What variables shape luxury consumer behaviour in China? An empirical study on luxury consumption in China towards luxury fashion goods

Abstract

The rapid growth of the Chinese economy in recent decades has brought benefits for luxury retail companies. The rise of the middle class has considerably increased investment in luxury goods, positioning the country as a near world leader in luxury goods consumption. The economic effects of this behaviour will be analysed in this paper. Therefore, theories such as the law of demand of Marshall and the Giffen goods paradox will be studied as part of the behavioural economics (Stigler, 1947). This science seeks to provide an answer to human financial decisions through psychology and sociology. Moreover, this paper will determine what the Chinese luxury market entails as well as the meaning of 'luxury' and its importance in the Chinese culture. Afterwards, consumer behaviour will be analysed through theories such as conspicuousness, subjectivity to normative influence, or pragmatism, among others. The main objective of this work is to determine what drives the Chinese population to such a high consumption of luxury goods. The second objective is to analyse the luxury consumption of young Chinese people in order to determine whether there are new influences that drive this part of the population to consumption. This will be of great value both for behavioural economics and for luxury firms seeking to capture the young consumer, as they will be able to shape their corporate and marketing strategy accordingly. As part of the study, qualitative research will be carried out through semi-structured interviews in order to find a solution to the research gap. Finally, the results will be analysed, and a conclusion will be provided with a recommendation for future research on the topic.