A lot has changed in the last two years. The way we live our lives has been drastically affected by the pandemic, along with which things we place value on and prioritize, but there are other trends influencing our lives and shaping how we spend our money.
Consumer decision making is evolving. The environment around us is changing, and consumers are reacting to those changes. There are also larger currents moving in the background such as a focus on environmentally friendly living spurred on by more frequent severe weather.
We are deciding to spend our disposable income now on luxuries that look different than the luxuries of the past. The things, experiences, and services we covet now focus on health and wellness, reconnecting with the natural world, and novelty experiences.
Consumer tastes are also maturing with more conscious and educated spending habits. The shopper of today evaluates the larger impact of what brands they patron, knowing that every purchase is essentially a vote in favor of a corporation’s ethos.
These trends are redefining the look of luxury.
An older view of luxury in China was an over-the-top opulence. Luxury used to look like a gold-plated toilet, in a gold-plated palace belonging to Hong Kong entrepreneur Lam Sai-wing circa 2008. A decade on, the shine and bling of gold and diamonds are still here, but more and more the things people really want and prioritize are less gold more green.
A good place to start is asking, what is a luxury and how is luxury being redefined?
Intuitively, a luxury is something you splurge on, something you really want and prioritize, and save up or redistribute your money to acquire. A luxury can mean different things to different people in different income and wealth brackets.
An academic view of luxury is defined as an item that is not necessary to live but is deemed highly desirable. These goods are recognizable by increases in demand when a person’s income increases.
So when we have more money, what do we choose to spend it on?
The consumer of today wants a physical and spiritual holiday, an escape from an unpleasant reality, and a novel experience. Frankly, we need a break.
People are quitting their jobs in the U.S. “The U.S. Bureau of Labor Statistics announced that 4.3 million Americans, or 2.9% of the entire workforce, quit their jobs in August,” according to National Public Radio. “UC Berkeley economist Ulrike Malmendier suggests there's something existential behind the Great Resignation: the pandemic and the rise of remote work have changed the way we view our lives and the world,” the article continues.
In China, a few young people are lying flat, or tangping, a phrase encompassing the mentality of opting out of the corporate overworking rat race. The grind is getting to everyone.
One way wary people are rejuvenating is by returning to nature in the form of glamping and travelling to the wide expanses of Western China.
Humans feel at peace in nature, even looking at the colors blue and green can be calming, and calm is need now more than ever.
Glamping, a combination of the words glamourous and camping, in particular has turned into a major trend for young Chinese travellers. The glamping experience involves comfort, amenities and services. The tent and furnishings are already set up, water and electricity are flowing, plus food and entertainment activities are usually provided.
As reported by Sixth Tone, “last year, posts about glamping witnessed a 271% growth on Xiaohongshu, a trend that has only increased in 2021, according to the company. In July, the number of glamping-related searches in the app was up by 286% compared to the same period last year.”
Travelling to tourist destinations like Yellow Mountain, or Sanya in Hainan during a national holiday is described in Chinese by the phrase, renshan renhai translated as People Mountain, People Sea. You can visualize of the mass crowds. In contrast, a quaint camping trip that is equally comfortable and photo worthy has an appeal.
Similarly, across parts of Western China like Yunnan Province, you’ll find luxury boutique hotels a plenty. A chain boutique hotel, Songtsam offers guests a tour from Shangri-la in Yunnan to Lhasa in Tibet, going from one Songtsam minsu to the next. The hotel takes care of transportation, along with planning and booking excursions at each location. It’s an easy way to enjoy new, natural landscapes with all the amenities of home.
Not only do people crave for unwinding in nature, they want to protect it for the future. In a year or floods, fires, typhoons, draughts, locust plagues in Eastern Africa, and mice plagues in Australia, our climate reality could have been taken straight from an apocalypse story. Humans are now acutely aware and feeling the effects of a changing climate.
Some ways individuals are contributing to helping the planet is by valuing sustainable products and switching to vegetarian and vegan diets that pollute less.
China sales of Tesla increased to 22.6% of the electric vehicle company’s overall global sales in the third quarter of 2021, up from just under 20% a year prior, as reported by CNBC. That translates to sales of $3.11 billion in China during that window. This is followed up with unprecedented demand for Tesla’s electric vehicles and company success with stock shares hitting a record high price, and a $1 trillion market capitalization.
It’s not just the big names like Tesla that are popular, the whole new energy vehicle industry, encompassing both electric and hybrid cars, is booming. With increasingly well known Chinese brands like Guangzhou-based companies BYD, XPeng and Shanghai’s Nio growing their market foothold.
Another trend that is contributing to reducing the effects of climate change is eating less meat by becoming vegetarian, vegan, or flexitarian, an occasional vegetarian.
