<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div></div></div>In his 2003 book, "<a href="http://www.amazon.com/Living-It-Up-Americas-Affair/dp/0743245067">Living It Up: America's Love Affair with Luxury</a>" (Simon &amp; Schuster), James Twitchell made the case that the urge of fitting in is depressingly vulgar but essential. The message from many luxury brands is that products will enable consumers to 're-invent' themselves and that they 'deserve' to reward themselves.
Two recurring questions I hear are: 'How is Chinese luxury demand different to Japanese demand?' and 'As there is limited growth with the Japanese, what is the risk that growth moderates quickly now with the Chinese?'
First, China is the only male-driven luxury goods market. Japanese consumption in the space has been essentially female driven.
But beyond that, there are many more consumer profiles in China and many differences in culture, history and sociology which make me believe that growth can continue strongly with the Chinese for some time still.
I have a friend, Francis Belin, who runs Swarovski for Asia Pacific and used to run Jaeger-LeCoultre (a watch brand, part of the Richemont group) for Japan. His view is that Japanese people used to purchase luxury products to fit in whereas Chinese are buying the goods to stand out. There are actually similarities there: consumption serves a purpose of being perceived as part (or not part) of a group. In Japan, you became part of society; in China, you leave the have-nots and show face when buying luxury. As Tom Doctoroff puts it in "<a href="http://www.amazon.com/What-Chinese-Want-Communism-Consumer/dp/1137278358">What Chinese Want: Culture, Communism and the Modern Chinese Consumer</a>" (Palgrave Macmillan, 2012), individuals in China 'stand out in order to fit in', meaning individual expression usually does not imply a break from the norm but a slight step up without straying away too much from conformity. This also may explain why it is rare to come across extremely innovative brands of Chinese origin.
Chinese individual expression is, however, challenged or made more intricate by the impact of Confucianism that continues to drive many relationships in society. At the center of Confucianism are the 'five bonds', which imply that individuals exist only through the lens/prism of these five sets of relationships: from ruler to ruled, from father to son, from husband to wife, from elder brother to younger brother and from a friend to a friend.
Confucianism replaced legalism in China after the country's first imperial dynasty (Qin: 221-206 BC) and has been a strong influence ever since.
Events unfolding during last century in China have been key to understanding the relevance of foreign luxury goods in the market. During the Mao era, Chinese were constrained by political fear and, for many, poverty. The People's Republic of China was founded in 1949 with Mao as chairman, following nine years of civil war ending with Chiang Kai-shek and the Kuomintang movement fleeing to Taiwan and founding the Republic of China (ROC).
Soon after, in the early 1950s, land reform and the campaign to suppress counter-revolutionaries began. The Great Leap Forward led to famine. In 1966, Mao announced the initiation of the Great Proletarian Cultural Revolution. Maoist policies meant to develop the country at all costs, one of them being to tone down 5,000 years of culture and history or, as the People's Daily expressed in June 1966: 'Sweep away all monsters and demons' by getting rid of the four olds.
There is a direct correlation between that history and luxury consumption: Chinese are looking to imported brands for history and craftsmanship.
Many Chinese fled while Mao was in power; many more got out of the country later as frontiers became easier to cross.
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>I mentioned Li Ka-shing before, who made money selling plastic flowers to the world that were produced in Hong Kong and eventually ran businesses worth billions. Jimmy Lai, born in 1948 in China, is another well-known multi-entrepreneur, founder of apparel brand Giordano and the Next Media group. He fled at age 12 to Hong Kong, smuggled aboard a boat. These men are two of many symbols of the success story of the Pearl River Delta, an extremely successful hub of cities now known for its pollution levels but initially known for being the 'Factory of the World'.
At the heart of the Pearl River Delta story is the development of Shenzhen, a town of merely 300,000 people-a friend who has been in the region for a while says it was really more a small fishing village then-when Deng Xiaoping made it the first Special Economic Zone in 1979. Now it is a more than 10-million-inhabitant megacity known for fakes and set up right across from Hong Kong to experiment with the capitalist world and establish more realism than during the Mao era in a 'Socialist Market Economy', a sort of capitalism experiment within a communist country.
Entrepreneurs who fled China brought about the success of Taiwan and Hong Kong. Now these entrepreneurs are looking at the other opportunistic side of the coin: as China politics are no longer dogmatic but pragmatic, those entrepreneurs want to go back-or at least develop strong commercial ties with the country.
Deng Xiaoping, starting in 1979 and with the 'one country, two systems' policies he implemented in the early 1980s, was of course instrumental in changing many realities in China. As Deng famously put it: 'It doesn't matter if a cat is black or white, so long as it catches mice'.
