The End of Cheap China, Revised and Updated: Economic and Cultural Trends That Will Disrupt the World

CHAPTER 10WHAT THE END OF CHEAP CHINA MEANS FOR THE REST OF THE WORLD

In September 2011, I flew to Paris to meet with the chief executive officers of some of the world’s leading luxury brands. They had all seen soaring sales to Chinese consumers and were eager to know more about the habits of China’s ultrarich. In just a decade, China has emerged from being a money-losing backwater for luxury brands to become the world’s second-largest luxury market. Chinese consumers have become the Japanese of the 1980s; wherever they travel, they shop for Louis Vuitton, Gucci, and Chloé and want a taste of the high life. Whole industries developed alongside Japan’s rise—from duty-free shops in airports to sushi bars sprouting up wherever Japanese businesspeople traveled—and fortunes were made. Traveling Chinese tourists and businesspeople could inspire the same phenomena.

Even middle-class Chinese aspire to buy luxury products, as Japanese housewives did before. It is not uncommon to see secretaries who make $800 a month buying $1,000 Gucci bags. They, too, will spark new cottage industries around the world for businesses smart enough to understand their needs.

As I walked along the Champs-Élysées, Chinese tourists were everywhere, rushing to Lancel and other elite brands’ flagship stores. Seemingly every other person in the Louis Vuitton store was Chinese. Sales clerks there told me that Chinese were driving so much of the sales of the most popular and expensive items that they had to limit ...