The most basic connection between eating meat and an increase in the greenhouse gas emissions causing warming of the planet is that cows emit methane.
An article from The Guardian quotes Dr Marco Springmann, senior researcher on environmental sustainability and public health at the University of Oxford, saying, “There are lots of different sectors that have an impact on emissions and the food system is surely one of the most important ones as it is globally responsible for about a third of all greenhouse gas emissions.”
Though some people call for a larger impact. The article further mentions Frank Mitloehner, professor and air quality extension specialist at the University of California at Davis saying, “going vegan for two years has the same saving impact as one flight Europe to the US would generate. If we really want to make a difference in carbon emissions we need to change policy.”
The pandemic reminded us of the importance of wellness- physical, mental, and spiritual. And the trends show that consumers in China are prioritizing spending on their holistic health.
An article by South China Morning Post examined a study by Euromonitor saying that by 2025 the health and wellness industry in China is expected to reach a size of $145.1 billion, an increase of 19.2% from 2020. The wellness industries range from activewear and sports gear to vitamins and supplements.
Traditional healthcare is also innovating and growing with technologies like health apps on smartphones and telemedicine.
Digital healthcare provider JD Health said, “In 2020 the company’s annual active user accounts reached 89.9 million, an increase of 33.7 million year on year; and average daily consultations exceeded 100,000, which is more than five times that of 2019.”
The article went on to say, “also reflecting the growth of the wellness industry is a spike in sales for products in the health, wellness and self-care categories. For example, during JD Worldwide’s Black Friday shopping festival in 2020, sales of self-care products increased year on year by over 180%.”
The health and wellness lessons we learned from the pandemic will continue on.
With boarder restrictions, domestic consumers are rediscovering and enjoying what China has to offer from buying international brands at home, championing homegrown brands, and exploring the varied natural geographies of the vast country.
Before the pandemic, China was already emerging as the future of luxury. A McKinsey report from 2019 titled The Chinese Luxury Consumer expected “China’s luxury spending will nearly double between now and 2025,” from 770 billion RMB in 2018 to 1,227 billion RMB in 2025, amounting to 40% of the global market.
The pandemic hasn’t shifted this trend. “Despite recent pandemic disruptions, Chinese consumers have remained the biggest growth opportunity for the luxury sector. Boston Consulting Group predicted luxury spending in China grew 20-30% during 2020,” according to Jing Daily. “And as Chinese consumers convert their international budgets to domestic spending, brands must focus more on them where they live.”
In Shanghai we have minimal immediate threats to our heath from COVID-19, thanks to China’s Zero Covid approach. Though we are not immune to the constant buzz of Covid anxiety that is still all around. This can make everything seem harder.
You may have experienced Covid fatigue, which the Mental Health Commission of Australia identifies as feeling worn-out, irritable, restless, and lack of enthusiasm for things you would normally enjoy.
Our constant day in day out routines in the past were broken up with exciting plans or mental recharges through a vacation, or trip back to our home countries to visit friends and family.
On top of Covid effects, expats are facing tougher times. China had already planned for policy changes that are coming into effect now and are having an impact on foreigners in the country. The most direct effect is changes to taxation. Starting in 2022, education fees, housing stipends, and other incentives that once made up an expat relocation package, will no longer be tax exempt. This means extra strain on companies and employees to fill the gap or cut the costs.
Many people in our support networks are also changing. Farwell parties are a common social gathering these days. For some, the difficulty of closed boarders means leaving China for good to be reunited with family members.
Under all of these present-day challenges, you may have felt the extra need to splurge and indulge in your desired luxury. A weekend getaway feels more essential. A trip to the spa is just as important as a trip to the doctor, and it’s not just you or your immediate social circle that is feeling this way.
This feeling is a documented economic phenomenon called the Lipstick Effect. During hard economic times, such as the Great Depression of the 1920s, or the Global Great Recession starting in 2008, economists noticed curiously that the sales of lipstick rose. Despite financial pressures on other areas of life and limited cash, consumers still bought lipstick, a smaller luxury they could afford, and were purchasing at even higher rates than in economic up swings.
It doesn’t take an expert psychologist to try to explain why this happens. When we feel restricted, or in the situation now, having former liberties like international travel restrained, we feel confined and crave a dose of luxury that make us feel better. The more pain we are under, the more we reach out for a salve in the form of luxury.
It may seem contradictory, but the current pandemic is an apt time to talk about luxury.
A lot has changed in the past two years. Shanghai has a different feel, but for a city that is always in motion, long-term residents have learned to hold on and ride the waves of change. The glamorous global jet setting lifestyle that once was, is at least for now, gone. But Shanghai, the Pearl of the East, will always be glamorous, luxurious, and refined.
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