That attitude signaled the end of dogma and the beginning of economic realism and in turn great confidence from the people.
Politics and economy explain many differences between Japanese and Chinese consumption of luxury, but other differences are due to social, demographic and cultural trends.
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<h3>The Parasite Single, Parasaito Shinguru</h3>
In 1999, Professor Masahiro Yamada published a book called "The Age of Parasite Singles", describing the common feature of single Japanese, in their twenties or often beyond, living with their parents and spending the majority of their vast disposable income on luxury goods, travel, spas and other discretionary products. In popular culture, especially when describing women, this 'parasite single' is a derogatory expression as these people are seen as partly responsible for the decrease in the number of marriages and in turn Japan's low birth rate, which is by extension responsible for many of the economic woes of the country.
This Japanese oddity has meant that young women working as office ladies (OLs) have been able to live above their means as they do not bear the burden of very hefty Japanese rents-and key money associated with renting a new place-while having many meals and other 'amenities' (laundry, etc.) taken care of by their loving parents. Often parents do not actually see this as a burden, as there is the expectation that kids will take care of parents as they age and find life more difficult. A sort of family 'win-win' really.
More recently, around 2006, alongside the concept of parent-dependent OLs, Japan has also invented the concept of 'herbivore men', young men who literally have no interest in flesh (or to be clear: sex) and avoid being in a relationship with a girlfriend in order to live frugally and look after themselves.
This phenomenon is adding to the issue of weak Japanese demographics. While female parasite singles have created the luxury market in Japan, herbivore men have boosted metro sexual-related consumer sub-segments, such as male cosmetics, for instance. Today the rise of the YUMMIES (young urban males) for premium consumption extends beyond Japan.
While such a social phenomenon has made part of the Japanese population maritally inept, some parts of the economy have benefitted. Ten years ago, half of Louis Vuitton sales in the world were made to Japanese consumers. And while I've heard often Tiffany Ma saying 'I can't buy Vuitton, I've seen it too much, it's a brand for secretaries', at the time it was factually true and not really an issue. The Japanese OL made Louis Vuitton a success; Chinese consumption is now compensating for the fact that she is not as dominant, has grown older and is not being replaced in Japanese society. One nationality has replaced the other.
<div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>The Japanese luxury boom came at a time when the economy was going through the 'lost decade', which started after the asset bubble burst in December 1989. The value of the Nikkei (the Tokyo Stock Exchange) was reduced by five between the 1989 peak and the 2003 trough. But while all hell was breaking loose, counter-intuitively, the OLs were creating the largest luxury market in the world.
Japan is perhaps an extreme example, but a good one that shows that luxury demand is not always correlated to economic growth and that social and cultural trends and, generally speaking, 'soft issues' are really what count.
Besides, in some instances, the luxury market, given its consumers, can be somewhat associated to a mass market.
Though Prime Minister Shinzo Abe's policies in 2013 seem to have given a boost to Japanese domestic luxury sales-and the weakness of the yen also meant that consumers stopped purchasing goods abroad-I believe the growth of the Japanese luxury sector is structurally impaired by the fact that there is virtually only one consumer demographic, the office lady, and that is on the wane. While higher-end consumers and men will contribute more in the future of Japanese luxury consumption, they probably will not manage to compensate for the fall of the OLs.
<h3>Multiple Chinese Avenues to Growth</h3>
In contrast to the Japanese market, the Chinese market for luxury goods is very much dominated by men for historical reasons linked to men's greater financial autonomy and corporate as well as government-related gifting practices. Some may argue that the sex ratio imbalance created by the one-child policy that was initiated by Deng Xiaoping in 1979 also will weigh on purchases, as in China, 113 boys are born for every 100 girls.
However, unlike Japan, consumer profiles, as illustrated by <a href="http://www.businessinsider.com/chinese-luxury-shoppers-are-taking-over-2015-1">our five Chinese avatar consumers</a>, are extremely diverse, including, among others, aspirational lower-tier city dwellers, affluent first-tier city entrepreneurs, and Westernized overseas Chinese-more than 50 million souls.
Anecdotally, the one-child policy has probably also been a beneficial measure for high-end consumption. Indeed, children have two parents and four grandparents who potentially have only that one child to spoil. Also, for the time being and, according to the US Census bureau, until 2025, China will continue to see its population expand. In 2026, after reaching close to 1.4 billion, China's population will start to decline.
<h3>The King Is Dead, Long Live the King</h3>
Chinese consumers, like many others, initially took their inspiration for many consumer products from Japan. This may seem odd to hear, given the historically strained relations between the two countries.
