The economic globalization accelerates the development of the Chinese economy. It helps improve the consumption structure in China better and stimulates the consumption habits of the Chinese consumers, especially in the luxury goods market. In recent years, the Chinese luxury goods market has a driving development vigor, many luxury goods manufacturers have spotted the huge market and broad consumer prospects in China so they all entered the luxury goods market. And they are sitting pretty, such as Chanel from French, the watch brand from Swiss, and Rolls-Royce car from British.
There is no doubt that the living standard has leaped forward for the Chinese Citizen in the past two decades. From Engel’s law, we can find that the standard of living to Chinese Citizen continues to grow. Engle’s laws say that “an observation in economics stating that as income rises, the proportion of income spent on food falls” (From Wikipedia), so we know that if the individuals’ revenue increases, they will pay more attention to entertainment expenditure. It reflects that a country enhances their standard of living. In China, I found that the Engel’s coefficient continues to decrease (From my Upper blogospher1 data curve), so there is no denying that the standard of living in China has a vast improve. On the other hand, from other data, we still can provide the norm of living in China has improved; China has surpassed Japan to become the world’s second-largest economy. With the growth of China’s economy, consumer awareness of consumer spending is increasingly high, spending power and personal disposable income are also increasing, stimulating the rising demand for luxury goods. The growth in luxury goods demand to our luxury market has brought great business opportunities; the market capacity continues to expand. Meanwhile, with the development of science and technology, Chinese consumers have more and more ways to buy suitable price luxury goods, and more and more people start to pay attention to the luxury goods and that led to increasing demand in China. Therefore, there is no doubt that China has become the one of the biggest luxury good markets in the world.
We cannot ignore some economic problems from the Economy of China although the Chinese economy and the luxury goods market have a real developing tendency. Firstly, the gap between rich and poverty is still widening, the rich gets richer, and the poor get poorer. Though the economic growth of China has a right tendency, China has over 0.4 international police line from the Gini coefficient, which reflects that China has some inequality in society, and the difference mainly reflected in the gap of wealth. In 2016, the per capita GDP is 57,313 yuan, equivalent to 8576 US dollars, but in fact, China still has 400 million people or more living on less than two dollars for one day. I think that China’s real consumption is puzzling: one side is the lack of domestic, and need to expand use; another side is the luxury consumption that is so hot; the overall lack of consumption and luxury consumption coexist. It exposed the fact that the income is the imbalanced. On the other hand, the gap of wealth will lead to an inflation time. For example, the China’s real estate price, to the wealthy people, the property (house or department) is a common good, if you want to live in the world, you should have a place in your life. However, in China, the house or department is considered a luxury to poor people whose wages may just be just enough for a kitchen in one department. Most of the rich people have 3 to 4 houses or offices. Therefore, China has an impressive appearance that most of the people are unable to buy one department, but real estate companies still have excellent sales condition. Meanwhile, a lot of people buy units or houses to increase the real estate prices, and they can then sell them. We can claim that it is a property value bubble in China real estate. There is no denying that this phenomenon will seriously affect China’s economic development.
Secondly, It appears that China lacks its luxury brands in the market. And Chinese customers often want to choose luxury brands from other countries, such as Europe, the United States, Japan, and other developed countries. However, in reality, China does not lack of local luxury products. In fact, the growth of luxury brands in China has been positive. China has a very real luxury brand growth. A permanent stile tailor suit that costs thousands of dollars and top-grade mahogany furniture are no longer uncommon. Moreover, the royal tribute in the history of China such as Nanjing brocades. China just needs an opportunity to promote the brands world-wide. Another example is the silk and embroidery of our unique raw materials and technology, hybrid international fashion, invited internationally renowned design master clothing design, style and Milan, and Paris, the trend of synchronization, it will create a new luxury brand. Although China is a country with great potential, the current focus is still manufacturing. And the profits from manufacturing is fairly lower compare to other industries. If China wants to develop further, it should create a brand rather than just be the factory of other countries.
Thirdly, I found one more problem for the Chinese luxury goods market: Whether China needs to expand imports of foreign luxury goods. China’s consumption of imported luxury goods is a more and more objective fact. To some extent, the import of luxury goods can promote the development of domestic and related industries. But on the other hand, China’s luxury goods industry will bring some unfavorable factors. Therefore, in China, whether the need to continue to expand the import of foreign luxury goods, we must grasp a reasonable balance. If we only blindly criticize and accuse the imported luxury consumer behavior, the objective will cause social psychological imbalance, which is not conducive to the harmonious development of society. We must advocate rational consumption, and promote the use of luxury goods to the localization and sound direction. On the one hand through the fiscal and tax policy to adjust, such as the introduction of luxury consumption tax, increase the national fiscal revenue; the other hand, to encourage China’s exclusive luxury Brand production and export, so that China from the luxury goods to luxury goods to output and export of large countries. I think that this is the best choice.
On the conclusion, the Chinses luxury goods market is so hot, but I still found some problems and these problems severely affect the economy of China to Microeconomics and Macroeconomics. I think that the government should pay more attention to this issue of an economy from the small economic phenomena. If a country wants to have a healthy development, it firstly should narrow the gap between the wealthy and poor. On the other hand, a country should have its own brand goods to develop the economy. China, for example, it still has a long way to go, although China has been the development of excellence.