Craze for luxury cars in China, hope for automakers but consumption mentality called flawed

The Shanghai Auto Show 2011 is set to conclude on Thursday with a "good harvest" for luxury brands, such as Rolls-Royce, Bentley, Ferrari, Lamborghini and Maybach.


The most eye-catching car was perhaps Aston Martin's One-77 from the United Kingdom. Five cars of this luxury model, which reportedly numbers only 77 worldwide, were provided especially for the Chinese market. All of the five were sold before the official opening of the Auto Show.


The car was priced at 47 million yuan (7.2 million U.S. dollars), the most expensive among the top 10 luxury cars at the eight-day event.


A widely spread story at the fair recounted how a Chinese man, aged more than 30 years old, came to the Aston Martin booth and had a glimpse at the exhibits. Only minutes later, he ordered a compact sports car valued at nearly 4 million yuan and then swaggered off.


According to HIS Automotive, a market research firm based in the United States, 727,227 high-end cars were in use in China last year. The figure is expected to reach 909,946 this year, and 1.6 million in 2015.


Media reports showed that more than 1,000 Ferrari cars are driven in China, which is expected to become the second largest market for the world's leading sports car supplier.


Last year also saw the sale of more than 120 Aston Martin cars in China, with an average annual sales growth of 50 percent in the country over the past few years.


Industry insiders believe that Chinese buyers of luxury cars at the Auto Show were probably private business owners and offspring from wealthy families.


According to research by the world's leading consulting firm, McKinsey & Company, luxury goods consumers in China are much younger than their counterparts in other countries. Such consumers are often between 18 and 34 years old in China, whereas their peers account for less than 30 percent of total luxury goods buyers in Britain.


Further, around 25 percent of luxury goods consumers are willing to buy without any discount, while the proportion was only 6 percent in Europe.


Ferrari's CEO, Amedeo Felisa, said in Shanghai that the potential in the Chinese market is almost unlimited, and that the company attaches great importance to the market.


He noted that Ferrari owners in China are much younger than those in other parts of the world.


A sports car dealer in Shanghai told Xinhua, on conditions of anonymity, that luxury-car clients in China are young and rich, that they refuse to take a low profile, and that they like to flaunt their wealth. They are often attracted by special or limited versions of luxury cars, though such versions are much more expensive than ordinary versions of the same models. Cars with stylish designs and color almost always win their hearts, the dealer said.


Market observers sum up the consumption mentality of the young wealthy Chinese with a saying that goes, "Buy it if it is priced high."


Such a mentality, according to observers, embodies people's desire to chase a high-quality life and exquisite products. On the other hand, it arouses concern about the nation's ever-widening gap between the rich and the poor.


Chasing luxury cars is only part of the fervor for luxury goods consumption in China, which is expected to make up some 20 percent of the world's total sales of luxury goods in 2015.


A 150-million-yuan auto package at the Auto Show attracted interest among some Chinese viewers. The package consisted of a 42-million-yuan gold-coated stretch Rolls-Royce Phantom, a 110-million-yuan jade jewelry set (including a necklace, a bracelet and a pair of earrings), a 3-million-yuan Hermes bag, and a 15-day tour to Switzerland for two, valued at 5 million yuan.


According to Ding Chen, vice general manager with the car-dealing company that offered a 150-million-yuan package, several pieces of jewelry in the packages had been ordered at the Auto Show, including a 50-million-yuan jade necklace.


Per-capita disposable income of urbanites in China stood at less than 20,000 yuan last year. A luxury car valued at 47 million yuan equals the total annual income of some 2,400 people.


Some Internet users commented that 150 million yuan was equivalent to the annual fiscal revenue for an impoverished Chinese county.


They believed that buyers of the commodities in the package mostly want to show off their wealth.


Experts note that luxury goods are often understood simply as symbols for social status in China. Most Chinese buyers only want to flash their luxury goods, but ignore the cultural elements in such commodities.


Professor Gu Xiaoming, with the Shanghai-based Fudan University, suggested that the public should tolerate luxury goods consumption and calmly see it as a lifestyle. At the same time, luxury goods consumers should not forget to spend a proper portion of their wealth to help the poor and support social undertakings, such as education in underdeveloped regions.
(Source:http://news.xinhuanet.com)