Cognac is not that popular in Europe anymore but was quickly adopted in Japan as the drink for corporate outings-before those became out of favor-and was rapidly adopted by the Chinese elite.
Louis Vuitton bags started becoming a regular feature in China ten years ago (i.e., the year sales peaked with the Japanese). Five years later, Coach became a huge success in Japan; it is starting to do very well now in China. Shanghai-based fashionistas have long considered Tokyo the go-to place for trends.
And fundamentally, while Japanese OLs were using luxury products to fit in, Chinese consumers were starting to purchase the same brands to show their peers that they had become successful in life.
Like avatar Calvin Li, many buy simply to say 'Look, I can afford it so I'm worthy of your consideration'. In the initial phase of growth, of course, this may have led some, like Calvin, to make mistakes and buy counterfeits with no knowledge of it or to feel insecure in their choices.
Probably the reason the bigger brands in Japan became immediately successful in China is the idea that if you can't judge for yourself, go for the brand that everyone knows. By doing so, you can't go wrong.
The Japanese dominated luxury consumption ten years ago, representing up to half of Louis Vuitton's business in 2003. Now the Chinese do. Or as luxury execs could say: 'The king is dead, long live the king'.
Text and figures taken from "<a href="http://www.amazon.com/The-Bling-Dynasty-Chinese-Shoppers/dp/1118950291">The Bling Dynasty: Why the Reign of Chinese Luxury Shoppers Has Only Just Begun</a>" by Erwan Rambourg; ISBN: 978-1-118-95029-6. Copyright © 2014 by Erwan Rambourg. Reprinted with permission of Wiley.

Here's The Difference Between The Chinese And Japanese Luxury Booms

<table class="image-container float_right" width="200"><tr><td><div class="image"></div><a href="http://www.flickr.com/photos/jurvetson/5499949739/in/faves-30998987@N03/">Steve Jurvetson</a></td></tr></table>As much as we focus on the day-to-day political and economic crises in the United States or Europe, we forget that business is truly global. There are technologies and <keyword id="44844" type="ORGANIZATION" weightage="60" keywordseo="Trade">trade</keyword> and policies that affect every business and country that exist. 
When we get better at transporting things and have greater access to markets, trade gets even more global, and technology and cooperation are really starting to push that. FedEx's <a href="http://access.van.fedex.com/access-20/">global trade policy magazine Access</a> put together a list of the biggest <keyword id="15467" type="COMPANY" weightage="60" keywordseo="trends">trends</keyword> in business, technology, and trade.
We spoke to Brooking Institute fellow and <a href="http://www.brookings.edu/experts/meltzerj">global trade expert Josh Meltzer</a> and FedEx global media manager Jenny Robertson about some of the top trends <a href="http://access.van.fedex.com/access-20/">from the report.</a> 
Driverless cars are coming far sooner than we thought
<a href="http://access.van.fedex.com/access-20/">Access spoke</a> to Wired Magazine co-founder and futurist Kevin Kelly, and asked him what would define trade over the next few years.
<a href="http://access.van.fedex.com/access-20/">He replied:</a> “I think in two years we’ll see certain parts of highway systems where you can turn your car over to the computer within certain parameters." 
The potential impact on the economy is massive. Congestion will cost the US an estimated $133 billion in 2020. 
While the US lags behind, the rest of the world is moving forward with high speed rail
There are <a href="http://access.van.fedex.com/access-20/">currently negotiations</a> to create the world's most ambitious high speed rail network. It could run from China to the United Kingdom, and over 17 countries in between. Parts are already operating, and the hope is to have a fully connected network by 2022. 
Japan's participation in the Trans Pacific Partnership could define 21st century trade in the Asia Pacific region
Japan's recent bid to join the Trans Pacific Partnership trade talks <a href="http://www.brookings.edu/research/opinions/2013/03/25-transpacific-partnership-solis">could be a game-changer</a>.
"A successful bid could be a big strategic gain for the U.S. and the Trans Pacific Partnership generally, Brookings fellow Josh Meltzer told us. "It would make it a much more significant trade agreement from a U.S. perspective and change the nature of the negotiations." 
