Reluctance to spend big at home is all in the mind

Fortune Character Institute's 2014 China Luxury Report found that 76 percent of Chinese luxury consumption occurred overseas last year, and that raises many questions. Are import duties too high? Is the anti-corruption drive simply too much? Are there too many fake products in China? Are Chinese luxury shops destined to be venues for bad shopping experiences? Whatever answers you come up with for these questions, it has to be said that the real problem at the heart of this overseas spending is a Chinese character trait: a lack of confidence.

All consumption is generally influenced by two things: the ability to consume and the psychology of consumption. As overall consumption increases, the ability to consume grows and the psychology of the consumer matures.

Many macro factors can affect consumption, such as exchange rates, tariffs and domestic policy, but generally none of these holds absolute sway.