Editorials

Unjustifiable consumption

(China Daily)
Updated: 2010-06-15 07:27

China has become the world's second-largest consumer of high-end fashion, accessories and luxury goods, according to the Chinese Academy of Social Sciences.

The country now buys 27.5 percent of the world's luxury goods, following in the footsteps of Japan, and is set to become the largest consumer of such items in five years' time.

Now, the Chinese citizen's dreams of cars, cash and credit cards extend well beyond the coveted goods of the 1980s - watches, radios and bicycles - and the TVs, washing machines and refrigerators of the 1990s. From luxury confectionery and designer clothes to imported beer and expensive cars, Chinese shoppers are buying as never before.

Consumption of luxury goods is mainly being driven by wealthy Chinese born after the "cultural revolution (1966-76)".

This generation saves less than older generations as they have been less affected by the large-scale social and economic transformations China witnessed previously.

Related readings:  China's latest frontier of luxury spending  China to be world's biggest luxury goods market in 5 yrs  Flush Asians splash out on luxuries  Survey shows office workers seeking out luxury goods

On average, consumption of luxury goods accounts for 4 percent or so of a consumer's assets globally. In China, however, the proportion is as much as 40 percent or even higher.

This has drawn the likes of Cartier, Prada and Armani to expand in China faster than anywhere else in the world.

This trend is quite disturbing. Hundreds of millions of people still below the poverty line in the country, and the rapid pace of spending on luxury goods actually conceal this grim reality.

Driving the world's economy is fine, but spending on non-essential goods is not the way to go about it.