09
Dec
2013

Please stop blaming gift giving

We all like to find an excuse for why we didn’t do something or what caused our original plans or goals to be derailed; we want to avoid the blame and shift the focus elsewhere. But the constant finger pointing to the reduction in gift giving, and Chinese government crackdowns on frivolous purchasing among its staff is wearing a bit thin now.

As I have written on more than one occasion, the months prior to and after the appointment of the new leadership, the implementation of regulations to bring government officials into line didn’t require ESP to know that spending would slow and the luxury market would be affected. Perhaps there is an argument that things have turned out worse that people did expect, if they expected it at all, but anyone with a little experience of China and the Chinese people could have told those who asked that often Chinese minds are black and white, all or nothing. There can be no grey.

Perhaps there is an element of generalisation in what I say, but I could see that in minds of luxury consumers, a new leadership probably means new rules soon after, which in turn means that ‘I need to prepare for the worst. I’ll cut back on my spending and watch to see what indications I get that things are not as bad as I fear. But what I do know is that things will not be the same as they were, they will be different.’ And unsurprisingly they are now different, and everyone seems shocked by it.

What luxury brands appear to have missed is that ‘different’ doesn’t mean that the money has dried up and that consumers are not spending. It doesn’t mean that the middle classes, affluent and wealthy don’t still intent to spend money and buy luxury products, but what it does mean is that they as a nation so used to living with the unexpected, they will adapt and change the way they do something. In China, for every problem there is always a way around it. And they have.

The new ways have clearly thrown a spanner in the works of many of the best known and most well established brands here because they were so wrapped up in their own little world of taking orders and not selling, that they took their eye off the ball. For any brand globally that is new in China, or new to the Chinese people, a door has opened up that was firmly closed 18 months ago. People have money and are spending it in ways they didn’t used to, and on items and brands that to some extent are not easy to track, and they are certainly being more selective in the whole spending process.

So lets not be fooled. Gift giving has been affected, and yes, gifts may be of lower value and less ostentatious, but gift giving is a cultural habit that will not go away, but like everything else here, it will change. Luxury brands need to be quicker to respond to consumer needs, and lead the changes rather than become victims of them.

Ken Grant
Ken is the publisher of Luxury Insights China, he is regularly asked for his comments and opinions of the luxury sector in China by the media, and speaks at conferences on the subject. His international marketing experience covers 25 years, and most territories of the world.

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