The March 8 article China's super rich no longer feel safe flashing their wealth is pointing out a phenomenon borne out of the current change in Chinese leadership and populist pronouncements by the incoming leaders about the need for more equality and less conspicuous consumption.
This is not a sudden change. The 1990s and 2000s saw unprecedented economic growth and with it extreme wealth accumulation in China. The Chinese leadership not only encouraged people to get rich, many in government themselves got extremely rich in the process (if not directly then by proxy through children and other relatives). Mass middle class discontent was always close behind but found it difficult to express itself in the (heavily controlled) print media. The advent of internet news media and crucially, user generated content on blogs and social networks (Sina Weibo for example), finally let out the steam of general frustration felt across China with super rich elites and out of touch politicians who are so cosy with eachother.
The Chinese leaders at the national level are nothing if not astute. They have sensed the national mood and began to act, at least superficially, to appease the masses. Even before the change in government, rules were announced last year to ban the word 'Luxury' from advertisements and restrict the travel budgets and time abroad for public officials, for example. The moves to bring more capitalists into the Chinese communist apparatus is another method of keeping a close eye on how the rich behave and using both a carrot and a stick with them.
The new leadership is taking things further with rhetoric and some hard policies and regulations may come out still. Whether anything changes in practice is still in doubt. Older generation rich in China have known for years to be careful with public shows of their wealth and always expect the unexpected. I heard told a story back in 2002 of a 60 year old Chinese Billionaire who always took public buses and dressed in common, cheap clothes. Second generation rich are not as careful and this is partly what brought about the recent backlash.
The effects of government policy on travel and consumption abroad
How will this new mood affect the consumption pattern of Chinese, who until now have been focused on ostentatious purchasing of Brands and the use of brand exposure to uphold their social status? In the short term, as seen from the above linked article, those wealthy who are rich thanks to political connections will likely subdue their preference for public showing off. Free market entrepreneurs may not need to be so careful though they too could be pressured by media scrutiny which is likely to increase, given additional rope by censors. Travel and property sectors may actually get a boost from millionaires seeking garages to park their super cars abroad and marinas for their luxury yachts, away from scrutiny.
We should also note that, irrespective of policy, luxury consumers are increasingly sophisticated and savvy in their choice of brands. The luxury symbols of 5 years ago-LV handbags etc. are now almost a middle-class product in China and shunned by the ultra rich. Shopping is becoming more personal and boutique brands are enjoying a renaissance. It is also realistic to project that experience, rather than material, will become the show-off currency from now.
This bodes well for the travel sector, yet poses a challenge-how to create unique, satisfying experiences for a new kind of traveller that 'knows the price of everything but the value of nothing'(to paraphrase Oscar Wilde). Will the elite of China recycle the pattern of the rich in Europe and USA in the past and focus only on themselves? Certainly, the French Riviera towns and the Casinos of Las Vegas are hungrily waiting for the masses of Chinese to take their place at the beaches and gambling tables.
But, maybe we can create a new paradigm where green, eco or sustainable travel becomes the new cool experience that people can brag about? (eg. I flew to Africa, went to a safari AND built a school). I'm taking bets now.
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