.

He's what the press calls Tuhao: tu is dirt; hao is splendor; so the meaning is along the lines of ‘parvenu peasant.' Chinese popular culture despises Tuhao and at the same time secretly is envious and jealous of them. Lewis bought the gold iPhone 5s that came out in 2013, the one Apple put out specifically for the Chinese market, known in China as the Tuhao Gold and in the Apple HQ as the Kardashian iPhone.

Tiffany Ma

Tiffany just started her first job in Guangzhou11 at age 22 in an advertising agency. She's ambitious, graduated from a good school but has limited revenues in this first job. She's never been abroad but would love to go to Seoul or Tokyo as they seem so refined.

Her English is conversational and fine. She recently started taking a few Korean lessons, just because it's cool, and she'd like to figure out what on earth the K-Pop12 bands she loves so dearly are singing about. She also follows many of the Korean soap operas that air on Chinese TV channels.

She's the Chinese equivalent of the Japanese Office Lady13 (or “OL”) and has relatively limited needs, so she has quite a bit of disposable income to purchase brands. She's connected, quite active on Internet forums and blogs and a first-time buyer of imported luxury brands. She won't be spending often but she'll be saving up to buy brands where she gets the sense that she's rewarding herself.

Her wealthier boyfriend—by that I mean he's wealthier than she is; she only has one boyfriend—bought her a Tiffany ring recently, and she was absolutely delighted. Yes, it cost more than a similar ring at a family jeweller but the blue box, the Tiffany guarantee and the discrete yet recognizable design thrilled her.

She is one of the 2 million Weibo14 followers of Angelica Cheung, the editor in chief of Vogue China and a veritable fashion guru. She likes brands with history and reads about them a lot.

Brittany Chen

Brittany is Tiffany's aunt though she's just ten years older. She's a marketing director for a fast-moving consumer goods company in Shanghai.15

She's Chinese in her style and has a slight, recognizable accent when she speaks in English but if I hadn't met her in Shanghai, I would probably have never guessed she was a local as she could really be from anywhere, sounding as cosmopolitan as she does. Brittany goes to London for business and enjoys relaxing weekends in Taipei. She's planning to go to New Zealand with her husband and daughter soon.

She has known foreign luxury brands for a while and is very knowledgeable. Louis Vuitton doesn't do it for her. She likes more niche-y concepts like Miu Miu and Céline but has seen many Italian and French fashion brands and thinks British Burberry or Mulberry or American Tory Burch and Marc Jacobs are great alternative options.

Tiffany and Brittany are at the heart of the Chinese luxury market growth. They are putting pressure on traditional, historical brands as they are very knowledgeable and won't be moved by what most Chinese consumers have an interest in.

They...