The talks are essential for "developing new rules for 21st century trade in the Asia Pacific region, Melter says. "Those rules are things like digital trade and cross-border data flows, on statehood enterprise, on regulatory coherence, to name a few. And getting Japan in would be important because, from a rules perspective it would increase the potential for the TPP to ultimately become a <keyword id="53587" type="ORGANIZATION" weightage="60" keywordseo="Free-trade">free trade</keyword> agreement A in the Asia Pacific region, which I think is the ultimate aim of all of the participants "
Watch out for growing logistics clusters
MIT professor <a href="http://access.van.fedex.com/access-20/">Yossi Sheffi argues</a> that a select few cities are making the investments and have the attributes to become "Logistics Clusters" and dominate world trade. He tells Access: “If you look at Panama’s five-year plan, they want to become more than just the canal. Chongqing in central China is another city to watch. And the German government just put 100 million euros into Dortmund, Germany, north of Cologne."
The world needs to figure out how to consistently trade services
The United States is the world's number one exporter of services, and is meeting with other leaders in Geneva to try and hammer out a legal framework. 
There are still many barriers, Fedex Global Media Manager Jenny Robertson told us in an email interview: 
U.S. services exporters encounter substantial non-tariff barriers (NTBs) around the world, which keep our services trade from reaching its full potential. Traditional barriers to services exports include sectoral prohibitions on foreign participation, foreign equity limitations, discriminatory regulatory requirements, lack of transparency, and nationality requirements for service providers. 21st-Century NTBs include restrictions on data flows, forced localization, and unfair competition from state owned enterprise
An international services agreement that removes barriers could boost exports by $860 billion a year and create three million jobs.
Chinese megacities are going to be an even greater economic behemoth 
Fedex's Jenny Robertson tells us that "Nine cities will be connected by 150 major infrastructure projects. The megacity’s location in the Pearl River Delta creates a single manufacturing hub of 42 million people — four times the size of New York City."
The merger will create the world's largest city by 2018, and a massive concentration of economic power. 
Infrastructure is a massive advantage, and countries will race to match Germany and Singapore
A <a href="http://blogs.wsj.com/searealtime/2012/12/05/singapore-tops-survey-with-worlds-best-infrastructure/">survey from consulting firm</a> Mercer found that Singapore had the world's best infrastructure, but that three German cities came in the top five. The benefits are clear. Singapore is a massive global shipping and business hub, and Germany's manufacturing power has weathered years of European difficulty. 
Other countries will be looking to catch up. <a href="http://access.van.fedex.com/access-20/">Big examples</a> that will change global trade will include the Panama canal expansion, and massive investments by China in Guangdong and Shanghai. 
Get ready for predictive GPS
GPS is already almost ubiquitous. <a href="http://www.forbes.com/sites/parmyolson/2012/08/06/algorithm-aims-to-predict-crime-by-tracking-mobile-phones/">Researchers at the University of Birmingham</a> have created an algorithm that's a sort of predictive GPS, it uses your phone combined with your friends to predict where you'll be in a day's time. 
Social shopping may mean the end of exclusivity
More and more, shopping experiences, even online, are community based, centered around curation and a lack of friction. Everyone involved in commerce is going to have to figure out how to deal with a more frictionless and democratic ecosystem. 
Free trade agreements are making the world more open
<a href="http://access.van.fedex.com/access-20/">Access highlights</a> three free trade agreements as particularly significant
<ul>
<li>The U.S. South Korea FTA will make some 95 percent of bilateral trade between the two huge economies duty-free over the next five years.</li>
<li>The new U.S. Panama FTA removes tariffs that were as high as 81 percent.</li>
<li>The EU-Singapore FTA, settled in September, connects two economic powers and makes it easier for both to do business. </li>
</ul>
Smart glasses are going to hit the marketplace and change the consumer experience
Once the stuff of science fiction, wearable computers are going to be a fact of consumer life soon. Businesses need to use the experience with early adapters to figure out their advantage as the technology becomes more widespread. 
The data explosion has changed everything, but we have no idea how to regulate it
<a href="http://access.van.fedex.com/access-20/">Data regulation is</a> "one of the least discussed, most urgent issues affecting trade."
International trade policy needs a huge update to keep up with the pace of innovation. At this point, countries are being more reactionary rather than planning or innovating. One of the biggest things the world can do to grow the economy is come up with a framework that balances between respecting privacy, and giving business a break. 
The financial crisis lead to massive infrastructure spending, and we're still seeing the impact
CIBC World Markets, a Canadian bank, <a href="http://access.van.fedex.com/access-20/">expects $35 trillion</a> of global infrastructure spending over the next 20 years. 
That's on top of what's already been spent. The amount of money that's flowed into the global economy hasn't been matched in size or speed <a href="http://access.van.fedex.com/access-20/">since World War 2.</a>

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Here's The Difference Between The Chinese And Japanese Luxury Booms

Erwan Rambourg, "The Bling Dy…

13 Trends That Will Define Global Business

Max Nisen