[Marxism] Conspicuous consumption

Louis Proyect lnp3 at panix.com
Thu Aug 18 07:26:04 MDT 2011


China’s newly rich are flaunting wealth — and giving Communist 
rulers a headache
By Keith B. Richburg, Published: August 18 | Updated: Wednesday, 
August 17, 10:37 PM

BEIJING — China’s new rich love luxury products — imported French 
handbags, Italian sports cars — and even more, they love to show 
off their bling.

That seems to be creating headaches for China’s Communist rulers, 
who after three decades of exhorting their subjects to get rich 
are facing growing discontent over a widening income gap. 
Officials now talk about making sure wealth is more evenly 
distributed, and how to get the rich to tone it down.

As the global economy melts down, and China tries to accelerate 
its shift to a more consumer-led growth model, Beijing’s leaders 
see luxury items as a lucrative revenue source. Many Chinese now 
buy luxury products in Hong Kong or abroad to avoid China’s high 
taxes, so officials are debating a move to slash tariffs to 
encourage consumers to shop at home.

But government is loath to be seen as taking any new measures to 
support the sliver of the population that can afford that pricey 
new Hermes bag or latest Ferrari, and has delayed any decision on 
cutting tariffs, according to Chinese media reports and industry 

“The government is facing a conflict,” said Michael Ouyang, 
representative of the World Luxury Association in China. “They 
don’t want to promote luxury because they are worried people who 
cannot afford it will see the advertisements. But they don’t want 
to limit luxury products because it’s good for the economy. So 
they’re facing a dilemma.”

It doesn’t help the government’s case when the rich keep showing 
off their bling.

Exhibit A might be a 20-year-old woman calling herself “Guo Meimei 

Guo — whose name “Meimei” means “Pretty, pretty” — became a recent 
Internet sensation in China, and prompted a national scandal, when 
she posted photos of herself on her microblog posing with her 
collection of imported Hermes handbags and showing off her white 
Maserati sports car, called “little horse,” and her (married) 
boyfriend’s orange Lamborghini, called “little bull.”

The initial outrage was over suspicion that she was linked to 
China’s largest, government-run charity. But many here said the 
“Guo Meimei scandal,” as the story became known, exposed a common, 
and unflattering, aspect of China’s headlong rush to get rich: a 
tendency of China’s new super-rich to show off how much money they 

“People like showing off their wealth,” said Yang Xu, who runs a 
shop called Vogue 2 that specializes in second-hand designer 
handbags. “The consumption of luxury products has grown too fast. 
It’s beyond anybody’s imagination.”

In his shop, for example, Hermes bags have become more popular 
than the Louis Vuitton brands, for a simple reason: They are more 

China’s rise in the world market

At a time when Europe and the United States are still struggling 
with stagnant economies, China has emerged as the premier 
long-term market for luxury products. Chinese bought $12 billion 
in luxury goods last year, according to the Ministry of Commerce 
and industry statistics. China will account for 20 percent of all 
worldwide luxury sales by 2015, according to McKinsey and Company 
management consulting firm.

Bentley has sold more cars in China this year than in the United 
Kingdom, with China now accounting for 25 percent of its sales. 
Mercedes-Benz in July opened a new design studio in Beijing.

According to the World Luxury Association, the market for luxury 
products in China grew 20 percent last year and shows no sign of 
slowing. “In China, purchasing power just keeps getting stronger,” 
Ouyang said. “We are the only country where luxury product 
consumption is growing year by year.”

Experts say the phenomenon of showing off wealth is a complex one, 
rooted in China’s long struggles with poverty and famine, and a 
sense that expensive possessions confer a higher social status.

“Showing off wealth shows that China’s economic development has 
not been long, and Chinese society’s psychology of consumption is 
still not mature,” said Hu Xingdou, an economics professor at the 
Beijing Institute of Technology. “In China, wealth is the only 
criteria to measure social status. People hope to show they have a 
higher social status by wearing luxurious brands.”

Many of those who show off tend to be the newly rich, and they are 
often young — the children of wealthy parents, the so-called “rich 
second generation,” or young women with wealthy boyfriends or 
suitors. “They want other people to look up to them,” Ouyang said 
of the Guo Meimei phenomenon. “They want people to know that other 
people love them and take care of them.”

“The deeper reason for this showing-off phenomenon in China is 
that luxury products help your personal confidence,” Ouyang said. 
“If you wear designer clothes, or carry a designer shopping bag, 
people will give you more respect. A bartender will give you 
excellent service. ... If you go shopping or to have lunch, an 
Hermes bag is like your ID card — it’s a really important ID card.”

Wealth and vanity, taken too far

On popular microblogging sites, many in China are openly 
questioning whether the country’s new creed of amassing wealth has 
gone too far.

For example, a professor at the prestigious Peking University was 
widely criticized recently after he used his personal microblog to 
tell his former students not to come visit him if they had failed 
to make at least $6 million by the time they turned 40.

Also, a millionaire in Shanxi province caused a stir, and became 
the subject of a video that went viral, after a guard at a Qing 
Dynasty tomb site told him that the underground tombs were closed 
to the public. The millionaire began throwing cash at the guard’s 
feet, demanding to go inside and claiming he had enough money to 
buy the ancient tombs.

But not all luxury consumers here are into showing it off. Zhang 
Yan, a 30-year-old shop assistant at a shopping mall, has several 
designer bags and is a particular fan of Louis Vuitton. But when 
she goes to work, she carries a simple Coach bag, mainly because 
it is more low-key.

“Some of my workmates can’t afford it,” Zhang said, “So I don’t 
want to show my Louis Vuitton or something to them.”

Even Guo seems to have conceded she perhaps went too far.

In her first television interview since she caused a stir, Guo, 
seated with her mother, told a Chinese television host that when 
she came to Beijing to study acting at the film academy, she 
became afflicted by “vanity.”

A nervous-looking Guo also admitted that only two of her Hermes 
handbags were real.

Researcher Liu Liu in Beijing contributed to this report.

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