East Asia and Luxury Goods: A Short Case Study
As a vast, culturally rich region, East Asia has many cases that demonstrate the intersection between culture and consumer behavior. An interesting consumer trend that most do not attribute to culture is East Asians' affinity to luxury products and designer brands. Whether these items are directly bought from designer stores, or vendors make thousands from selling knock-off versions, East Asians have demonstrated a huge preference toward luxury.
Despite its generally low average income, East Asia is the leading market of luxury good consumption. Some East Asians prioritize high-priced good consumption even prior to fully securing basic necessities, like food, clothing, and shelter. A paper by researchers at the University of Hong Kong, Li and Su, concluded that compared to American consumers, Chinese consumers are more likely to consider the prestige of a brand or product before purchasing.
They also attributed the region’s consumption of luxury good to the concept of “face,” or reputation. Face is prioritized in collectivist cultures--a concept that I'll expand further on in a future blog post. Most Asian countries have a collectivist culture that focuses less on individual pursuits, and more on collective advancement as a community or family. In the U.S., most people make decisions for themselves and regard themselves as individual entities. In China and other East Asian countries, individuals are viewed in relation to others (father, son, brother, etc.). “Face” in the context of East Asian countries refers to the prestige of one’s entire family.
Collectivist cultures often have strong relational networks. This means that every individual in a family is responsible for upholding everyone’s prestige, forcing a culture of constant optimization and social "appropriateness." Chinese people tend to “act in accordance with external expectations” and resist “internal desires" (Li and Su). For example, drinking alone is seen as depressing and improper, but when done to welcome people or have fun with friends, the act is encourage. The emphasis on social networks drives cultural expectations in East Asian countries. It's the constant notion that everyone is observing your behavior--social and financial.
Thus, people in collectivist cultures consume products with the motivation of “saving face,” or earning social respect. Through extensive research, Li and Su determined that conformity, upholding social status, and honoring others proved to be extremely influential to Chinese consumer behavior. This is just one of many examples I'll delve into in which consumer trends are a result of cultural aspects that many "by-the-numbers" economists might fail to consider.
REFERENCES
Li, J. J., & Su, C. (2007). How Face Influences Consumption - A Comparative Study of American and Chinese Consumers.
Shavitt, S., & Cho, H. (2016). Culture and consumer behavior: The role of horizontal and vertical cultural factors. Current Opinion in Psychology, 8(PMC5222543), 149–154. ncbi. https://doi.org/10.1016/j.copsyc.2015.11.007
