Perspective: What Do Chinese Luxury Consumers Buy?

Lily Li works at Access Asia, a retail research firm in Shanghai. She has a work card hanging around her neck. Even at weekends, she can't solve this card. For her, this card means she has a white-collar job.

She plugged Apple's ear strings on her cheap mobile phone.

There are many people like Lily Li in China. Many Chinese consumers regard expensive consumer goods as a show off.

There are many predictions that China will become the second largest consumer market in the world in 2015, only after the United States.

The Chinese have bought more cars than any other country, and the expenditure last year was as high as 13 million 500 thousand dollars.

China's consumption of luxury goods is also among the best in the world.

In July 4th, Nestle, the world's largest food manufacturer, confirmed that it would buy the biggest Chinese dessert maker, Xu Fu Chi, which will mark the biggest acquisition in recent years.

Hsu Fu Chi's valuation in Singapore stock market is US $2 billion 600 million.

Nestle's sales in China last year were 2 billion 700 million dollars, only half of Nestle's sales in Brazil, while China's population was 7 times that of Brazil. So Nestle decided to increase investment in the Chinese market.

Paul Bulcke, President of Nestle, said: "understanding the psychology of Chinese consumers is the most important thing for us. The food business is very large, because the tastes of people in every region are different. Selling cheese in the Chinese market is just as impractical as selling tofu to Swedes."

Nestle has been searching for a long time in the Chinese market, and recently bought most of the shares of the group.

Large multinational companies have so far focused on China's coastal areas.

P&G is headquartered in Guangzhou and Unilever is headquartered in Shanghai. Both companies are now planning to develop into the rural areas of China.

China's rural area has a population of 665000000, which is very impressive.

The Chinese government has made a difficult problem for these pnational groups. The Chinese government only allows these multinational groups to enter the Chinese market only when they need to introduce foreign capital. Many multinational enterprises can only enter China through cooperation with state-owned enterprises.

Since the French President Nicolas Sarkozy announced that she would receive the Darai Lama in 2008, Bernard Arnault, President of LVMH group, said she was interviewed by the Chinese ambassador to France, while Louis Vuitton's store in China also suffered a large number of Chinese women's attack on the brand of the Louis Vuitton fake package.

Unilever said that the corresponding increase in prices has also faced a lot of trouble.

The Chinese government is very worried about inflation and has imposed a lot of fines on Unilever.

Besides the central government, the local government is also a big challenge.

Local governments will be biased towards local enterprises, and Chinese enterprises are catching up.

Many Chinese enterprises can offer prices lower than those of pnational corporations, and their quality has also greatly improved.

However, many enterprises that are not very good at their own development in China have made great profits in entering the Chinese market. For example, KFC has never been equal to McDonald 's in the US market, while in China, there are as many as 3300 KFC shops, 3 times the McDonald s.

The reason for KFC's success is that it knows how to cater to the Chinese market, according to China.

The American DIY furniture enterprises like Home Depot have no market in China. The reason is that Chinese consumers do not choose expensive decoration at all. Many people prefer to hire cheap workers to decorate their houses.